Canada’s public sector beating private sector on narrowing the gender wage gap, report finds

By on 07/03/2024 | Updated on 07/03/2024
A photo of male and female figures sitting on piles of piles of coins to represent the gender pay gap
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Canada’s public sector gender pay gap is half that of the private sector, according to a new report from research institute the Canadian Centre for Policy Alternatives (CCPA), which also explores the reasons behind this.

CCPA senior economist David Macdonald examined hourly pay levels in 2023, adjusting them for 15 factors such as age, education and occupation.

Although wage inequality is smaller in the public sector, the report says that overall “discrimination is alive and well in Canada”, with women paid 8.5% less than men in 2023, and that “public and private sectors have substantially different discriminatory pay gaps hiding below the surface”.

The study reveals that in the public sector, the gender pay gap is 5%, while the private sector pays women 10% less than men.

MacDonald said: “The public sector is better at reducing the pay gap because it lifts pay for workers at the bottom of the income spectrum – who tend to be women and immigrants – and it constrains pay for those at the top of the income spectrum – who tend to be men and executives.”

The narrowing of the gender pay gap in the public sector was found to be most evident for lower-paid workers. Public sector women who earn around C$20 (US$14.70) an hour achieve pay equity, meaning they are paid the same as similarly qualified men. This is “a rarity in Canada”, the CCPA notes.

However, women working in the public sector who earn a higher pay level – around C$100,000 (US$73,568) a year – get paid less than their female counterparts on the private side and much less than comparable men.

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Pay restraint

The research found that the top 25% best-paid workers are paid more in the private sector compared to the public sector “and this contributes to worsening income inequality across the economy”.

In the public sector, however, high-earning senior managers are paid 29% less than in the private sector, as are health professionals like doctors and dentists. Educators in primary and secondary schools, university and colleges are paid more, as are social workers and counsellors – occupations that often employ more women.

Macdonald told Global Government Forum: “There are often suggestions that the public sector should be more like the private sector. However, what this research shows is that the exact opposite is true if we’re concerned about equal pay and with reduced inequality.

“In general, folks object to excess executive compensation and doctors pulling in large pay packages while lower skilled workers can’t catch a break, yet that’s exactly what the private sector does. The public sector is far from perfect in eliminating the gender pay gap, but its noticeably better.”

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The motherhood penalty – and fatherhood premium

The study highlights that having children is an important factor in pay, noting trends such as the ‘motherhood penalty’ and the ‘fatherhood premium’, where women with children make less than those without children “because they are treated in the workplace as less competent and having fewer loyalties to their job”, while the opposite happens to men.

While the motherhood penalty was not seen in the public sector, the report states: “There is some evidence of a motherhood penalty in the private sector, but the fatherhood premium is a massive 15% in the private sector and smaller in the public sector, at 7%.”

The findings also reveal that the wage gap for immigrants who arrived in Canada more than 10 years ago is narrower in the public sector at 5%, compared to 8% in the private sector.

In conclusion, Macdonald commented: “A continued focus on equal pay is likely one of the reasons why the public sector has a smaller gap. We can see the effect on gender and immigration. Unfortunately, the dataset I’m using doesn’t have data on racialised groups, but I suspect that we’re seeing it there too.

“These types of initiatives need to continue a job that isn’t done yet.” 

He added that if the private sector followed similar pay practices to the public sector, Canada’s gender and immigration pay gap could be greatly reduced.

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