“Equal pay isn’t just a women’s issue, it’s a family issue. When women get equal pay, their families do better. That’s something that helps men, too.” This a how Michelle Obama emphasized the importance of addressing the gender pay gap and promoting gender equality in the workplace.
The gender pay gap, defined as the difference in median earnings between men and women, still persists in many countries worldwide. This gap exists across various industries and occupations and has significant consequences for the economic security and well-being of women and their families. According to the Federal Statistical Office of Germany, the unadjusted gender pay gap in Germany in 2021 was 18%. Even the adjusted pay gap (assuming the same qualifications, experience, position etc.) was estimated at 6%. Let that sink in for a moment…
There are various factors that contribute to the gender pay gap, including discrimination, bias, and the concentration of women in lower-paying occupations. To address this issue, it is important to implement policies and practices that promote gender equality and equity in the workplace.
One effective way to close the gender pay gap is through pay transparency meaning making information about salaries and compensation publicly available, or at least available to employees within an organization. This allows individuals to see if they are being paid fairly in comparison to their colleagues and it can help to identify and address any discrepancies. The lack of thereof is the main obstacle in closing the gap. Some companies, such as IKEA and Salesforce, have already implemented such policies with positive results.
As of June 2023, Japanese companies employing more than 300 staff must disclose their gender pay gap as a percentage and explain any discrepancies on their website. This will impact 18,000 firms and is a part of Prime Minister Fumio Kishida’s plan to address Japan’s labor shortage and promote growth. Despite Japanese law already requiring equal pay for equal work between men and women, the country has the highest gender pay gap among G7 nations, at an estimated 22% and ranks 116th in the World Economic Forum’s Global Gender Gap rankings.
Good news come also from Europe. The EU Pay Transparency Directive, agreed upon in December 2023 by the European Council, Commission, and Parliament, aims to eliminate the pay gap between men and women. In the future companies with over 100 employees will be required to disclose average salaries for comparable roles, and failure to do so may result in fines. Wage gap higher than 5% will require developing solutions in cooperation with internal and external social partners. However, as always in politics, only if the given gap cannot be explained by objective factors. I’m sure that creative companies will come up with plausible workarounds. Either way, the progress seems to be positive. Slow and steady, we will get there eventually.
Another effective approach is to conduct pay audits and evaluations. This involves analyzing pay data to identify any disparities and taking steps to correct them. It is important to ensure that these audits are conducted by unbiased parties and that they consider a range of factors, such as education, experience, and job performance, in order to accurately assess pay equity.
In addition to these specific practices, it is also important to address the systemic barriers and biases that contribute to the gender pay gap. This includes promoting women’s leadership and advancement in the workplace, as well as advocating for policies that support gender equality, such as paid family leave and affordable childcare. Obviously, it’s a bigger issue in the US, but this plenty of room for improvement in almost every country. According to a study by the Peterson Institute for International Economics, companies with more women in leadership positions tend to have better financial performance. Another study, by McKinsey & Company, found that increasing gender diversity in the workplace can lead to improved innovation and decision-making.
It is clear that closing the gender pay gap is not only a matter of fairness, but it also has tangible benefits for individuals, families, and organizations. By implementing best practices we can work towards a more equitable and prosperous society for all.