Frequently Asked Questions about Gender Pay Gap

By  Dirk Dragstra, Paulien Osse, WageIndicator directors

What is Wage Difference?

Wage difference means that one employee earns more than another. Wage differences do exist. They are not forbidden, not between men and women, neither between persons of different creeds and colors. Such differences may even be huge. Wage differences frequently occur because individuals with more work experience or performing highly qualified jobs make more money than individuals who have hardly any education or are starters in the labour market. Wage differences are therefore widespread. But are these fair?

What is Wage Inequality?

When two individuals in a company do similar work at the same level of qualification yet are not paid equally, this is wage inequality. Such situations are illegal. They are considered discriminatory. Yet wage inequality tends to creep in. As an example, imagine a work situation where the manager puts the 'slick talking boy' into scale 2 right from the start and the 'timid girl' at the bottom scale 0, although she is equally qualified. This first wage scaling can haunt one for years. It is hard to say to what extent wage inequality exists. Several investigations speak of residual gender pay gaps that cannot be explained away. Possibly these unexplained gaps indicate wage discrimination. To complicate matters: such wage differences that can be linked to understandable causes may nevertheless be tainted with discrimination. It is difficult to put a finger on the sore spot. Wage inequality for similar work may occur within teams or departments, companies, and branches of industry. Similar work is compared in terms of the qualifications needed for its proper execution. Thus in principle men and women performing similar jobs or tasks should be rewarded equally, and receive the same hourly wages. This implies that their type of contract (fixed or not) or duration of their working week (part time or full time) cannot serve as a pretext for unequal remuneration.

What is Wage Discrimination?

Wage discrimination occurs when individuals with the same education and working experience perform similar jobs, yet are paid differently. The law in the vast majority of countries forbids wage discrimination on grounds of:

  • gender and sexual disposition
  • nationality
  • age
  • marital status
  • descent
  • country of origin
  • race
  • religion

Where Men Earn More, is it Fair?

Women in many countries on average have hourly wages way below those of their male colleagues. These wage differences vary as widely as 10 - 40 percent, comparing and averaging the whole working population split by gender. Formally these differences are accounted for. But are these fair? No, not really. In practice women seem to be short of time to earn (much) more. They often have more jobs to do than just work for money, if one adds in domestic responsibilities. And they are sometimes sexually harassed by men, with career consequences including leaving a job due to the stress of this.. There are many reasons for the different career choices that women make. Both men and women consider these differing choices quite normal however. Yet, the (long term) consequences of their choices hold women's income levels down.

Where Women Earn More, is it Fair?

In a few professions in some countries it happens that women earn more than their male colleagues. These women as a rule have the same or better education, work full time and have been able to negotiate their salaries. These highly self-aware, , modern women are (mainly) relatively young. They are (still) exceptional. There is not a single country where women of all age groups systematically outperform and outnumber men in terms of their earned incomes.

What Prompts Wage Differences?

Some wage differences or pay gaps emerge when individuals are paid in a discriminatory way. Such discrimination may be rooted in race, gender, religion or just 'feeling'. Wage differences however may also come into being as a consequence of all too casual application of job descriptions and scaling of jobs. For measurement of wage differences it is important to know which job descriptions have been used for the scaling of the particular jobs men and women do.

What Are the Root Causes of L:arge Pay Gaps?

Pay gaps may grow because of a series of choices individuals face and make in their working lives. Such choices relate to:

  • education
  • occupation, profession or trade
  • sector
  • large or small company
  • working part time or full time
  • additional training on the job.

Men and women typically make different choices - usually more gender related than as a matter of free will. Think of the choice of a certain education, more easily combined with family life. Or a job that can be performed more easily while managing a demanding family life, for example having flexible working hours or working part time. Or a job close by, usually in a small(er) company, since there are more small and medium sized enterprises and fewer big companies, whereas big companies as a rule pay better. Since men and women choose their career paths along gender specific lines, such decisive moments of choice merit special attention given their long term consequences. The biggest part of the gender pay gap is caused by education, choice of occupation and sector combined. And consider this: part time work may not amount to much wage difference per hour worked, but it always results in bringing home less money by the end of the month.

 

 

 

The Gender Pay Gap Increases with Age

With increasing age the gender pay gap widens. This seems to be caused by more than just (choice of) education. Generally today women are just as well educated as men, which is quite different from a decade or more ago. It would appear that wage differences are also caused by the twin facts that women frequently and for longer periods work less hours than men, and that they tend to interrupt their careers. Men by contrast tend to have longer working hours and try to avoid career breaks. Such unbroken longer working experience contributes to higher incomes. The big differences emerge when men opt for longer working hours and are promoted, whereas women reduce their working hours and refrain from building their careers. These differences are magnified still when women decide to quit their jobs once their husbands retire as pensionersIf the husband has a  sizable pension this should be no problem. But if the couple divorces or the husband dies (prematurely) these financially dependent women could be reduced to a meagre existence, or to poverty.

