Treatises On Equality

How Canadian banks are closing the gender gap

TORONTO–(BUSINESS WIRE)–DBRS Morningstar published a commentary titled, “Women at Canada’s Large Banks: Closing the Gap,” which focuses on labour force gender equity, women in leadership, and the pay gap at Canada’s big six banks.

Highlights of the commentary include:

• Although transparency is improving, there is still a lack of uniformity in reporting on gender diversity and pay equity at Canadian banks.

• Female labour force participation in the finance, insurance, real estate, rental, and leasing sectors remains strong despite disruption by the coronavirus pandemic, which caused a disproportionate number of women to leave their jobs at the onset of the pandemic. It is widely assumed that this was for women to take care of their families. Subsequently, women have gradually returned to the workforce.
• Pay equity legislation came into force in 2021 and banks will have to publish their findings and plans by 2024. This may help to gradually bridge the pay gap that currently sits at around 19%, according to DBRS Morningstar estimates.
• Banks continue to employ a high percentage of women in Canada and are at the forefront of efforts to promote gender equity in the workplace. Women make up more than half of the six large Canadian banks’ workforce; however, that proportion decreases at the executive and board levels.

“Gender equity measures are being implemented as part of a sea of change among financial institutions globally, and are also being supported by regulatory change,” says Maria Khoury, Senior Vice President, Financial Institutions.

Important to assessing gender diversity among financial institutions is transparency and reporting. The six large Canadian banks are making efforts to publicly disclose their gender diversity information and targets, which is beneficial to external parties when making assessments on these important issues.

Closing The Gap

Data shows that the impact on women in the workforce was immediate following initial coronavirus-related shutdowns, but subsequently, women have gradually returned to the workforce. Nevertheless, disruptions to the labour force caused by the pandemic have widened the wage gap despite equal pay efforts. In fact, the dollar wage gap (i.e., the difference in pay between males and females) has reached its highest level since 2000.

Specifically, at the large six Canadian banks gender equity measures are being implemented as part of a sea of change among financial institutions globally, and are also being supported by regulatory change. Issues that can be headwinds to career growth for women, including a stagnant wage gap, limitations on promotion opportunities, training and mentorship, parental and elder care leaves, and work flexibility are being addressed. In some instances, such as with workplace flexibility, trends that were slowly occurring were accelerated by the pandemic. In other cases, such as narrowing the wage gap, data shows that the pandemic resulted in a reversal in progress.

Important to assessing gender diversity among financial institutions is transparency and reporting. The six large Canadian banks are making efforts to publicly disclose their gender diversity information and targets, which is beneficial to external parties when making assessments on these important issues.

Women Left the Workforce at the Start of the Pandemic But Have Gradually Returned

At the onset of the pandemic, a greater proportion of women exited the workforce as compared with men. The likely explanation for this decline is that women generally shoulder a greater burden when caring for their families. With daycare closures and schools moving to online learning early in the pandemic, more at-home childcare was required. According to Statistics Canada, between February and April 2020, more women aged 25 to 54 left their jobs in the finance, insurance, real estate, rental, and leasing sectors than men.

Specifically, in the period of February 2020 through April 2020, there were 11% fewer women working in finance, insurance, real estate, rental, and leasing sectors over this same time period a year earlier. The dip was in contrast to what happened to male representation in these sectors, with the data showing an increase of 15% in February 2020 through April 2020 as compared to the same period of 2019.

Interestingly, following this steep decline through April 2020, women gradually returned to the workforce in the finance, insurance, real estate, rental, and leasing sectors and generally demonstrated steady improvement through November 2020. This ebb and flow seems to align with the outbreak of new variants, and can possibly be tied to school closures and family care challenges.

It is important to note that both women and men in the finance, insurance, real estate, rental, and leasing sectors fared better than the rest of the labour force, which experienced severe losses throughout 2020. This can be attributed to both the fact that banking and insurance were deemed essential services, and that most of the companies in these sectors already had mechanisms in place to allow for remote work as part of their disaster recovery plans. Therefore, it was less onerous for banks to switch to a “work from home” model than companies in other sectors, which meant that the effect of the pandemic on both male and female employees was not as pronounced.

Despite continued provincial lockdowns as Canada battled the third and fourth waves of the pandemic in 2021, the growth of the female labour force in the finance, insurance, real estate, rental, and leasing sectors continued in line with growth of the male labour force. Companies were able to attract increased female participation by offering flexible and remote working options. Overall, between February 2019 and January 2022, the male labour force in these sectors grew by 11% whereas the female labour force increased by 8%. This leaves gender representation unchanged in these sectors with women making up 53% of the labour force while men make up the remaining 47%, which is in line with pre-pandemic gender diversity.

Challenges Remain Unequal

Increased scrutiny from regulators and investors on gender diversity and pay equity is driving change across employers. The impact of the pandemic may have accelerated these efforts given the disproportionate impact on women. While data shows the return of women to the workforce following the pandemic-related drop, the wage gap has considerably increased. The six large Canadian banks are making efforts to publicly disclose their gender diversity information and targets. While improving, there still is a lack of uniformity amongst those disclosures. Pay equity reporting will add an additional layer of complexity and, although more transparency is better than none, it will be a while before investors can make a true apples- to-apples comparison on many factors regarding gender equity and diversity.