BUSINESS/ECONOMY

Legislating fair wages

ANN WALMSLEY July 20 1987
BUSINESS/ECONOMY

Legislating fair wages

ANN WALMSLEY July 20 1987

Legislating fair wages

At Toronto's Electro Arts Ltd., it is mainly women who make the circuit boards for

the company’s sophisticated electronic telephone-line equipment. Across the floor, it is mainly men who assemble the housing for the circuit boards, a job that requires some heavy lifting. The circuit-board makers earn about $7.25 an hour, while the assemblers earn about $7.50—a wage gap of roughly $500 a year. But

under Ontario’s controversial new pay equity legislation, Bill 154, which has passed through the legislature and now awaits official proclamation, the province’s Pay Equity Commission will ask Electro Arts president Robert Zappacosta to determine if the two jobs are comparable in worth. If they are, he

will have to begin paying his female employees $7.50 an hour. As a result, he said, his business could suffer. Declared Zappacosta: “How can I compete with someone in North Carolina who does not have this albatross?” The controversial Ontario pay equity bill is the first legislation in North America that requires employers to go through a government-dictated

process to guarantee women equal pay for work of equal value in the private sector as well as the public sector. Ontario’s three political parties gave unanimous consent to its passage last June 15. But the reception among many members of the Ontario business community remains icy. And many analysts predict that the main beneficiaries will be management consultants, who will be called on to determine the relative

value of specific jobs. Under the new legislation, employers will have to implement a system for comparing the value of jobs dominated by women with those predominantly held by men. Using four criteria—skill, effort, responsibility and conditions of work— managers may find themselves weighing

the value of executive secretaries against janitors, industrial fabric cutters against seamstresses and parking lot attendants against clerks. If a wage gap exists between jobs deemed to have equal value, the company must bridge it by increasing the pay for the lower-paid female worker at a rate of one per cent per year, beginning three to six years after the

bill becomes law—a process that could take decades. But public-sector employers, including governments, schools and hospitals, will have only five years to attain wage parity between males and females. A few business leaders have voiced a desire to abolish socalled pink-collar ghettos of low-paid women workers and correct pay inequalities based on sex. Indeed, executives at Spar Aerospace Ltd. in Toronto, one corporation that supports the bill, claim that they have already eradicated gender bias from the workplace. But other company executives charge that the legislation will tamper unfairly with competitive market forces, harm industry and even hurt female employment levels in the long run. And the law’s most caustic critics say that it will do more to benefit consultants than it will for women’s wages. Said John Crispo, a

professor of industrial relations at the University of Toronto: “This is a bigger boondoggle for consultants than the Charter of Rights and Freedoms is for lawyers.” The Canadian Federation of Independent Business (CFIB) is continuing to lead criticism of the bill on the grounds that arbitrary job evaluations will replace the law of supply and demand. The federation argues that evaluators often disagree about the worth of the same job, and that evaluation is therefore unworkable. It cites a 1986 study published by the U.S. public policy journal Policy Review which compared three publicsector jobs in four states. The study revealed that a data entry operator would rank first ahead of a laundry worker and a secretary in Minnesota, but second in Vermont and Washington and only third in Iowa. Concluded the study’s authors: “Nonbiased job measurement is impossible.” Still, Pierre Vallée, president of the Toronto-based management consulting firm of Stevenson Kellogg Ernst & Whinney, said that there are job evaluation methods that would eliminate those differences. Said Vallée: “If people are applying the same evaluation tool consistently, they should come to the same conclusion.” The process of hunting for a qualified consultant is increasingly confusing as entrepreneurs brandishing an array of job evaluation plans begin to enter the new market. The Institute of Certified Management Consultants of Ontario requires three years of experience in the job of man-

agement consulting and completion of a series of exams. Still, Nadine Winter, a director of job evaluation consulting at Hay Management Consultants in Toronto, said that many people in her industry “simply hang out a shingle, print a business card and begin operating” without government approval.

But companies that pay for bad advice, and act on it, could discover that they must revise their pay scales later to comply with the law. Said David Glennie, a senior policy adviser on pay equity with the Ontario Women’s Directorate, a provincial body that examines policy issues relating to women: “A concern we have is that some people will see this as a good opportunity to make a quick buck.”

The costs of using a consultant, good or bad, can be steep. At General Motors of Canada Ltd., which has 48,000 employees, most of them in Ontario, officials say that they expect to pay about $1 million to hire a management consulting firm and reclassify existing personnel. And after paying consulting fees, companies would still have to pay for employees’ salary adjustments. In the case of General Motors and other national corporations, the wage increases would affect employees across the country because the company’s salary programs are national.

In an attempt to reduce the consulting cost to individual companies, some industry associations have hired specialists to grade typical jobs in that business and prepare a kit of guidelines. The Toronto-based Apparel Manufacturers Association of Ontario, for one, is paying the Coopers & Lybrand Consulting Group between $15,000 and $30,000 to develop a ranking system for about 25 jobs ranging from patternmaker and shipper to sewing-machine operator and accountant.

Experts say that the introduction of pay equity laws will prompt some companies to reduce the number of employees in order to fund pay increases for women. And they say that other companies may attempt to place both men and women in some jobs to avoid female-dominated positions. But the frustration remains unabated among some employers who intend to comply with the legislation. Said Zappacosta: “This will create a monstrous bureaucracy of pay police.” And other provinces, particularly Manitoba, where pay equity in the private sector was part of the NDP government’s platform in the March, 1986, election, will keep a close watch on Ontario’s experience.

— ANN WALMSLEY in Toronto