Gender Pay Gap in the Modern Workplace

Future of Work

Breaking down the “what,” “how” and “why” of the gender pay gap.

Actresses in Hollywood have spoken up against it. Politicians have vowed to resolve it. And governments across the globe have implemented policies to address it. It is no wonder then that, over the last decade or so, “Gender Pay Gap” and “Equal Pay” have become mainstream topics of conversation. Here’s everything employers and employees need to know about the issues as they navigate an evolving workspace.

Gender Pay Gap and Equal Pay

Although used interchangeably, the terms “Gender Pay Gap” and “Equal Pay” denote two related but distinct concepts.
Equal Pay refers to individuals “being paid the same for like work, work rated as equivalent or work of equal value,” regardless of their gender. In short, equal pay for equal work.
On the other hand, according to a Mercer Report, Gender Pay Gap is defined as “the difference between the gross hourly earnings for all men and the gross hourly earnings for all women.” Calculated using six parameters (including pay gap mean and median, bonus pay proportions, and quartiles), the gender pay gap is essentially a profile of the workforce that reflects company hierarchy and the position of women.
One of the biggest reasons for the existence of the gender pay gap is believed to be the hiring of men to senior roles. That is, a company whose senior roles are occupied mostly by men and whose junior roles are occupied mostly by women is bound to have a significant gender pay gap.

Several other socio-economic factors also contribute to the gender pay gap including direct pay discrimination, bias against mothers, occupational segregation, disability, age, racial bias and access to education.

The Story in Numbers

A recent study found that women in Britain are paid £260,000 less than men throughout their entire career. In other words, women earn only a shocking 59% of what men earn over their lifetimes.
The situation is only slightly better in the US where the average income of a male employee is $55,291 while that of a female employee is $45,097. For every dollar a man earns, a woman earns only 82 cents. This gap in income is worse for women of colour, who are consistently undervalued, forced to hold lower-paying jobs and deal with stagnated careers.
In India, the gender pay gap is much the same — men get paid Rs. 242 per hour while women are paid Rs. 196 (Rs. 46 less).
Although progress has been made, it has been slow and infinitesimal. For instance, from 2017 to 2018, India was able to close the gender gap only by a measly 1%.

A Systemic Issue or a Matter of Meritocracy?

Studies conducted across the world establish the gender pay gap as a universal problem. Overwhelming evidence also suggests that it is a structural issue, one that restricts women from advancing in their careers, thereby creating an opportunity gap.
However, there are still those who continue to dismiss its existence or downplay its effects. A recent study, for instance, found that 46% of American men believe that the gender pay gap is “made up to serve a political purpose.” Others claim that the gap is simply a matter of meritocracy.
The research, however, says otherwise.

It has been found that employers tend to undervalue degrees earned by women and often pay men more than women despite the latter being more educated.
A study of the Malaysian workforce found that women in the country were not only better educated but also displayed greater actual learning capabilities than men. In fact, in 2017, women constituted 64% of the student population at universities. However, according to a 2018 Salaries & Wages Survey Report of Malaysia, the median salary of a male employee in the country was RM 2,432 while that of a female employee was RM 2,227.

The Way Forward

Gender pay gap and unequal pay have often been ignored and dismissed as “women’s issues.” However, these are, in fact, a matter of fundamental labour rights. They also hold immense economic implications for society as a whole as there is a strong correlation between a country’s ability to close the gender pay gap and its productivity, its economic growth and competitiveness, as well as its ability to attract and retain talent.
Given that women form half of the working potential of the world, implementing fair and equal pay practices is crucial to allow them to fully participate in the economy and maybe even future-proof it.
Some organizations are slowly acknowledging that a diverse and inclusive workplace is good for business and that it contributes significantly to an improvement in financial performance. They are now actively taking steps to close the gender pay gap. For instance, they are promoting more transparent policies, including the publishing of information like salaries, workforce composition and gender pay gap, in order to ensure accountability. They are also changing hiring policies by refusing to base a new hire’s salary on their previous history, and are choosing instead to provide a salary range for the role in question. Further, they are encouraging decision-makers in the organization to use data and technology to make smarter, more objective decisions to help achieve their pay equity targets.

The World Economic Forum predicts that it will take 202 years to close the global gender pay gap. That is 202 years more of unfair labour practices, 202 years of restricted career opportunities for women, and 202 years of women being denied their rightful share of the economic pie.
Let’s hope that by working together we can prove the World Economic Forum wrong and achieve parity in pay within our lifetime.

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