Attracting and retaining the right talent remains a key challenge facing employers in Canada.
According to Mercer’s 2026 People Risks Report, the top concerns around labour shortages in Canada include skills mismatches between available employees and required roles (40%), increased labour costs due to competition for talent (35%), and operational disruption from insufficient staffing (32%).
In this labour market context, employers are not just looking to fill roles; they need to attract and retain talent with the right skills and a long-term fit.
This is where pay equity comes in. While it is a legal requirement for many employers in Ontario, pay equity can also reflect an employer’s commitment to equitable compensation practices, which plays a key role in attracting and retaining the right talent in a competitive labour market.
Talent Attraction
Research from Great Place to Work Canada (2025), based on 125,000 employee responses across multiple sectors, found that fairness and inclusion received an average positive score of 93%. This highlights their importance to employee belonging, well-being, and performance.
Fairness and inclusion can be advanced through various workplace practices, including equitable compensation practices such as pay equity, which ensures employees receive equal pay for work of equal value.
Against this backdrop, implementing and communicating pay equity can signal that an employer values fairness, inclusion, and equitable practices. Employers can make this visible by highlighting pay equity in job postings, career pages, and broader employer branding. This can strengthen the employer’s appeal to the right talent who prioritizes these values when considering employment opportunities.
Talent Retention
Attracting the right talent is only part of the challenge; retaining them is equally important.
When employees believe pay practices are equitable, they are more likely to stay with their organization. In contrast, perceived pay inequities can increase employee turnover.
A 2023 ADP Canada survey found that 63% of Gen Z respondents and 53% of Millennials would consider leaving their roles if they experienced gender-based pay inequities.
The cost of them leaving can be high. A 2026 Express Employment Professionals–Harris Poll survey found that Canadian businesses spend an average of $30,680 per employee annually on turnover-related expenses, including recruiting, onboarding, training, and lost productivity.
By implementing pay equity, employers can reduce employee turnover costs.
Conclusion
Pay equity is more than a compliance obligation. It can serve as a meaningful way to attract and retain talent.
As employee expectations of fairness, inclusion and equitable pay practices in the workplace continue to evolve, employers have an opportunity to go beyond compliance and make pay equity a visible part of their talent attraction and retention strategies.
Pay equity is a legal requirement for public-sector employers and private-sector employers with 10+ employees in Ontario. For more information on obligations and compliance, visit: https://payequity.gov.on.ca/i-hire-in-ontario/
