Globe and Mail

The pay equity debacle

Tuesday, May 21, 2002 – Print Edition, Page A19
The Globe and Mail

It sounded like a good idea at the time: equal pay for work of equal value.

What could possibly be wrong with that? Isn't an office clerk worth as much as a shipping clerk?

Ten years ago, the federal government set out to overhaul its entire pay scheme for all its unionized civil servants. The goal was equality for women. On orders from the Canadian Human Rights Commission, it would get rid of all those nasty gender-biased wage gaps and make the system fairer for everyone.

It didn't work out that way. Instead, the pay-equity plan grew into an administrative nightmare that threatened to devour the entire civil service. Instead of creating equity, it created new inequities. Instead of attracting and retaining talented new people to government, it threatened to turn the civil service into the worst place to work in all of Canada. Fortunately, it proved impossible to implement, and two weeks ago it quietly bit the dust. After 10 years of work and more than $100-million in startup costs, the Treasury Board declared the scheme "unworkable."

The idea of pay equity is rooted in the 1980s, when businesses were ordered to to stop paying women less than men for doing the same job. The Canadian Human Rights Commission, however, went further. It instructed Ottawa to implement equal pay for work of equal value, which is a different proposition altogether.

The civil service employs about 150,000 unionized people -- clerks and lawyers, statisticians and veterinarians, translators, computer programmers, biologists, librarians, economists. To implement equal pay for work of equal value, it had to come up with a way to compare apples and oranges and grapes and bananas and pomegranates.

Should a vet make more than a statistician? In the real world this question makes no sense. The market decides the value of their work. Under the new scheme, the government would decide.

And so it set out to create a master plan -- a universal yardstick for measuring the objective "value" of every job. Every job would be ranked according to a points system. A job would receive so many points for the "knowledge" component, so many for the physical component, and so on. People's salaries would be determined not by their occupation or by what private-sector firms were paying down the street, but by their point range.

You don't need a PhD in economics to figure out why this approach was doomed from the get-go. All you need is a simple grasp of market forces.

"It was an elegant model geared only to a particular piece of legislation which was very distant from the real world," says Bill Krause. He's president of the civil service union that includes economists. His union pointed out that points are worthless if you want to hire a computer programmer and someone down the street happens to be paying more for them.

There were other major problems. After the first 40,000 jobs had been rated, nearly all the high-tech jobs scored lower than expected. Computer programmers wound up with the same number of points as clerks and dockhands, and would have been paid far below market rates. Meantime, people doing essentially the same jobs wound up with different ratings. Thousands of professionals with university degrees discovered they'd be red-circled and might end up making not much more than clerical workers. The clerical workers, on the other hand, would be the best-paid clerks in Canada.

Rather than throw the plan out, the planners decided to iron out the wrinkles. All the job descriptions were sent back to be redone. More consultants were brought in. Professional writers were engaged to help the managers classify the jobs more accurately. None of them, of course, could fix the fundamental flaw, which is that supply and demand are impervious to master plans and point schemes.

"Labour market volatility was the one thing this approach couldn't handle," says Bill Krause.

The universal yardstick has been described as one of the biggest exercises ever undertaken by the federal bureaucracy. It chewed up colossal amounts of management time. And it was a total failure.

"We realize that because of the amazing diversity of jobs in the public service . . . that it is completely unworkable," said Treasury Board Secretary Lucienne Robillard.

In any case, the pay-equity overhaul was devised to fix a problem that's largely disappeared. Women are no longer disproportionately segregated into lower-paying ghettos. A gender wage gap still exists. But almost all of it is explained by women's different work patterns -- taking time out to have kids, working part-time instead of full-time, working shorter hours.

And speaking of economists, I asked Mr. Krause how many in the government are women. He looked it up, and told me it's exactly half.

Copyright © 2002 Bell Globemedia Interactive Inc.