The Gender Pay Gap

In theory, nothing prevents women from reaching the same professional level and the same pay as men. Still, in every country in the world, women continue to be paid less than men for comparable work. Today, the pay gap around the world remains at around 20%, while the situation is marginally better in OECD countries, where men earn on average 13% more than women in similar full-time jobs. The pay gap has only narrowed slightly over the past few decades.

Education has always been an important pay determinant. If we go back in time, there were different levels of educational attainment for men and women. However, in most Western countries today, the educational difference between the genders is almost eliminated. In fact, in most OECD countries, women outnumber men at universities and are more likely to complete a degree. Today, educational attainment only plays a minor role in gender earning differences. There are other, more important factors that explain the wage disparity.

We know that women tend to choose different occupations than men, and there are large and persistent differences in earnings between different occupations. So, even though the education is equally long, a teacher or a nurse would usually be paid less than an engineer or an IT consultant. You may ask why women choose these jobs when they know that there will be a difference in pay. Is it because there are not enough role models for women? Are there barriers to female advancement in certain occupations? Or is it because there are biological differences that lead to women and men having different abilities and strengths? We may also pose the question why salaries are lower in these professions: Why are these jobs valued less when they are often of vital importance in fields such as health and education?

We also know that having children will affect a woman’s income. This is often referred to as 'the motherhood penalty'. According to an OECD report, women will on average have a 7% wage reduction per child. In many Western countries, men and women who are working full-time in the same occupation and sector will usually have approximately the same pay in the beginning of their careers. However, after a few years -often after the arrival of children – the gender gap starts to widen. Women will lose out on professional opportunities when taking maternity leave, and staying away from work for weeks, months, or sometimes years will often affect both pay and responsibilities in the workplace.

Having children also results in more part-time work for women. In most modern families today, both parents work, and in most of these families, women still do the most when it comes to childcare and household chores. This has often restricted the careers of women, as it can be difficult to combine the caregiver role that many women fill with being a professional working woman. As a result, women end up working part-time and doing more of the unpaid work at home.

There are also several studies that show that discrimination, stereotyping, and implicit bias explain some of the gender pay gap. Many people think that men make better leaders whereas women are more nurturing and make better caregivers. This implicit bias will affect what type of jobs men and women will apply for and also what kind of jobs they will be offered. In this way, men and women are funnelled into different types of industries and jobs with widely different pay, based on gender norms and expectations.

Also, there are many employers who would hesitate to hire or promote a woman of childbearing age, claiming that maternity leave will be a financial cost to their business. This attitude is not only a loss for working women, but also for companies who are missing out on many excellent, bright young workers. Norwegian lawmakers have attempted to rectify this by making it illegal to ask about pregnancy or maternity leave during interviews. However, this law is not always honoured, and not all countries have such laws.

We know that the gender pay gap widens dramatically after women have children. Staying home with children for months or years decreases participation in the labour market, resulting in overall lower earnings for women. The pay gap could be reduced if men and women were able to share childcare more equally. As a way of battling the gender pay gap, many countries have introduced a paid paternity leave that allows the father to stay home on terms equivalent to those of the mother. This may help reduce discrimination against women in the workplace and particularly in hiring: if men and women are equally likely to take leave, employers will be less reluctant to hire women of childbearing age.

Also, greater flexibility in working hours and the opportunity to work from home for both men and women, would make it easier to work full time and at the same time have a family life. This could also turn out to be a win-win situation: There are several studies that have shown that offering a more flexible working environment can be good for businesses too, with increased engagement and productivity for employees.

Another way to rectify the problem is to make sure that there is wage transparency. In many companies around the world, there is a lack of transparency that makes it difficult to compare salaries and benefits. In Norway it is common to be given a standard wage that has been negotiated between the employer and the labour union. However, this is not common in all professions and in all countries, and workers often have to negotiate their own pay. If pay is treated as a closely guarded secret, you will have no idea what your male counterparts are earning. This will make it difficult to ask for an equitable salary.

This lack of transparency became very obvious in 2018 when details about a shocking gender pay gap in the BBC was made public. Journalist Carrie Gracie, who had been with the BBC for more than 30 years, quit her post after she discovered that her two BBC male colleagues, who were doing the exact same job as her, earned “at least 50% more” than she and her female colleague did. A closer look revealed a pattern of pay disparity between male and female reporters, especially among senior reporters. At that time, BBC stated that there was “no systemic discrimination against women”. However, some male presenters later agreed to a pay cut, some women (and men) were given pay rises, and Carrie Gracie was later given several years of backdated pay.

As a result of the hush-hush mentality we find in many large companies, governments in several countries have recently enacted new laws requiring larger companies to publicly report their gender pay gap. In the United Kingdom, companies with more than 250 employees are required to publish any differences in salaries and bonuses between men and women within the organisation. We find similar laws in countries like France, Germany, and Iceland. Penalties for not complying vary from country to country, but the reputational harm that companies may face for not reporting or reporting large pay disparities will hopefully help reduce the gender pay gap that exists today.

Before change can happen, there needs to be an increased awareness of the problem. And for lasting change to take place, it first has to be implemented at the top – among CEOs, presidents, and executive directors - and, most importantly, in the laws of the country. Originally, the working world was created by men, for men. However, this is no longer the case, and the workplace needs to be made an equal environment for all.