Question/Problem Definition
Equal pay is one of the most pertinent issues in labor laws and regulation. Most governments across the globe have institutionalized legislation that aim to safeguard their citizens and ensure that they are well compensated for their talents regardless of their origin, race, gender and other distinguishing characteristics. However, this is not usually the case. In spite of having such laws, the labor market especially the private sector is far from realizing and implementing equal pay. The state is even worse in developing countries where most women employees do not earn even half as much as their male counterparts do. Developing countries are also reading from the same script. For example, the American film entertainment industry popularly known as Hollywood is grappling with equal pay cases. Actresses, film directors and other female players in the industry have over the years threatened to down their tools if they are not compensated just as much as men.
Apart from gender, employees are also unfairly paid due to their race and their origin. For example, immigrants doing odd jobs in the United States are paid lower than other people born in the US doing such jobs. A study also found that immigrants and Canadian-born were not equally paid i.e. immigrants were paid lower irrespective of the job type. What brings about these differences in payment? Why are female employees being paid less than the male ones? What roles do these physical distinguishing characteristics play in labor compensation? This paper thus presents an analysis of the Canadian labor market examining the earnings differentials and other discriminatory practices found in the market. The essay will show; an examination of the existent literature on the subject, a succinct analysis and conclusion that will provide any remedial assistance on the issue.
Economic Theories
Human Capital Theory.
This is one of the earliest theories that tried to explain the reason in earning differentials especially between men and women. The basic tenet of the theory is training and acquisition of new skills. It suggests that people’s inclinations to acquire new skills widely depends on the returns from such investments (Holmes, 1976). For example, employee A will be willing to get trained and gain new skills if he/she knows that he/she will get returns from the time and money invested in training. Female employees anticipate less returns from these skills compared to male employees (Holmes, 1976). This is because working women have comparatively more breaks from work than male workers e.g. maternity leaves (Holmes, 1976). Businesses and companies also shy away from employing women because they anticipate lower returns on their training and development investments (Holmes, 1976). This theory, in spite of its continued academic application, provides limited explanation on gender-based earning differentials.
Occupational Segregation
Although it cannot be termed as a theory, occupational segregation can be used to examine unequal pay between men and women. This framework suggests that women are paid lesser than men. Segregation occurs in two ways; vertical and horizontal. Vertical segregation exists when men have the highest paying positions within the same job group (Mueller, 2009). Horizontal segregation occurs when women are given an array of low-paying jobs that require less skills (Mueller, 2009). The female occupations are referred to as 5C’s i.e. catering, caring, cleaning, cashiering and clerical work (Canadian Women Foundation, 2016). These jobs are low-paying because they are usually part-time and discrimination in the labor market can lead to excessive supply of employees for such jobs (Canadian Women Foundation, 2016).
Ethnicity-based Earning Differentials.
There are different studies that comprise of comparable examinations that incorporate a local versus immigrant earnings measurement. Pendakur and Pendakur (1998) inspected wage differences amongst ethnic groups and amongst whites and visible minorities given information gathered from the 1991 Public Use Census Microdata File. They found that there are significant compensation differentials amongst whites and between whites and visible minority communities for both males and females (Pendakur & Pendakur, 1998). Compared to locally-born white men, noticeable minority and Aboriginal men encounter a compensation gap of 8% and 12.5% among Canadian-conceived people (Pendakur & Pendakur, 1998). Migrant white men and visible minority men experience wage impediments of 2% and 16% separately. Interestingly, Canadian-born, visible minority ladies face no pay gap, except for native women with a 7% difference. There are 1.4% and 9% differentials for migrant white and visible minority women in examination with local conceived white ladies (Pendakur & Pendakur, 1998). By analyzing the pay differentials for all ethnic gatherings, whether they are whites or visible minorities, the outcomes additionally recommend that the visible minority class may misdirect as a marker of monetary separation on account of the multifaceted nature of ethnical income differentials. Hum and Simpson (1999) and Pendakur and Pendakur (2002) establish that these earnings differentials are as result of difference in skills.
