Discussions on the problems of gender inequality have been going on for decades. The difference in the earnings between men and women is called the gender pay gap. This gap is partly explained by different remuneration levels in traditionally female and male occupations, partly by education, positions held, and others. According to the latest ILO research on global wages and gender equality, the main causes of the pay gap are occupational segregation and gender segregation in industries and sectors of the economy.
Work performed by women is often underestimated and underpaid for two reasons: either because it duplicates work that women have traditionally done at home or because women are simply paid less for work of equal value. It is also essential to answer whether the presence of the gender gap affects economic growth or, in other words, whether reducing the gender gap will accelerate economic development. These questions are essential because the reality of modern socio-economic development poses them.
ILO researchers also talk about a more significant gender pay gap with the increasing age of workers. Across all EU countries, on average, the gender pay gap rises from 11.2% for workers under 30 to 17.4% for workers over 60 (Measuring the Gender Pay Gap 20). For men, upon reaching 55–60 years of age, a full-fledged working life continues, although they also feel the peculiarities of the pre-retirement period. In any case, at this age, the gender pay gap in favor of men no longer decreases. The dynamics of the gender pay gap may be related to the following reasons. At the age of 25–40, women are most likely to give birth to children. At these ages, the preschool period of child-rearing falls, requiring more attention and the presence of a woman at home, including sick leave, and a reduction in the opportunities for women to study during this period. Over the past decade, the age of the gender pay gap has shifted from 30–34 to 35–39 years.
Initially, the salaries of men and women were practically the same. When women raise children and care for their families in middle age, the gap is more significant than the average. It is women who look after other family members, do housework, which significantly inhibits or ultimately reduces their career opportunities, and at the same time, salary growth. Men, oppositely, do not face such a problem at any age. A 2019 ILO report shows that in Europe, a factory with a predominantly female labor force wages women by 14.7% less than a comparable factory with a male labor force (“Global Wage Report”). It will take 70 years to close the global gender pay gap (“Delivered by women”). In the study of KPMG Australia, the proportion of factors (drivers) that form the gender pay gap was estimated (Kitchen 10):
- Discrimination, gender stereotypes, and prejudices in recruiting personnel and making decisions on pay (the share is 39% of the gender gap).
- Breaks in the professional career of women (25%).
- Women and men are mainly employed in different economic sectors: there are areas in which female labor dominates with predominantly lower pay (occupational and industrial segregation) (17%).
- Part-time (part-time) employment (7%).
- Unpaid work, including housework to care for family members (7%).
- Woman’s age (3%).
- Work for the current employer (1%).
- Work in governmental and non-governmental organizations (1%).
In general, the share of factors related to family and children accounts for 39% of the gender pay gap. In terms of the gender economic gap, monthly wages tend to be higher than the hourly rate, as women, on average, work less than men. The economic inequality between genders refers only to differences in wages for workers. Consequently, it does not account for differences in earnings between people due to unemployment and unfinished contracts (“Delivered by Women”). For example, income from corporate profits or financial assets is excluded.
Since there are fewer women than men among entrepreneurs and investors, and non-wage incomes are higher than wages, the income gap (which includes all types of income) tends to be larger than the wage gap. According to estimates provided by the World Economic Forum in the Global Gender Gap Report 2020, the income gap is quite large: the average world income of a woman is about US $ 11,000 (purchasing power parity, PPP), while as the average male income is US $ 21,000 (PPP) (17). The gender pay gap should be viewed in the context of women’s underrepresentation in the labor market. Therefore, according to the ILO, the global gender gap in labor force participation is 27%, while in Arab countries, North Africa, and South Asia, it exceeds 50%.
According to the OECD (Organization for Economic Co-operation and Development), which monitors data on the status of gender inequality, the average gap in the countries of the Organization in 2018 was 12.7% (the calculation is based on the median earnings of men and women) (“Delivered by Women”); the Republic of Korea has the highest gender gap – 32.5% in 2019 (“Delivered by Women”); in Japan – 23.5% (2019); in Israel – 22.7% (2018); in Canada – 17.6% (2019); in the UK – 16.0% (2019); in New Zealand – 6.5% (2019) (“Global Gender Gap” 13). Considering the bridging of the wage gap stimulates more active involvement of women in the economy. The ILO estimates that reducing the gender labor force gap by 25% by 2025 could increase global GDP by 3.9%, or 5.6 trillion US dollars.
