Our excellent Research Fellow Dr Rachel Hodder warns about potential legal nightmares in the government's proposed pay equity framework.
Last week, the government announced that it would accept the Joint Working Group’s recommendations, which will allow employees to take pay equity disputes directly to their employers.It would be very interesting to know just how much warning Treasury or the ministries provided about the difficulties encountered in Ontario, and likely difficulties here. One should be especially careful about the quality of advice in areas where there is a lot of wishful thinking, and a lot of social sanction for even suggesting that outcomes might diverge from intentions.
These changes were motivated by the landmark ruling in the TerraNova case where it was ruled that female-dominant aged care work has been historically undervalued due to gender discrimination. This has opened the door for a flood of similar claims to be made in other female-dominant industries.
The intentions of the changes are laudable but good intentions do not always make good policy. Overseas experience with similar pay equity laws is a good reason to be concerned.
There is little evidence that similar laws have reduced gender pay gaps. Adjusting pay in undervalued female-dominant industries is a blunt tool compared with adjusting pay for individual undervalued female employees in any industry.
Ironically, some studies have demonstrated that pay equity laws have widened the pay gap. Making employers pay more in whole industries reduces the number of jobs available, pushing many women into lower paid work.
A review of similar pay equity laws in Ontario is discouraging. The costs of administering the system ate up much of the available compensation change.
Establishing plans for compensation systems was much easier said than done. These costs were disproportionately felt by small employers where often the administrative costs were more than the recognised pay differences.
Difficult in practiceDisputes turned into a litigation nightmare. Rules to determine what counted as equivalent work seemed simple on paper but were difficult to evaluate in practice.
This led to endless disagreements about what male-dominant industries could be considered as relevant comparators. The main winners of the laws were consultants and lawyers, not women.
One would hope the government has been advised on the likely problems the new laws could encounter based on overseas experience.
Meanwhile, The Listener does not give us reason to hope for reasonableness:
The law change won’t be a magic wand. Comparing the relative value of different jobs in disparate industries was a contentious issue within the working party and threatens to be a sticking point in workplace negotiations. A suggestion by the New Zealand Educational Institute that pay rates for teacher aides be linked to those of Corrections officers, whose work entails risks not generally present in primary schools, isn’t a promising start.The government hasn't drafted the legislation yet; I hope that the government gets some better advice around this stuff before it does.