The gender pay gap refers to the difference in average earnings of people in the workforce based on their gender. Generally, the causes of the pay gap are made up of conscious and subconscious biases and discrimination. Even with treaties, policies and laws in place, it still exists, why is that?
Why does the gender pay gap exist?
According to the Economic Policy Institute, it is believed that women are generally paid 20% less than men across the world. This cuts across most industries, and has existed for decades. One can attribute over a dozen reasons why it is still an issue today, however, we will focus on 3 main issues in this article.
3 causes of the gender pay gap
- Underrepresentation in leadership
- Working Hours
- Discrimination
Underrepresentation in leadership
Undeniably, evidence from the World Economic Forum’s Global Gender Gap Report shows that there is an imbalance in the demographics as you climb up the corporate ladder. In effect, there are more males involved in management positions as compared to females, and this translates in the pay, as senior workers receive a higher pay than junior workers.
Working Hours/Flexibility
Societal expectations of women in the past implied that women had to bear the responsibility of caring for their family, as the men were expected to provide financially for their families. With this notion, a lot more women took on roles that provided a level of flexibility to be able to care for the family. This was also often attributable to availability and cost of child care.
Currently, as society changes over time, expectations and responsibilities have also changed. Furthermore, with offices offering remote work more recently, it has contributed to reducing the imbalance. Although, admittedly, it is not enough to curb the gap.
Discrimination
The impact of discrimination in the gender pay gap is seen in the rapidly increasing efforts of organisations prioritising other aspects of their business beyond financially rewarding schemes. In recent times, most can attest to the fact that there has been an increase in demand regarding Diversity & Inclusion initiatives. It is evident that discrimination goes beyond gender, and affects race, religion, ethnicity amongst others. Also, discrimination triggers equal pay as an issue, where men and women are paid different amounts for the same work done.
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How can we close the gender pay gap
The gender pay gap exists for a myriad of reasons as expressed above. With that, it is an issue many are actively tackling, through policies and laws by the government and other institutional bodies. Closing the gap is beneficial as it contributes to reducing the risk of poverty, especially as people age, due to pension. Furthermore, it provides a win-win situation as it increases the spending habits which stimulate the economy.
The reason for the gap will affect how to close the gap, however, there are some actions that can be taken as a blanket approach.
Companies can become more transparent in disclosing the salary ranges for certain positions, as it is often found that women do not negotiate for salaries as high as their male counterparts. Furthermore, they can disclose the metrics being used in decision making when it comes to promotions as it can reduce pay disparities.
In terms of recruitment, it would be recommended that companies move towards a more inclusive talent recruitment body. Such representation in the team translates into the decision making for the new hires. This would help reduce the bias when it comes to making decisions and increases accountability of the decision makers.
What is gender pay reporting
This is when employers are required to publish their gender pay gap data yearly. In the UK, this does not apply to all companies. It only becomes mandatory where the organisation has 250 or more employees.The required employers are segmented into two groups, public-sector employers, and private and voluntary sector employers. After finding out whether you are required to report your gender pay gap, you need to calculate the figures and then publish the report.
What to do as a business
- Check whether your company falls into any of the categories required to publish a report
- Understand how to calculate your figures
- Publish your report
The Gender pay gap has existed for centuries and unfortunately still exists. However, efforts are being made through legislations such as The Equality Act 2010 and the Gender Pay Gap Information Regulations 2017. It is an ongoing effort to reduce the gender pay gap that we hope to one day see at a minimal level.