Therefore, closing the gender pay gap creates incentives for more active involvement of women in the economy and has a beneficial effect on the economic situation in the world. Internationally, this issue has also been highlighted by the IMF, the World Bank, and several individual researchers. The relationship between the dynamics of economic growth rates and the gender pay gap was also not identified. However, a long-term trend is evident: as the economy develops, the gender pay gap is narrowing.
Various international organizations, including the International Trade Union Confederation, in the process of combating economic gender inequality (“ITUC Economic”), recommend to:
- Create a legal framework to ensure equal pay for work.
- Ensure transparency (transparency) in pay, allowing employees to identify cases of gender discrimination.
- Take measures to eliminate professional gender segregation, in particular, overcoming gender bias in curricula, raising women’s awareness of the possible consequences of choosing certain specialties for their future career, pursuing targeted recruitment and retraining policies for women in areas where they are underrepresented, such as STEM.
- Promote family strengthening, and implementing the family policy will reduce interruptions in women’s professional careers; prevent them from leaving the labor market (high-quality and affordable child and elderly care services, parental leave, changes in related social norms, and stereotypes.
- Set a subsistence level for the poor to close the gap between women in low-paying jobs.
Bridging gender gaps is one of the most pressing challenges facing the world of work today. Globally, women have significantly fewer opportunities to participate in the labor market, and those who do manage to do so are less likely to get jobs than men. Moreover, women’s access to quality employment continues to be limited. For example, when paid and unpaid work is considered, women often work longer hours than men. In addition, when it comes to paid work, women work fewer hours for pay or remuneration because they choose part-time employment or part-time employment is the only option available to them. These gender gaps persist despite the desire of most women in the world to have a paid job, and this confirms that many factors limit a woman’s choice.
The ILO also notes the problem of the so-called “the motherhood penalty,” in which working mothers are paid, on average, less than women without children, and inequality in pay increases as the number of children a woman has. The uneven impact of the COVID-19 crisis on men and women, according to the ILO, could widen the gender gap in the labor market and threaten to undo progress in reducing it over the past few years. In the spring of 2020, many countries introduced self-isolation regimes, especially harsh for older people. In the first year of the pandemic, there has been ample empirical evidence that women in developed countries have deteriorated more than men in the labor market, with the highest risks of job loss or reduced hours in countries such as Australia, England, Germany, Singapore, and the USA, were observed among mothers, especially with young children.
According to the ILO methodology, the wage gap can be calculated by the average and median wages of men and women (wages of men minus wages of women divided by wages of men). In this case, the calculation can take into account wages per month or hourly wages. The ILO considers hourly wages preferable to monthly wages as it provides the most reliable data; this is primarily due to the fact that women are more likely to choose part-time jobs (“ITUC Economic”). Using the same methodology, the gender gap in receiving bonuses (awards) by men and women can be calculated separately.
The ILO factor-weighted gender pay gap is an adjusted version of the above calculation. Baseline mean and median wage differences are adjusted (using econometric analysis) for four factors: educational attainment, age, working hours (full-time versus part-time), and status (private sector versus part-time employment). For example, according to the ILO, when recalculated according to a refined methodology, the difference in the global gender gap was 3.2 percentage points: 15.6% according to the standard calculation and 18.8% adjusted for factors. The gender wage gap exists in all countries of the world. According to the International Labor Organization (ILO) research in this area, this gap has narrowed over time. Nevertheless, despite numerous attempts to overcome economic gender inequality, the gender pay gap remains widespread in all world regions. It affects, to varying degrees, the vast majority of sectors of the economy and types of employment.
Works Cited
“Equal Pay for Work of Equal Value. UN Women”. unwomen.
Delivered by Women, Led by Men: A Gender and Equity Analysis of the Global Health and Social Workforce. World Health Organization. no. 24, 2019, pp. 1-72.
International Labour Organization. “Measuring the Gender Pay Gap”. 2020, ISBN: 9789220331064
International Labour Organization. Global Wage Report 2018/19: What Lies Behind Gender Pay Gaps. 2018, ISBN: 9789220313473
Kitchen, Alison, et al. “She’s Price(d)less”. KPMG Australia. 2019, pp. 3-15.
World Economic Forum. Global Gender Gap Report 2020. 2020.