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Understanding the Gender Pay Gap

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Understanding the Gender Pay Gap Figure 1. Mean gender pay gaps using monthly earnings, selected countries by incomegroup 1.Meangenderpaygapsusingmonthlyearnings,selectedcountriesby Figure 1 a) High-income hasbeenlittlechange. countries whileinothersthere over 45 per cent to hardly any difference (see figure 1). The gender pay gap has been reduced in some ahighof variationsbetweencountries,from large are theworld.There 20 percentlessthanmenacross continueto bepaidabout that womenonaverage estimates (ILO) The InternationalLabour Organization the gender gap pay Understanding 40 45 50 35 30 20 25 15 10 -5 0 5 This brief is based on findings from the ILO report on theILO This briefisbased on findingsfrom Average Netherlands Republic of Korea United Kingdom Switzerland Australia Estonia Norway Canada Argentina Italy Women inBusiness andManagement:Thebusinesscase forchange Women United States France Spain Uruguay Women in Business and Management inBusinessand Women Czech Republic 1 Sweden Finland Belgium Slovakia Chile Luxembourg Portugal Poland Malta Cyprus (Geneva, 2019). (Geneva, Lithuania Latvia Hungary Slovenia Panama (b) Upper-middle income 50 45 40 35 30 25 20 15 10 5 0 Average Armenia (c) Lower-middle income South Africa 50 45 Russian Federation 40 35 30 Peru 25 20 Mexico 15 10 Brazil 5 China 0 -5 -1 0 Bulgaria Paraguay Turkey Average (d) Low-income Albania 50 Pakistan Costa Rica 45 40 35 Ukraine Romania 30 25 Namibia 20 Sri Lanka 15 Jordan 10 Indonesia 5 Ecuador 0 Thailand Mongolia Source: ILO: GlobalAverage wage report 2018/19: What lies behind the gender pay gaps (Geneva, 2018), p. 25. Egypt Viet Nam Sie rr Tunisia a Leon eT 2 Women in Business and Management: Understanding the gender pay gap Bangladesh he G El Salvador ambia Cabo Verde Nepa Philippines l Mala wi Madagasc ar United of Ta Republic nz ania The gender pay gap is a measurable indicator of inequality between women and men. Most govern- ments have legislated to guarantee equality of treatment between men and women in remuneration. The ILO Equal Remuneration Convention, 1951 (No. 100) is one of the most highly ratified conven- tions. Yet, the gender pay gap persists and the World Economic Forum estimates it will take 202 years to close the global gender pay gap, based on the trend observed over the past 12 years.2 Even when women advance to higher paying jobs in management, the gender pay gap is frequently found. Figure 2 shows that the gap ranges between a high of 43 per cent in Honduras to a low of zero in Albania, El Salvador and Thailand. In some cases, the gap is similar to the overall gender pay gap and in other cases it is larger or smaller depending on the economic sectors and industry profile of different countries, the kind of jobs where women or men are concentrated in the labour market, as well as gender norms that reserve management jobs mainly for men. 2 World Economic Forum: The Global Gender Gap Report 2018 (Geneva, 2018), p. 15. Women in Business and Management: Understanding the gender pay gap 3 Figure 2. The gender pay gap in management for selected countries, latest available year % Thailand 0 % El Salvador 0 % Albania 0 % Costa Rica 3 % Myanmar 4 % Bangladesh 6 % Greece 9 % Viet Nam 10 % Serbia 12 % Indonesia 15 % Mexico 16 % Mauritius 16 % Finland 18 % Norway 19 % Bolivia 20 % Ecuador 23 % Egypt 24 % Brunei Darussalam 24 % Australia 25 % United Kingdom 26 % Uruguay 27 % Republic of Korea 27 % Czech Republic 27 % Slovakia 29 % Argentina 29 % Jordan 30 % Brazil 30 % Rwanda 32 % Russia 32 % Switzerland 33 % Uganda 36 % Honduras 43 Note: Mean nominal percentage difference in monthly earnings of female and male managers, 2017 for all countries except Australia (2014), Egypt (2015), Jordan, Mali, Switzerland (2016), Brazil, Ecuador, Mexico, Serbia (2018). Source: ILOSTAT. 4 Women in Business and Management: Understanding the gender pay gap The gender pay gap needs to be considered in the context of overall gender inequality. It is one We have been talking about of the more visible examples of structural gender gender equality, and the ILO is discrimination stemming from the horizontal and invested here, and has been for vertical segmentation of labour forces. The greater a very long time. Equal pay for participation of women in the labour market and their equal value is in our constitution higher levels of education alone have proven to be from 100 years ago. We adopted insufficient to dismantle this segmentation. the key ILO conventions on equality 60 years ago. And yet we still have these problems like gender pay gaps and lower work What causes the participation. gender pay gap? It is clear to me that just adopting Under-representation in leadership. Far fewer laws, just doing the obvious good women than men are in management and leadership things – important as they are – positions, especially at higher levels. When women are is not enough. managers, they tend