Analysis
Men and Women
According to a report released by United Nations Human Rights, there still exist inequalities among men and women including a wide pay gap in Canada. This pay gap has a disproportionate effect on women who work in low income jobs, women from minority communities and even indigenous women (Canadian Women Foundation, 2016). In 2014, Canada had the seventh highest gender pay gap amongst other 34 OECD countries (Canadian Women Foundation, 2016). Over the past thirty years, the number of women in formal employment in Canada has moved upwards from 42% to 60% (Canadian Women Foundation, 2016). This is one of the most historic changes that has taken place in the Cenomanian society over the past century. However, governments and employees have not been able to respond effectively to this rapid growth. This is because of the ever increasing gender pay gap.
As we have established earlier, most women are employed in jobs that are called the 5C’s. These jobs do not often require any expertise since they are related to home chores that women are already familiar with. Since women already conduct this jobs for free at home, they are not paid much at work. Women are employed in low-paying occupations and low-paying industries (Patel, 2016). The variety of jobs which women can do in Canada is very limited. For example, close to 66% of the female work power is concentrated in education, nursing and human services and clerical work (Patel, 2016). Women aged 25 to 54 represented 22% of the Canada's minimum-wage paying jobs in 2009, more than twofold the extent of men in the same age group (Patel, 2016).
Also, about 70% of part-time workers in 2013 were ladies, an area that has stayed relentless for three decades (Canadian Women Foundation, 2016). Women working in such little maintenance or impermanent employments are significantly less prone to get advancements and training than those in all-day jobs.
Why then do women prefer to work in part-time jobs? They prefer these jobs because of the flexibility that come with them. Since most high-paying jobs are not time flexible and have strict leave policies and little child care allowances, women resort to part-time jobs to take care of their children and other domestic responsibilities (Patel, 2016). These societal and roles in marriage, as explained clearly later in the paper, result to interruptions in employment and thus have an adverse impact on income.
Similarly to the human capital theory, women are paid less because they have less returns on training investments compared to men. This is as a result of the numerous breaks that women take from work compared to men (Mueller, 2009). The hypothesis is that marriage plays a critical role in employment (and breaks from work) and consequentially in compensation (Mueller, 2009). Canada just like many countries is a patriarchal society. Men have for a long time been considered the bread winners of the society (Holmes, 1976). However, the community is trying to shift from this trend and more women are moving from being homemakers to search actively for meaningful employment (Holmes, 1976). Gender roles especially in marriages are unequal and women still remain confined in the house.
Immigrants and Canadian-born
When it comes to immigrants and earnings differentials with Canadian-born, the main reasons for the pay gap is skills. The small income of immigrants is frequently ascribed to the specificity of human capital to the nation from which it comes from, the contention being that abilities created through training and experience in the source country cannot be specifically exchanged to the host nation (Canada) (Stelcner, 2000). Leading to highly qualified foreigners holding low-paying employments (Stelcner, 2000). Another contentious issue is that Canadian businesses oppress migrants, that is, they pay foreign specialists an amount that is very low compared to Canadian-born employees (Stelcner, 2000).
Keeping in mind that the end goal is to gauge the impact that expertise levels has on income, Bonikowska, Green and Riddell (2008) initially analyzed the relationship between profit and various components that affect profit levels. These different variables were; years of work experience, level of education, legal status of the immigrant, duration since coming to Canada (for migrants) and having a first dialect other than English or French.
The investigation established that male migrants got weekly income that was less than half of what Canadian-born employees, with the same level of aggregate experience and training, got. For migrant women, the span of this impact was to some degree lower, however the rift was still substantial, at around 44% (Bonikowska, Riddell, & Green, 2008). In the years after immigration, immigrants’ income ascended at rates of around 2.5% (men) and 2.8% (women) more every year contrasted with Canadian-born specialists. However, over time this ‘catch-up to Canadian-born’ has reduced (Bonikowska, Riddell, & Green, 2008).
Part of the clarification for these distinctions is that migrants' income upon arrival to the Canadian work market reflected low, or even zero, returns to their professional experience. However, when just their Canadian work experience is checked, immigrants' income were more like those of the Canadian-born with similar years of experience (Bonikowska, Riddell, & Green, 2008). Subsequently, the authors come to the conclusion that, a noteworthy source of low income rates among migrants, particularly men, is the powerlessness to exchange human capital obtained in their nation of origin to the Canadian work market. Later, the income gap with the Canadian-born starts to get narrower as they increase Canadian work experience.
