Mind The Gap

There are both moral and economic incentives for every sector to seriously tackle the growing global gender pay gap, as Helena Haimes reports.

If you were under the impression that gender equality in the workplace is almost a global reality, let me burst your bubble with a few recent statistics. The World Economic Forum’s latest Global Gender Gap Report revealed that average pay for women stood at $12,000 annually in 2017 across 144 countries, compared with $21,000 for men. At the current rate of progress, the difference in income between men and women will take an estimated 217 years to close. Even more dismayingly, this gap has actually steadily widened in the last few years – in 2016 the WEF estimated women would ‘only’ have to wait around 170 years until they could expect the same levels of pay as their male counterparts.

Much of this will come as little surprise to anyone who keeps half an eye on the headlines. The tenacity of the gender pay gap has been consistently highlighted by the national and international press since the WEF’s first report on gender equality was released in 2006. Since then, some governments and businesses have become adept at paying convincing lip service to addressing wage disparity, without taking sufficiently concrete steps towards ensuring lasting, systemic change. There are, however, plenty of reasons to believe the tides are slowly starting to turn, thanks to a promising combination of governmental data-gathering exercises, innovative corporate initiatives and increasingly broad acknowledgement of the seismic cultural shifts that societies need to make in order to ensure true gender equality.

Defining the gap

The gender pay gap does not simply boil down to equal work for equal pay; although that certainly remains an issue in places, it is (in theory at least) relatively easy to legislate against. Unfortunately, the factors contributing to the existing imbalance are far tougher to untangle and solve: women tend to work in industries with lower average salaries rather than lucrative, male-dominated professions such as technology or finance; they are far more likely to work part time due to parenting and other care commitments; and – crucially – they are significantly underrepresented in better paid, senior positions. Across every sector and country surveyed in the WEF report, an average of just 22 percent of senior managerial positions were held by women.

“Research shows that the wage gap starts from day one and grows continuously throughout women’s careers while the ‘narrowing’ of the pay gap when it happens is mostly confined to the early stages of women’s careers,” says Marianna Fotaki, professor of business ethics at Warwick Business School. “The gender pay gap is growing especially in highly paid professions such as accountancy, law, consultancy and business, but even in ‘feminised’ sectors men tend to be over represented in top paid jobs.”

Australia, Japan, Germany, Sweden and the UK are among a small number of countries that have recently introduced requirements for bigger businesses from all sectors to publish annual figures revealing their gender pay gap. The UK’s statistics, which were released on the 4th April 2018, showed that women are paid an average of 9.7 percent less than men in eight out of ten companies based on median hourly pay, and are underrepresented at senior levels in 82 percent of organisations. “Many of these firms will be concerned that such reports could be harmful to their image,” claims Shainaz Firfiray, Associate Professor of Organisation and Human Resource Management at Warwick Business School, speaking to us just before the government deadline. “Although not surprising, a major concern about the results reported so far is that women remain heavily under-represented in higher-paid positions, which suggests there is still a long way to go before the gender pay gap can be closed.”

Why should we care?

If women feel they aren’t fairly rewarded and rarely reach top leadership positions they may feel disengaged with their jobs and may ultimately decide to leave their organisation,” continues Ms Firfiray. “Customers are less likely to show a preference for the organisation’s goods and services and investors less likely to put their money into firms that lose their reputations as good corporate citizens – closing the gender pay gap could help firms avoid some of these costs.”

Beyond the good optics and clear moral incentives for companies to address the gender pay gap in pursuit of equality and justice, there are also sound business reasons to persuade even the most sceptical leaders to promote gender equality. A 2017 study by the Institute for Women’s Policy Research in the US predicted that equal pay would add around $512.6 billion to the US economy if male wages remained unchanged. Meanwhile, an IMF Report last year estimated that increasing the proportion of women in the boardroom – from its current two to just three out of ten members – would directly improve an organisation’s bottom line by between three and eight percent, as well as seriously impacting gender pay differences throughout a company.

From manufacturing to mining

Although the gap is pervasive across almost every industry and country, there are undoubtedly sectors which have far more ground to make up than others. “Industries where the gender pay gap is particularly wide are those that have a higher proportion of one gender,” says Ms Firfiray. “For instance, within the male-dominated construction sector wages are higher among males.” Indeed, according to the newest UK figures, the British construction industry currently has the worst median pay gap in the country at twenty five percent.

A recent Randstad survey into gender equality in construction revealed a number of systemic forces at play that mean women are woefully underrepresented at management level in particular, though there are issues with female recruitment and retainment throughout the sector. There is convincing evidence that women in construction are simply not given as many opportunities for progression as their male colleagues – nearly three quarters of women questioned felt they had been passed over for a project because of their gender and 49 percent of all respondents had never worked with a female manager.

