Pay Equity Act requires federally regulated employers to pay same wages to women as to men for work of same ‘value’.

Whenever the Justin Trudeau Liberals can use new legislation to virtue signal, there is no apparent limit to how ruinous that ensuing legislation can be.

I could commence every column respecting federal legislation with that sentence.

The newest entry is the Pay Equity Act requiring federally regulated employers and the federal public sector to pay the same wages to women as to men for work of the same “value.” Indeed, we have a brand-new Pay Equity Commissioner, with a host of highly paid bureaucrats under her, to ensure compliance.

Now, how can I be so churlish as to object to any of this, beyond its expense?

Because we live in a capitalist society where the price of labour is measured by a combination of competitive pressures and supply and demand. If our trucking companies have to pay their office staff the same as their truck drivers because a zealous government bureaucrat deems them to be of “equal value,” then our trucking companies’ wage burden will ascend dramatically. They will be unable to compete with U.S. trucking companies and eventually go out of business.

Lest this analogy appear histrionic, this legislation would never have been proposed or enacted if the intention was not to increase the wages of various groups of employees in companies whose market value does not command that increase. It is not merely U.S. and foreign companies to which Canadian employers will lose business. To the extent these federally regulated employers are competing with provincially regulated ones, which they sometimes are in the margins of their businesses, those employers would be at an immediate competitive disadvantage relative to provincially regulated companies in the same line of work without the financial burden of paying above-market wages to massive numbers of their employees.

And, of course, to use my example, the wages for office staff of federally regulated employees would rise considerably above other office workers in the same employment marketplace.

For women, its intended beneficiaries, this legislation will prove a calamity. As with all anti-competitive legislation, the law of collateral consequences applies. What will companies do when forced to increase the wages of lower paid groups of employees to new, uncompetitive heights? What any company in business to make a profit does: Contract those functions out entirely so that they are no longer required to pay uncompetitive wages. And those contracting companies they contract out to are not railways, telecos, airlines or other federal undertakings, but provincially regulated companies not caught by the Pay Equity Act, which can pay lower wages with impunity.

Remember, the legislation is aimed at groups of employees who are predominantly female, so the impact of the legislation, inevitably, is that rather than assisting women it would cause their layoffs or terminations in massive numbers. Of course, this won’t happen in the federal public service where profligate wage spending is de rigueur.

And in terms of the “equity” in pay equity, what changes in wages must be made when predominantly male groups of workers perform work of the same value as female ones, but are lower paid? Well, none at all. But I did introduce this topic with references to virtue signalling.

How high do wages have to increase? Well, quoting from the legislation: “For the purpose of determining salary in the calculation of the compensation associated with a job class, the salary at the highest rate in the range of salary rates for positions in the job class is to be used.”

And how is “value” determined? The legislation states: “the composite of the skill required to perform the work, the effort required to perform the work, the responsibility required in the performance of the work and the conditions under which the work is performed.” In other words, entirely subjective. With no two persons having the same view of responsibility required, effort required, skill required and working conditions, let alone the combination of those factors, it is guaranteed to be ideologically driven.

The Pay Equity Act comes into force on Aug. 31. Federal employers have three years to set up committees, develop plans and make these changes.

Let’s hope for a change in government first.

By Howard Levitt

Got a question about employment law during COVID-19? Write to Howard at levitt@levittllp.com.

Howard Levitt is senior partner of LSCS Law, employment and labour lawyers with offices in Toronto and Hamilton. He practices employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada. 

THIS ARTICLE ORIGINALLY APPEARED IN THE FINANCIAL POST AND IS REPRODUCED HERE WITH PERMISSION FROM THE AUTHORS: https://financialpost.com/fp-work/howard-levitt-pay-equity-legislation-another-case-of-virtue-signalling-by-trudeau-liberals-and-will-be-a-calamity-for-women?video_autoplay=true

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