An essential inquiry is whether immigrants get lower returns in the job market for their abilities than do the Canadian-born. The confirmation is that this is not the situation. Truth be told, male migrants get a higher rate of returns to their aptitudes, with income increments for men at 37% related to a 100-point increment in expertise levels, contrasted with an increase of 24% for Canadian-born men (Lamb, 2013). Besides, the gains associated with skills were most astounding for male workers who had gotten their training abroad. For ladies, the income increments connected with an expansion of 100 points in expertise levels were equivalent to those of Canadian-born ladies, at 28%. Generally speaking, then, immigrants who completed their education before entry into Canada got considerably more returns to skills than did locally-born Canadians.
Conclusion.
For women to be able to compete fairly with men, the Canadian sector has to be levelled to a fair playing ground. Women and men have to be able to secure similar job tasks that pay them equally. Women should be given a chance to enter into high-wage occupations. The private corporate sector should be structured in a way that it does not create any impediments for women to secure the top most jobs. Young girls should also be encouraged to pursue STEM (Science, Technology, Engineering and Mathematics) subjects and careers which have over time proven to be the highest compensating. Systemic discrimination towards women especially in fields that are dominated by men should also be discouraged. For example, gender-discriminating stereotypes which affirm that there are specific jobs for men and women should not be entertained. Women do have the academic qualifications and professional requirements necessary to succeed in a particular job.
The finding that skills significantly affect income proposes that lower immigrant expertise levels may help in comprehending immigrant/Canadian-born income differentials. In the case that migrants had similar skills as the Canadian-born, the income differentials between high school-educated workers and local conceived Canadians would contract by around 13% to 16%. This change would turn the 11% income differential of migrant men with high school education into a 5% advantage and would raise the benefit of high school-taught female workers over their Canadian-born counterparts to just about three times that size (Bonikowska, Riddell, & Green, 2008). Likewise, this change would decrease the foreigner income inconvenience among college taught men considerably and would take out the 19% differential among college-educated ladies (Bonikowska, Riddell, & Green, 2008). It is work experience in Canada that tallies toward earnings development. This is especially true for immigrant men. At the point when just their Canadian work experience is checked, foreigners' income are more like those of the Canadian-born with similar years of experience. Bonikowska, Riddell and Green (2008) infer that low returns to foreign professional experience assumes a significantly bigger part in clarifying contrasts between the income of migrants and Canadian-born men than do differences in aptitude levels.
References
Bonikowska, A., Riddell, W., & Green, D. (2008). Literacy and the Labor Market. Ottawa: Statistics Canada.
Canadian Women Foundation. (2016). The Facts about The Gender Wage Gap In Canada | Canadianwomen.org. Canadianwomen.org. Retrieved 14 August 2016, from http://www.canadianwomen.org/facts-about-the-gender-wage-gap-in-canada
Holmes, R. (1976). Male-Female Earnings Differentials in Canada. The Journal of Human Resources, 11(1), 109. http://dx.doi.org/10.2307/145077
Hum, D. & Simpson, W. (1999). Wage Opportunities for Visible Minorities in Canada. Canadian Public Policy / Analyse De Politiques, 25(3), 379. http://dx.doi.org/10.2307/3551526
Lamb, D. (2013). Earnings Inequality Among Aboriginal Groups in Canada. J Labor Res, 34(2), 224-240. http://dx.doi.org/10.1007/s12122-013-9158-0
Mueller, R. (2009). Male-Female Earnings Differentials in Canada: Where in the Earnings Distribution Do They Exist?. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.2256128
Patel, A. (2016). There's A Surprising Reason Canadian Women Earn Less Than Men. The Huffington Post. Retrieved 15 August 2016, from http://www.huffingtonpost.ca/2016/03/08/canada-gender-pay-gap_n_9393924.html
Pendakur, K. & Pendakur, R. (1998). The Colour of Money: Earnings Differentials among Ethnic Groups in Canada. The Canadian Journal of Economics, 31(3), 518. http://dx.doi.org/10.2307/136201
Stelcner, M. (2000). Earnings Differentials among Ethnic Groups in Canada: A Review of the Research. Review of Social Economy, 58(3), 295-317. http://dx.doi.org/10.1080/00346760050132346