Wage Differences may Occur Right from the First Job

In their very first jobs men and women may already be paid differently. Systemic causes are education, choice of occupation, profession or trade and sector. But also job scaling and negotiation skills play their parts. Whereas men more frequently negotiate about position and salary, women tend to do this less frequently and tenaciously. Once a salary has been fixed, this starting level may have repercussions for years on end. Each new employer may enquire about previous earnings. You don't have to oblige by answering, but normally one volunteers such information - perpetuating the possibly already existing gap at the next level.

Wage Differences, Job Evaluation and Job Rating

Job evaluation is a systematic way of comparing jobs within a company and/or branch of industry. Thus jobs get ascribed duties, competences and responsibilities. These aspects in turn are weighted, and get points. In this way a whole hierarchy of job positions is designed, with each position worth so many points. These points or job ratings then are used to fix salaries. Modern job systems are gender neutral, meaning that male qualifications are not systematically overvalued in relation to female qualifications - and vice versa. Immeasurable 'feeling' can no longer be invoked to base promotion or demotion on.

Wage Differences, Job scaling and Emoluments

Given job evaluation and rating systems in place, scaling employees does not seem to be difficult. Yet it frequently happens that, whereas women are scaled (fairly) according to their actual skills, men are scaled somewhat higher. Men also frequently get more extras, such as a lease car, a free phone, bonuses, etc. Such differences are explained by the fact that the women may work less hours, or simply did not ask for any extras. Also, it may be automatically assumed that a women does not need these emoluments, whereas the male does, since he is the main earner of the family income (even in cases where this does not apply). Such unquestioned assumptions and quiet resignation cause possibly growing gender pay gaps. Since each scaling also presents a moment for negotiation, it seems logical that those who switch jobs more frequently, end up higher on the promotion scales.

Wage Differences, Big or Small Company

It is understandable why big companies pay better - as a rule. That certainly applies to multinationals. But this rule does not automatically apply to big organizations such as government agencies, schools, retailers, or hospitals. Big they may be, but their pay levels are not up to a par with the commercial sectors. On the other hand, they usually offer more flexible regulations for combining working and family life. This fact accounts for the fact that relatively more women are employed in the latter sectors (for example retailers, schools and hospitals) than men.

In smaller companies usually wages are lower. This lower level however is to a certain extent compensated for by the relative proximity of the work place, thus avoiding long commuting hours, which is convenient for family life. These aspects combined may contribute to the statistical fact that on average women work for less pay than men. Making a career for oneself is easier in big companies, and is paid better, but comes with a price in terms of family life.

Wage Differences and Disrupting one's Career

Disrupting one's career, if only for a couple of years, comes with a salary sacrifice and fewer future chances. A few weeks off is not a problem, but a few months starts to be tricky. Stopping for a couple of years is penalized. Moreover, returning to work at the same level is less likely as the years go by. To sum up: employees with a solid professional education are advised to keep on working and cash in on their skills and accumulating experience. Disrupting one's career may also have negative consequences for one's retirement pension.

Wage Differences and Training on the Job

Availing oneself of the opportunity to do additional professional courses while on the job may be profitable and lead to an increase in one's hourly wage. Some companies require training on the job and pay for it. Some other companies permit and encourage this but do not pay for it. Practices vary per country, industry, collective agreement and company. Generally speaking the rule is: additional training is profitable. Yet, where women in the prime of their lives tend to reduce their working hours, men at the peak of their abilities more often choose to work more and make careers when the opportunity presents itself.

Wage Differences and Working Part-time

Where low wages prevail it seems immaterial whether men or women work part time or full time. Yet, where and when full time is more common or making longer working hours becomes the norm, hourly wages tend to rise. Put differently: working part time is not just detrimental for the monthly income, but also for the hourly wages.

Working part time is however smarter than not working for an income at all. For all possible cases (seen from the angle of income) working makes more sense than no paid work. Working full time is more sensible still, as it opens up additional options, such as a lease car and training on the job. On the other hand, working part time can contribute to a more relaxed life.

In conclusion: where and when hourly wages are relatively high at a given educational level, the choice for (large) part time jobs is understandable.

Executive Positions and Wage Differences

Not all executive positions are paid (much) better. Worse: in small companies or simple companies with few layers of management, being the boss may increase one's standing, but not necessarily one's pay check. A supermarket or school for example are relatively flat organizations. This also applies to companies where many women are employed. Here the management does not make exorbitant sums of money. By contrast, a hugely complex company usually offers (many) more career opportunities. Scaling the ladder means one may negotiate one's way up the pay scales as well, topping up one's hourly wages at each step.

