Ontario's Pay Equity Act

Date June, 1987

With passage of the Pay Equity Act in 1987, employers in the public and private sectors in Canada’s province of Ontario were required to provide equal pay for jobs requiring comparable skill, effort, and responsibility.

Locale Ontario, Canada

Key Figures

• David Peterson (b. 1943), Liberal premier of Ontario when the Pay Equity Act was passed
• Ian B. Scott (b. 1930), justice minister who introduced the Pay Equity Act in the Ontario legislature in 1986
• William Wrye (b. 1944), labor minister who introduced the Public Service Pay Equity bill in the Ontario legislature in 1986

Summary of Event

By the 1960’s, there was clear economic evidence of differential pay for male-dominated and female-dominated jobs in Canada. In 1979, the average earned income of Canadian women who worked for the full year was 63 percent of the full-year earnings of men. Opinions concerning the reasons for these pay differences were widely divergent. At one extreme, the wage gap was regarded as resulting from years of wage discrimination against women in the workplace. At the other extreme, the gap was explained as a natural outcome of market supply and demand, with women choosing careers requiring lower levels of skill or education and thus earning lower pay.

In 1980, more than one-third of the female workers in Canada were employed in traditionally low-paying clerical occupations, compared with 6 percent of the male workers, suggesting that at least part of the pay differential resulted from the different types of occupations pursued by men and women. However, a study published by the Ontario Ministry of Labour in 1982 concluded that when the salaries of men and women employed in the same occupation for the same firm were compared, the women still earned almost 10 percent less than the men. This study confirmed that part, but not all, of the pay difference was caused by wage discrimination.

In the 1970’s and 1980’s, growing activism by the women’s movement focused attention on the differential pay issue. Disagreements about the cause of the pay differential were resolved through a focus on comparable worth or pay equity, the demand for equal pay for equal work. The goal of instituting pay equity is to end wage discrimination by requiring comparability in the wages of women and men who hold jobs requiring similar skills and education and who have the same length of experience in those jobs.

In Canada, the New Democratic Party championed the cause of workers’ rights and supported legislation on pay equity. A long period of Conservative Party rule in the province of Ontario came to an end in 1985 with the formation of a minority Liberal Party government. To obtain a working majority and maintain power, the Liberals needed the support of either the Conservative Party or the New Democratic Party. In May, 1985, the New Democratic Party agreed to support the Liberals in return for a promise that the Liberal leadership would introduce several pieces of legislation, including a bill on pay equity for both the public and the private sectors.

In the fall of 1985, the Liberal government consulted with organizations representing women, labor, and business in order to work out the details of the proposed legislation. The Public Service Pay Equity Bill, Bill 105, was introduced in the Ontario legislature by Labor Minister William Wrye on February 11, 1986. As written, the bill would have covered only 29,000 women in public-service jobs, but the New Democratic Party and the Conservatives offered a series of amendments that expanded the scope of the coverage to 340,000 women in public-sector jobs. Widespread criticism of Bill 105 by women’s and labor groups prompted the Liberal government to introduce the Pay Equity Act, which covered both public- and private-sector jobs. This bill was introduced by Ian B. Scott, the attorney general and the minister responsible for the status of women, on November 24, 1986.

Debate focused on the scope of the legislation, with three sectors considered: the narrow public sector (only civil service employees), the broader public sector (including education, health, and municipal workers), and the entire working population, including both public and private sectors. Many businesses opposed legislation that would affect the private sector, because it would mandate an increase in wages for some private-sector workers. The Ontario Chamber of Commerce estimated that implementation of the proposal could cost as much as five billion dollars within the province. Despite these objections, Conservative Party attempts to limit the scope of the bill failed, and the Pay Equity Act received final approval in June, 1987. It took effect in Ontario on January 1, 1988.

Significance

The Pay Equity Act required that employers with more than ten workers assess all jobs in which more than 60 percent of the employees are women. About 1.7 million women in Ontario were covered by the act, and the wages paid for their jobs had to be compared to the wages paid for male-dominated jobs found to be similar based on four criteria: skill, effort, responsibility, and working conditions. Using these four criteria, the York Board of Education, for example, determined that secretaries in media resources, earning $9.26 per hour, were in an equivalent job to caretakers, who earned $10.64 per hour.

