The gender pay gap: If we’re to accelerate change we need a gear shift

People doing the same work have to get the same pay, regardless of gender. That is the law. So why is there a gender pay gap?

It’s because the gender pay gap is measured as the difference in the average hourly wage of all the men and all the women in an organisation, and is largely the result of different gender representation at different organisational levels.

It’s an area we are only now starting to get clarity on, thanks to the recent Gender Pay Gap Information Act, which requires organisations to report on their gender pay gap each year.

According to European Commission figures, the gender pay gap in the EU was 12.7 per cent in 2021. That means women earn on average almost 13 per cent per cent less per hour than men.

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Figures from Ireland were not available at that time but Eurostat figures from 2019 showed the gender pay gap for Ireland was 11.3 per cent. Closing that gap is important and not just for today but for tomorrow. Currently women retire earning 35 per cent less than their male counterparts, which has an impact on their income into retirement too.

Unfortunately, no woman alive will live to see the back of it. According to the World Economic Forum, if things continue at the current rate of change, the global gender pay gap will not close for more than 130 years. In fact, things may be worse than they appear. Research from professional services firm PwC here earlier this year, which analysed 500 companies that had reported, found a mean gender pay gap of 12.6 per cent.

Currently only firms with more than 250 employees have to report and the study found the widest gender pay gaps are in the finance, banking, insurance, legal and construction sectors. The lowest gender pay gaps are in retail, health and charity organisations.

The inequity is compounded by a mean hourly bonus gap which is almost twice as large, at 22.9 per cent. It reflects the greater representation of males in senior roles which, in turn, is linked to higher bonus payments.

“The more males a company has in these top quartiles relative to the number of females, the higher that company’s pay gap is likely to be,” says Doone O’Doherty, partner, people and organisation, at PwC Ireland.

Businesses are required to file their 2023 gender pay gap reports in December 2023, based on a snapshot date in June. Smaller organisations with 150 or more employees will have to report from 2024.

According to Eurostat, the gender pay gap is much lower for new labour market entrants but widens with age, most likely as a result of career interruptions women may experience during their working life.

According to a report by EU agency Eurofound – Understanding the gender pay gap: What roles do sector and occupation play? – the gender pay gap is larger among higher earners, highly educated employees and those with privileged labour market status related to age, job tenure, contractual arrangement, permanent, full-time contracts and supervisory responsibilities.

“Regarding part-time work, one of the key underlying factors explaining the persistence of a gender pay gap in the EU data shows that the share of female part-time workers in total female-employed people aged 15-64 in the third quarter of 2022 was higher – 28 per cent – than the share of men – 8 per cent – with women representing the highest shares in all occupational categories. This means that around one-third of employed women are working part-time in the EU, but (with) very significant cross-country variation,” says the report’s co-author, Martina Bisello of Eurofound – the European Foundation for the Improvement of Living and Working Conditions – which is based in Dublin.

“Very importantly, when asked about the reasons for working part-time, in 2022 women reported that they worked part-time to look after children or incapacitated adults more frequently than men.”

Sector and working time are both contributory factors. Women are more likely to be working in lower-paying sectors and to be working part-time, both of which are associated with lower wages. Women are also less likely than men to occupy supervisory roles associated with higher pay.

Furthermore, women are more likely to hold temporary contracts and less likely to work in companies covered by collective pay agreements.

Worryingly, though, the report finds that most of the gender pay gap “remains unexplained”.

Discrimination is, its authors agree, likely to be one of the main contributing factors, “albeit one that is difficult if not impossible to demonstrate using the survey wage data available”.

Instead it points to other studies which show women are three times more likely than their male peers to experience gender discrimination in the workplace. This can take various forms, including unfair promotion and demotion practices, which are relevant in terms of gender pay differentials.

But, the authors point out, there are other, unobservable factors, such as the greater likelihood that the careers of working women are disrupted primarily as a result of care-related leave, or withdrawal from the labour market.

The answer may be not just to encourage more women into higher paying areas such as Stem careers but to also encourage more men into areas that have traditionally been female dominated.

In the meantime, barriers to full-time employment should be removed for all workers who desire to work more hours, so that women may avoid the part-time pay penalty.

“Having caring and family responsibilities is the main reason that women are employed part-time rather than full time. In this context the availability and affordability of care services for children or ill, disabled or elderly adults, plays an important role,” it finds.

Improving the work-life balance of workers by rebalancing the division of paid and unpaid work between men and women is another line of attack, it says, allowing women to have the same professional opportunities as their male counterparts.

“It’s a very complex issue that can’t be tackled from one angle only,” says Bisello. “At the end of the day it always boils down to freedom of choice. But you have to have a choice.”