 

Wage Differences and Transparency

Publication of wages and salaries by companies or within branches of industry makes it easier to bring unmerited wage differences to the fore. Checking one's salary at WageIndicator certainly helps, as well as Collective Agreements and official rulings on equal pay.

Whenever doubt arises about the merit of wage differences, consulting with colleagues or the trade union is the first sensible thing to do. Going to the courts is the last and ultimate option. Research and consult to begin with. Use this WageIndicator website for starters!

Wage Differences and (Social) Action

When the gender pay gap is (too) wide, deprived individuals, their family members, trade unions, employer's associations, companies, political parties, parliament and government can do something about it.

When as a woman you earn less than your male colleague for the same or very similar work with the same skills, you are free to start legal action. This is not an easy path, but you can invoke help from the trade union(s) and consult WageIndicator!

What Can a Woman do Against Wage Differences?

When as a working woman you decide that a high(er) hourly wage now and in the future is important, consider the following:

  • Choose your further education knowing what is in demand and with an eye to future employment
  • Finish an education once you start (get your diploma!)
  • Choose a sector or branch of industry that pays (e.g. fine arts pay less than health care)
  • Choose an occupation that is many sided, learn skills that can be applied widely
  • Choose - possibly - a partner who supports your wish to work for a living
  • Choose, if starting a family, a partner who supports your wish to work for a living and share family chores
  • Opt for part time and never stop working, if you can
  • Choose a large company which provides facilities for children's day care
  • When with kids choose to work for a small local company, reducing commuting time and allowing for a lighter work-life balance
  • Negotiate your salary at each new career step or option
  • Regularly discuss your career with your partner, other family members, your colleagues: a career needs to be taken care of (just like your partner, kids, house etc.)
  • Keep learning and use training-on-the-job offers, or work-related upgrading courses, as the labour market changes ever more rapidly
  • Keep an eye on your pension fund/rights.

 

Wage differences occur and are inevitable, like aging. Yet huge pay gaps can become problematic, not just for you as an individual, but for society at large. Government, business, women and men should be aware. A good starting point would be to try and get the most out of the work that you do, also financially. And of course, even before this is the choice of what education to pursue, especially with regards to what jobs are in demand. Some jobs pay better and lead to sectors or industries that pay better. You should also be alert to spotting wage differences that are unmerited, and that may point to discriminatory inequalities in pay, forbidden by law.

How Can a Woman Earn More?

Working full time is the best answer, as it increases chances for additional training (on the job), promotion and executive positions - both for women and men alike. Earning well starts with comparing jobs and sectors when choosing the starting point of a career path. Some jobs pay better - also because they require higher education. Some sector and branches of industry pay better.

What Can Family Members and Colleagues do to Combat Wage Differences?

When a man and a woman, having a family, agree that each should have a working life and strive for individual financial independence, conditions must be created to allow each to have an equal share in family duties and caring for their children. And since most working men and women have families, their colleagues are probably facing the same issues.

Following on this, it should become easier to evaluate each career step and to see whether this will have positive or negative consequences in terms of income.

Difficult maybe, as each individual has to compete in their own working environment, yet necessary.

What Can an Employer do against Unmerited Wage Ddifferences?

Employers may at least provide transparency of wages and have an open eye for promotion opportunities for both men and women alike. The employer may also facilitate the combination of working and family life, especially when kids are still small, for, by example, offering flexible arrangements. Employers may forestall the firing of pregnant employees and create safe and healthy working conditions for pregnant workers. The employer may also closely monitor the scaling of men and women, trying to avoid unwarranted pay gaps creeping in through automatic, gender based favoritism.

The employer may subscribe to collective agreements open to flexible working hours and career opportunities, current and future.

What Can Trade Unions and Employer's Associations do against Unmerited Wage Differences?

Both organizations may agree that gender pay gaps in companies will not surpass certain levels. Both may plead for a legal minimum wage that is easy to enforce.

Both organizations have an interest in CBAs that allow women to grow in their jobs and make careers, starting now and progressing well into the future.

What can Political Organizations, Parliament and Government do against Unmerited Wage Differences?

Gender based wage differences can be promoted as a permanent item on socio-economic and political agendas through ongoing debate. Political organizations, parliament and government, from their roles, responsibilities and positions can direct attention to and assist in:

  • the creation of proper work-life balances
  • the provision of adequate education and training for all age groups.

Women, their partners, family members, colleagues, social partners, political parties, parliament and government have a stake in well educated women, who use their skills and knowledge, earn their own incomes, pay taxes and obtain economic independence while doing so, thus avoiding ending up poor and poorer still as they grow old.


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