Women, members of visible minorities and aboriginal people are significantly more likely to face wage discrimination in the private sector than the public sector, according to new research. The same study suggests the public sector “wage premium” results from fairer pay — not higher salaries.
A report released Wednesday by the Canadian Centre for Policy Alternatives compares the wages of full-time Canadian workers in both sectors. It found that university-educated aboriginal workers in Canada were hardest hit by pay discrimination: their salary in private employment was almost half that of their non-aboriginal counterparts. In the public sector, that gap narrowed to 14 percent.
Kate McInturff, a senior researcher at the CCPA and co-author of the report, said she was “shocked” by the findings, on aboriginal employees in particular.
“I did not expect to see that gap to be as big it was, and I have never seen a wage gap that gets bigger for the more educated group of workers. In almost every other case — certainly with women — you see the more educated the woman, the smaller the wage gap.”
But the research also found that women experienced greater discrimination in the private sector. There, university-educated women’s salaries were 27 percent smaller than men with equivalent qualifications. In the public sector, that figure was 18 percent. Similarly, the pay gap for visible minorities in the private sector was almost double that of the public sector.
Mary Cornish, of the Ontario-based Equal Pay Coalition, said her group “has been saying for years and years and years that the wage gap is higher for racialized women. There’s still a perception publicly that women have moved ahead, when the reality is still that there is a very significant gap, whether you’re in the public or private sector.”
Nonetheless, the CCPA report credits the public sector with reducing inequality more effectively because it enjoys higher levels of unionization, more legislated monitoring of pay equity, and better benefits.
“The private sector has a lot to learn from the public sector,” said the CCPA’s McInturff. “There’s no reason why you can’t bring those same solutions to the private sector — and in fact some (in the) private sector have.”
Several business-oriented think tanks have contested the way the public sector compensates its workers, however.
In Ontario, research released earlier this year by the Institute for Competitiveness and Prosperity found that most public-sector roles enjoyed higher wages than their private sector equivalents, resulting in a cost to the Ontario government of an estimated $1 billion per year.
The Fraser Institute has also criticized public-sector pay structures, with research showing that public-sector workers at all three levels of government receive, on average, 12 percent higher salaries than their private-sector counterparts.
“In the private sector, compensation for the most part is determined by market forces. In the government there isn’t that same type of discipline,” said Charles Lammam, associate director of tax and fiscal Policy at the Fraser Institute.
“It’s important for a whole host of reasons to ensure that people are compensated in a way that is based on some fundamental economic factors.”
However, the CCPA report says public-sector salaries are only higher for groups that would otherwise experience severe wage discrimination in the corporate world. For groups unlikely to experience discrimination based on gender or race, the report found government salaries were lower on average than their private-sector equivalents.
Almost 26,000 public-sector jobs have been cut in Canada over the past three years as part of the federal government’s austerity drive — a trend that McInturff called “worrying” for groups that experience wage discrimination.
“We can see in the study what market forces can do,” she said. “They are more discriminatory. That says to me, when it comes to fair pay, that we need some counter-balances to market forces.”