March 20, 2023
Navigating compensation terminology can be tricky. Acronyms that aren’t spelled out, phrases you don’t understand, or terms that seem to mean the same thing. It wasn’t too long ago that speaking about pay or wages was considered an outlawed conversation. But now, pay has become an authentic topic of conversation.
Pay equity vs. pay equality is not simply asking for a raise or discussing your salary. It goes deeper to address longstanding systemic issues that continue to be rooted in unfair practices. To combat this, the federal government has laws and regulations around pay equity, but no laws exist to protect pay equality. In this post, we will explore the differences between these two concepts and what they mean for achieving fair compensation in the workplace.
Unlike pay equity, pay equality is about access to opportunity more than pay itself. It means ensuring equal chances for promotion and advancement (and thus higher compensation) for those qualified across any industry, regardless of marginalized factors. Because of pay inequality, marginalized groups often cannot get higher-paying jobs. This could be the result of a few barriers, such as:
- Socio-economic factors, such as having a diploma compared to a degree
- Interpersonal concerns, such as judging someone based on an opinion or misunderstanding
- Unconscious bias, such as stereotyping or prejudice based on race, religion or gender
- Enforcement of social norms, such as constant gossip that promotes clique-based groups
These barriers can be broadly categorized within society or systematic within your organization. As a result, pay equity aims to remove these hurdles for equal access to opportunities.
Implementing Pay Equality in Your Workplace
Pay equality is founded on a culture of diversity and inclusion. When looking to better your workplace towards this concept, you might consider factors at play that create an environment of pay inequality and review things like:
- If your workplace is wheelchair accessible
- Maternity and paternity leave policies
- Exclusionary language or terms
- Training on the importance of diversity and inclusion
- Intentional hiring practices focused on welcoming people with all identities
Have you noticed patterns within your office that could point to a culture of pay inequality? Some clear chances to improve culture and promote pay equality could be refining recruitment practices to hire more diverse candidates, creating transparent career paths for each team member, and providing compensation benefits that promote a more inclusive environment, like flex hours or remote options. The greater the awareness of barriers and understanding of why they exist and then removing them is the first step to pay equality.
As mentioned above, pay equity is regulated by the Canadian government. It means staff receive equal pay for work of equal value. This is important when considering potential discrimination based on race, religion, sexual orientation, or disability status. These are prohibited grounds, meaning employers cannot enforce pay gaps between staff members who may identify differently than other staff.
Note that the terminology focuses on being “equal” but not the same. This is an important distinction when considering companies with employees in various roles who might be accomplishing similar work, but not in the same role. To assess areas connected to overall compensation for equal work, you might look at the following factors:
- Job responsibilities
- Soft and hard skills
- Level of effort
- Current working conditions
The above can help determine a threshold for compensation for positions throughout your organization. You can also consider current wages and demographic data, such as gender and age, to reveal any bias as part of research to determine pay equity. Two people doing similar work should receive similar pay based on their role and experience, not socio-economic factors.
Equal Pay for Work of Equal Value
This concept is directly related to pay equity, although it expands on the guidelines slightly to account for various roles within a company. Not all businesses have the capacity to have everyone doing the same job and thus getting paid the same amount. So, equal pay for work of equal value puts the onus on a business to determine what is considered equal. This involves standardizing the way a job is assessed, so it can be used to compare to other jobs. This also helps compare roles across fields and sectors within the same industry, closing a gap that might exist otherwise. Wage transparency is an excellent way to facilitate this comparison across fields and sectors. Companies can (and should) publish their wages for positions online.
The pay gap is an ongoing concern for workers worldwide. This is a key metric that determines how much work is being done at the compensation level to address pay equality and equity accurately. The gap compares roles and wages to determine data that highlights where improvements need to be made. There are two kinds of pay gaps: uncontrolled and controlled.
Uncontrolled Pay Gap
The uncontrolled pay gap is a broad scope that compares the median salary for men and women, regardless of position, qualifications, seniority, and other factors.
This gap tends to be larger because, on average, women are paid less than men. We can consider this data a direct result of pay inequality because women are not given the same access to higher-paying jobs as men. This data shows us there is still a long way to go for equality, and having these conversations can help to drive real change.
Controlled Pay Gap
The controlled pay gap is a more focused measurement. It looks at similar roles, qualifications, and experience metrics of men and women in a particular industry. This gap is often much narrower than the uncontrolled pay gap. If pay equity laws are practiced ideally in Canada, the controlled pay gap should be zero. However, this is often not the case because of the social biases and barriers discussed earlier. The good news is that the gender pay gap in Canada continues to narrow. This is an important metric highlighting that legislation can make a difference when it comes to equal pay for work of equal value, meaning it could also influence pay equality.
In conclusion, while pay equity and pay equality are both crucial concepts in achieving fair compensation in the workplace, they have different meanings.
- Pay equity ensures that workers are paid based on equal work
- Pay equality focuses on removing barriers by ensuring that all workers are given the opportunity to advance in their careers and compensation levels
Understanding the differences between these two concepts is essential in creating a more equitable and fair workplace, where workers are compensated based on their job performance, qualifications, and experience rather than their gender, race, or ethnicity.
Pay Equity Consulting
Understanding how your company ranks regarding pay equity vs. pay equality can be challenging. Indeed, some metrics and data can highlight gaps, but what can be done about them, and how do you prevent them in the future? A compensation strategy that addresses these issues is a step in the right direction. At True North, we offer pay equity consulting as an opportunity to ensure your company complies with federal laws. We can help you navigate the metrics and data and arrive at inclusive practices that keep your employees happy and ensure your peace of mind. To learn more about this service, reach out to us.