to be more concentrated in man- Guy Ryder, Director General, ILO agement support functions such as human resources Source: Nordic Labour Journal: ILO’s DG Guy and financial administration than in more strategic Ryder finds inspiration from problem-solving Iceland (12 Apr. 2019). roles. This brings down the average salary of female managers compared to that of male managers. Working hours. The gender pay gap is often a consequence of the different patterns of workforce engagement by women and men. In the Global wage report 2018/19: What lies behind the gender pay gaps, the ILO highlights that women work on a part-time basis more than men do in all but five of the 73 countries where data are available.3 This is often linked to women taking on more of the un- paid family responsibilities. On the one hand, women may be in part-time employment as a result of the lack of affordable and sufficient child care. On the other hand, women’s opportunities for full-time em- To reduce differences between ployment may be more limited than men’s, resulting in average earnings of men and women taking part-time employment. Part-time work women, we instead need to does not always provide benefits that are proportional tackle gender segregation in to those of full-time work, which can affect the remu- education and in our labour neration package over time. markets. Societies should do more Time out of the workforce. Women more than to address the long established men are likely to take career breaks from their employ- cultural reasons leading to a ment in order to raise children or care for the older or persisting gap. This means ill members of the family. This means that when they promoting gender neutral choices return to work, they are likely to have fallen behind in of individuals at all stages and in advancement and in remuneration. In many countries, the issue of part-time work and career breaks may not all aspects of their lives. arise as domestic workers and extended family help Source: BusinessEurope: Addressing the gender pay gap are readily available. Nevertheless, as labour markets – a BusinessEurope position paper (23 June 2015). evolve, this situation can easily change. 3 The report does not consider trends in productivity as part of the analysis due to the lack of data (see p. 23). The effect of productivity gaps could also partially explain gender pay gaps. Women in Business and Management: Understanding the gender pay gap 5 What causes the gender pay gap? Working hours Education Time out of the workforce Feminized jobs Under-representation in leadership Education. Women are surpassing men in most regions as tertiary graduates, and they are advanc- ing into the science, technology, engineering and mathematics (STEM) disciplines. Nevertheless, women still lag behind men in STEM areas that are associated with higher paid jobs. Even when women are qualified in STEM subjects, it can be challenging for them to obtain and maintain a job in these areas because they are traditionally male dominated. Feminized jobs. Occupational gender stereotyping results in certain jobs being held predominately by women, and that leads to “female jobs” being undervalued for purposes of wage rate determination. This brings down wages across the board for women compared to men as feminized occupations and industries tend to pay less than those occupations and industries dominated by men. Also, enterprises that employ a majority of women tend to have lower wages How you structure your than businesses employing mainly men. workforce is explicit, needs to be architected and you Unexplained parts of the gender pay gap. While have to know which things to there are a number of objective elements that explain do first. From our research the gender pay gap, research has shown that those conducted a few years ago elements do not account for the whole gap. There may on gender participation in be factors that are unknown or unaccounted for, but the workforce, we found that also there can be an aspect of discrimination on the across all economies that basis of sex, whereby a job done by a woman is per- increasing gender participation adds a significant amount to ceived as worth less than a similar job done by a man. all economies. If we get the In the absence of objective job evaluation methods big things right, like gender and practices, gender bias can easily occur in deter- participation, health and safety mining pay scales for women and men. standards, technology training standards, we would make a lot of progress. Benefits of closing the Vivian Hunt, Managing Partner, United King- dom and Ireland, McKinsey & Company gender pay gap Source: Speech given at the event “How to The benefits of women earning the same as men in- shape a future that works: Transforming the global response to the future of work”, clude an increase in their purchasing power which in organized by the Financial Times and the ILO turn helps stimulate consumer spending and the econ- (Geneva, 11 Apr.
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