Women working in the public sector were affected almost immediately, with the first salary adjustments to be made by January 1, 1990, and complete pay equity to be achieved by January 1, 1995. For workers in the private sector, the time allowed for implementing necessary pay adjustments depended on the size of the business. Companies with 500 or more employees had to make their first pay adjustments by January 1, 1991; companies with 100 to 499 employees had until January 1, 1992; companies with 50 to 99 employees had until January 1, 1993; and companies with 10 to 49 employees had until January 1, 1994. Private companies with fewer than 10 employees were exempt from compliance.

In the private sector, no company was required to pay out more than 1 percent of its previous year’s payroll as equity adjustments, with additional adjustments of 1 percent of total payroll each year until equity is achieved. There was no deadline for private firms to reach pay equity, so long as they made adjustments of at least 1 percent of payroll each year.

More than eight hundred Ontario companies had five hundred or more employees and so were required to begin implementation by the first deadline. The law produced substantial raises for many women, particularly those in secretarial and clerical jobs. For example, after evaluating the skill, effort, responsibility, and working conditions of a receptionist earning $6.81 per hour and a warehouseman earning $9.38 per hour, an automobile company in Toronto found these to be comparable positions. The company was required to make a series of adjustments in the salaries of receptionists to bring the two jobs’ salaries into balance. The Bruce Telephone Company adjusted the wages of its female service representatives by about $2.50 per hour, to match that earned by male telephone installers. Werner-Lambert Canada, a pharmaceutical company, made minor upward adjustments in the salaries of about a dozen female employees.

The province of Manitoba had passed a pay equity act in 1985, but that law was restricted in its coverage to a narrow part of the public sector, excluding school boards, nursing homes, and many other public institutions. Following the passage of Ontario’s Pay Equity Act, the governments of Nova Scotia, Prince Edward Island, and New Brunswick passed their own pay equity acts in 1988 and 1989; however, these acts also were restricted to covering certain groups of public employees. The executive director of the National Committee on Pay Equity, Claudia Wayne, based in Washington, D.C., noted that “Ontario has gone the furthest in the world” in mandating pay equity for employees within the province.

Bibliography

Curtis, James, Edward Grabb, and Neil Guppy, eds. Social Inequality in Canada: Patterns, Problems, Policies. Scarborough, Ont.: Prentice Hall Canada, 1988. Collection of essays on various Canadian problems with social inequality includes a chapter titled “Employment Opportunities for Women” that addresses salary differential and its causes.

Fredman, Sandra. Women and the Law. New York: Oxford University Press, 1997. Volume on women’s status under the law compared with that of men focuses primarily on the United Kingdom and the European Union. Chapter 6 includes discussion of Ontario’s Pay Equity Act.

Freudenheim, Milt. “A New Ontario Law Matches Women’s Wages with Men’s.” The New York Times, July 27, 1989, A1, A18. Provides an in-depth description of the implementation of the Pay Equity Act in Ontario. Discusses the criteria for assessing comparable jobs and indicates the pay increases expected for women under the law.

Fudge, Judy, and Patricia McDermott, eds. Just Wages: A Feminist Assessment of Pay Equity. Toronto: University of Toronto Press, 1991. Collection of papers presented at the 1990 Pay Equity conference at York University focuses on the results of the 1987 Ontario Pay Equity Act.

Gunderson, Morley. “Male and Female Wage Differentials and Policy Responses.” Journal of Economic Literature 27 (March, 1989): 46-72. Presents an in-depth description of the wage differentials between men and women along with comparisons showing how equivalent work is established.

Gunderson, Morley, and W. Craig Riddell. Labour Market Economics: Theory, Evidence, and Policy in Canada. 3d ed. Toronto: McGraw-Hill Ryerson, 1993. Text on Canadian labor market economics includes discussion of the Ontario Pay Equity Act and its effects.

McColgan, Aileen. Just Wages for Women. New York: Oxford University Press, 1997. Examines the approaches taken in different nations to address the issue of pay equity for women. Chapter 7 is devoted to discussion of Ontario’s Pay Equity Act.