The mining sector is listed as the fifth worst culprit on the UK government list, followed by the energy industry in sixth, figures that are broadly mirrored globally. In Australia, for example, mining is the most male dominated-industry in the country – just 2.6 percent of CEOs and 12.3 percent of senior managers are women, though the ratio flips when it comes to administrative positions, with women comprising 77.4 percent of clerical workers. The oil and gas industry has long struggled to close its gender pay gap too – a recent analysis by Energy Voice revealed average salaries for men and women in the UK stood at £74,799 and £59,395 respectively. Alarmingly, it also reported a 5.3 percent difference in like-for-like pay.

Manufacturing is also waking up to the need to properly monitor and address its gender pay disparities. A 2017 CV Library survey into the pay gap in British manufacturing found that 83.3 percent of women working in manufacturing felt they had been paid less because of their gender. Lee Biggins, CV Library founder and managing director, claims that a broad cultural shift is sorely needed if the industry wants to permanently up its game. “The gender pay gap has been a topic of discussion for many years now,” he says. “…and while there’s been some development to better support working parents, such as the introduction of shared parental leave, organisations must work hard to facilitate their employees and create an honest and open culture where women feel comfortable taking a stance against inequality…without effectively tackling the issues around flexible working, caring responsibilities, helping women aged over 40 back into the workforce, and general workplace discrimination, the UK can’t expect to see the gender pay gap to truly close for some time.”

Identifying the causes

Although practical issues certainly mean that both recruitment and retention are proving to be huge stumbling blocks to achieving gender parity in workplaces across the board, they are far from the only contributory factors. Discrimination resulting from unconscious bias is also responsible for the lack of women in senior management and boardrooms, as Ms Fotaki explains: “Behavioural ethics research suggests that many such assumptions are due to unconscious bias that both women and men share,” she explains. “Power operates at a subconscious level and discrimination is often tacit and rationalised post-hoc. Unconscious bias can, in part, explain the propensity of many executives to hire in their own image which reproduces the lack of diversity on companies’ boards. In organisations that adopt meritocratic policies, research has found that managers tend to favour a male over an equally qualified female employee and award him a larger monetary reward, perhaps because they no longer see the necessity to address the existing inequalities or for the fear of discriminating against men.”

An entrenched culture of presenteeism that puts many female carers at distinct disadvantage is another widely-cited problem, as is the marked difference in aggression between the genders when it comes to asking for a pay rise and the responses they encounter from employers when they do. “As employment relationships are becoming increasingly personalised with a greater emphasis on negotiable employment terms, women are facing systematic disadvantages,” explains Ms Firfiray. “Women rarely initiate negotiations and even when they do, they routinely negotiate lower salaries and less desirable employment outcomes than males”.

Start from the top

All this is certainly not to say that workers in these industries do not have the will to change – 93 percent of employees in the Randstad survey, for example, said that having a female manager would either not affect their way of working or have a positive impact. However, the same study also uncovered what researchers called “serious blind spots” in many organisations that are severely hampering progress – after all, it is impossible to effectively tackle a problem before identifying and fully understanding it.

Ms Firfiray is hopeful that compulsory monitoring will lead to more awareness and thus permanent change, as long as results are taken at more than face value. “It is important that organisations do not perceive gender pay gap reporting as a mere compliance exercise but carefully monitor their pay gaps, understand the factors that contribute to these gaps and take requisite measures to tackle them,” she tells us. “Obviously there won’t be any instant solutions but there are several factors that can foster greater gender equality in the workplace including provision of better networking and career advancement opportunities, appropriate mentoring schemes and dealing with gender biases in the workplace.”

She is also emphatic about the importance of correcting structural inequalities in the workplace if companies want to see lasting change: “(It is essential to)…transform existing systems that have failed to address the concerns of working women and hindered their progression in the past,” she tells us. “This will involve unbiased recruitment, training and mentoring practices as well as more flexible career paths and shared parental leave.”

Businesses looking for constructive ideas to help them address their gap can draw inspiration from across the corporate and non-profit world. Ernst and Young implements a ‘reverse mentoring scheme’, where younger women mentor older men in an effort to shift perspectives; Oxfam’s most recent action plan introduces what it calls “enhanced, shared parental pay for partners, aimed at encouraging more men to take time out for childcare responsibilities; while Randstad suggests following the lead of 12 percent of the construction firms it spoke to by removing names and/or gender from CVs in order to combat unconscious bias during the recruitment process.

Whatever approach an individual company chooses, it will certainly pay them – both morally and economically – to act decisively on all this research sooner rather than later.

 

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