Canada just gave women a pay rise

"Gender" is not a word normally associated with budgets. That is, unless you happened to hear it mentioned a whopping 358 times in Canada’s 2018 statement from Finance Minister Bill Morneau.

Prime Minister Justin Trudeau is well known for being a feminist and wanting to prioritize women’s equality. And his rationale is based on economics as well as ideology.

"I’m talking about hiring, promoting and retaining more women,” he explained at this year’s World Economic Forum Annual Meeting. "Not because it’s the right thing to do, or the nice thing to do, but because it’s the smart thing to do."

In the last 40 years alone, the increasing number of women in the workforce has accounted for 33% of Canada’s real GDP per capita growth, according to the Canadian government, driving economic growth, boosting family incomes and helping more families to join the middle classes.

And research from RBC Economics estimates that if men and women participated equally in the workforce, Canada’s GDP could be boosted by as much as 4%.

To that end, this year’s budget unveiled a raft of measures designed to get more women back into the workplace, and with higher wages to boot.

Closing the gap

Women in Canada earn on average 31% less than men, partly because they are over-represented in part-time, temporary and lower-wage jobs. But even after accounting for differences in hours worked, the median gender wage gap is still stuck at 12%.

The public sector will lead the way on wages, implementing a new law to enforce equal pay for equal work in federally regulated sectors.

“What we can do is lead by example,” Morneau said. “It is our hope that in doing so, all employers will reflect on the way in which work done by women has been too often undervalued.”

Nevertheless, the goal of overall pay equality is unlikely to make significant progress unless women are better represented at the top end of the career ladder.

Share of women in the Canadian workforce

In addition to the move towards pay equality, the budget also set aside $6.2 million for legal-aid funding to support victims of sexual harassment in the workplace.

And it will offer an additional five weeks’ paid leave for couples – on the premise that they share their parental leave – in order to increase the number of men who take time off after the arrival of a baby.

Currently, two-parent families can take 12 or 18 months leave after the arrival of a child, but 86% of the claims for parental leave come from women.

Embracing the deficit

Such changes inevitably carry a cost to the state purse. The extra time for parental leave, for example, will cost $1.2bn over five years. And the cost of ensuring equal pay for federally regulated organizations is also expected to be considerable.

This means that the government will continues to post annual deficits. It is currently projected to show a deficit of $14bn in the 2018-19 financial year, even though Trudeau’s liberal party pledged to balance the books by 2019 as part of its 2015 campaign.

Nevertheless, budgets with a gender focus are here to stay in Canada. The government has promised to analyse every budget decision from a gender perspective, as well as cementing this practice into law.

And the investments will surely pay off in the long run, if the new measures result in an expanding economy because of a greater number of women at work.