Question

what is the negative and positive impact of pay equity on the employer and employees

Answer 1

Pay equity is applied in the organization as per the guidelines of pay equity act and it is a mean to eliminate the gender discrimination. So, with a perspective of an employer, implementing a pay equity acts as a positive impact because it brings employer branding and enhances reputation in the job market as best employer with superior HR practices. It will help the employer to attract good talents and it is very valuable with strategic perspective. The second positive impact to the employer is that they comply with the laws and eliminate gender discrimination. Though the negative impact is that it can increase the overall compensation amount to be paid to the employees. Further, the employer has to correct the compensation practices and ensure that gender discrimination does not take place.

Regarding the employees, the positive impact is that they get pay equity with elimination of gender discrimination specifically for female employees and their jobs are compared with the male counterparts when compensation is fixed. The second positive impact is that it will prevent the exploitation of employees (specifically female employee) who are not paid a pay that she deserves. Pay equity will eliminate it. So, despite pay equity act not equivalent to equal pay for equal work, it makes significant improvement in wages paid to the female employees and wage gap reduces. The next positive impact is the increased level of labor participation by the female employees as they will be encouraged to work because they get pay equity.
There can be few negative impact for the employees also. With rise in wages, as a result of pay equity, the demand of workers will decrease. So, less number of employees will be kept in the organization and the unemployment rate will increase. There are male counterparts who can either demand higher wage or get demotivated at work. It affects the productivity negatively.