Level the Paying Field: Economic recovery and pay equity

How far can government intervention go in closing the gender wage gap? Image: Shutterstock/Camilo Concha

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This article is part of a series in which OECD experts and thought leaders  from around the world and all parts of society  address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.

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Amid a global pandemic—causing unanticipated yet devastating regression in women’s labour market participation and a widening of the gender wage gap—global multilateral organisations came together to inaugurate the first ever International Equal Pay Day on September 18, 2020. 

This was an initiative led by United Nations members including Australia, Canada, Germany, Iceland, New Zealand, Panama, South Africa and Switzerland, with a total of 105 UN member states co-sponsoring the resolution to establish September 18 as “International Equal Pay Day.” Together with UN Women, the Organisation for Economic Co-operation and Development (OECD) and the International Labour Organization (ILO) make up the Equal Pay International Coalition (EPIC). EPIC advocates and organises for equal pay and promotes this day globally.

While women’s employment and wages plummeted with rising COVID-cases and lockdowns, we saw another phenomenon: a surge in the number of reports, studies and stories about women and the economy and the economics of inequity. Over the past year, we have coined the terms “she-cession” and “she-covery”, with governments and agencies globally talking about a “feminist post-COVID recovery”. My team and I wanted to know more about gender and pay equity’s resurgence as an imperative to post-COVID economic recovery. This is perhaps not surprising given that the economic impact to be derived from women’s equitable participation in the labour market and wage parity is large and measurable. Globally, McKinsey & Company’s Global Institute report found that narrowing the gender wage gap could add between USD 12 and USD 28 trillion to the global GDP.

Read more on the Forum Network: Four Building Blocks for a Gender Equitable and Sustainable Recovery by Elizabeth Hill, Rae Cooper & Frances Flanagan, University of Sydney

With this in mind, we wanted to learn what legislators globally have done to advance closing the gender wage gap (GWG), and what has yet to be done to level the paying field to support equitable economic recovery. We set out to identify countries that are succeeding in eliminating the GWG to understand how we can move closer to closing it here at home.

By overlaying four data sets—the OECD GWG 2018, ILO Global Wage Report 2019, Eurostat 2019 data, and the World Economic Forum (WEF) Gender Gap Report 2021—we considered the extent to which economies are developed with comparable data, while balancing a more diverse selection of countries to mitigate against western bias. The top performing counties we initially analysed include Belgium, Denmark, Norway, New Zealand, Sweden, Croatia, Luxembourg, Switzerland and Bangladesh.  While we are still working on the analysis, we can share three things we’ve learned so far about closing the gender wage gap:

  1. Government intervention is working. In countries where we see the GWG narrowing, governments have acknowledged it as a combination of labour and equity issues that cannot be left to the free market to regulate. Government interventions range from direct pay equity and pay transparency legislation to anti-discrimination and human rights policies. In many cases, countries rely on a suite of complementary policies that work together to address the complexities of the GWG.
  2. Regular GWG communication between the government and business is important. Many of the countries we examined that are succeeding in closing the GWG have regular and effective reporting practices that enable policy makers to monitor and analyse GWG data. This allows for agile policy and programme interventions that are responsive to trends in the data and address both longstanding and emerging inequalities.
  3. There is a limit to what government intervention can do. While legislation and policy directed at closing the GWG have been effective, about one-third of the GWG remains unexplained. The OECD and others have categorised these as factors of cultural stereotypes, deeply-rooted in constructed cultural norms, widely held beliefs about gender and discrimination. Discrimination has proven difficult to measure and there are significant questions about how government intervention can effectively address it.

The insights we’ve learned in our initial analysis give us hope that through equitable economic recovery policies, we can move closer to Leveling the Paying Field and close the gender wage gap globally. This has been our mission in Ontario, which has had the most advanced pay equity legislation for more than 30 years.  Our pay equity law continues to be internationally recognised as one of the world’s most effective laws in redressing the gender wage gap.

This is because of the comprehensiveness of our model, which combines legislative, collective bargaining, adjudicative and enforcement mechanisms to arrive at pay equity. It recognises that wage discrimination is not an individual problem, but rather a systemic problem that requires a systemic solution. For over 30 years we have succeeded in closing the GWG by 8%, with the GWG currently sitting at 12.2% in Ontario. Globally, the GWG remains at 18.8% throughout the world, ranging from 12.6% in low-income countries to 29% in upper middle-income countries.

International Equal Pay Day is more than just a reminder of the inequalities that persist in the world of work.

It is a call to action.

It is a moment to celebrate what has been achieved.

It is a call to all actors in the labour and economic policy spheres to take the need to address wage inequities seriously and design an equitable global economic recovery. 

The Ontario Pay Equity Commission is committed to this and has launched Level the Paying Field, a series of conversations with global leaders in the equity space, so we can engage with policy makers, legislators and activists around the world to support closing the gender wage gap.

Listen to Level the Paying Field, a series of conversations with global leaders in the equity space

Related Topics

Gender Equality Tackling COVID-19 Income Inequality

Kadie Ward

Commissioner and Chief Administrative Officer, Pay Equity Commission, Ontario Ministry of Labour, Training and Skills Development

Commissioner Ward is a seasoned executive whose career has been characterized by successful collaboration across public, private and not-for-profit organizations to design and deliver inclusive economic growth strategies. Before joining the Pay Equity Commission in 2020, Commissioner Ward worked on implementing aspects of the Federal Government's "Feminist International Assistance Policy" where she increased women's participation in international trade, the labour market as well as equitable participation of men and women in their local economy. Her expertise has taken her around the world working with legislators to establish programs and legislation that support women-led micro and small enterprises.  She is a Queens’s Diamond Jubilee Medalist, recognized for her work contributing to significant economic improvement in various Canadian cities. Commissioner Ward firmly believes that equity and inclusion are the foundation for sustainable economic prosperity.

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