Mind the Gender Pay Gap: Causes and Possible Solutions

Gender inequality remains a persistent problem in our society, and one area where this is particularly evident is in the gender pay gap. The gender pay gap refers to the difference in earnings between men and women, and it continues to exist across many industries and professions and has significant implications for women’s economic security and overall well-being.

What’s causing the gender pay gap

There are many factors that contribute to the gender pay gap, including occupational segregation, discrimination, and the motherhood penalty: 

1) Occupational segregation refers to the fact that women are more likely to work in lower-paying industries and occupations. Flexible working arrangements can help to reduce occupational segregation by allowing women to work in fields that may have previously been unavailable to them. However, note that even when men work in typically female jobs, they still get paid more than their female colleagues. 
2) Vertical segregation is the term for the fact that women are less likely to get promoted to leadership roles. 
3) The motherhood penalty refers to the fact that women who have children often face reduced earnings and career opportunities. Career planning, support for women entrepreneurs can help to mitigate this penalty by providing resources for child care and flexible working arrangements. 

4) Plain old Discrimination can contribute to the gender pay gap, e.g. if bosses believe that men are more in need or more worthy of raises, e.g. because male employees are thought to be more likely to become leaders, or because male bosses ‘see themselves’ in the men they manage, or because men are thought to be more likely to leave if they don’t get what they want, whereas women can be stereotyped as being less dynamic, more meek, more loyal or similar. In short, if women get smaller pay rises because they are 
– perceived as less likely to ‘need the raise’
– more likely to be seen as ‘pushy’ if they ask for a raise
– less deserving of a raise because they don’t conform to male stereotypes of leadership
…then that’s discrimination at work, and it contributes to the gender pay gap. In this context, it’s important to note that the old argument that “men negotiate better” is not an acceptable excuse for paying women less. Don’t believe me? Well, at least the German Federal Labor Court agrees with me: Earlier this year, the Court found that equal pay is due for work of equal value. Following this decision, employers (in Germany) will no longer be able to justify a higher salary for a man by saying that he received it because of better negotiations.

What’s the impact of the gender pay gap?  
The gender pay gap has significant consequences for women and their families: Women who earn less than men may struggle to make ends meet, and may be less able to save for retirement or invest in their own education and career advancement, and may get stuck in unhappy relationships that they can’t afford to leave. The gender pay gap doesn’t just result in economic inequality for individuals, but it also has broader socio-economic implications, as it can limit overall economic growth and productivity. So at the end of the day, we all pay the price of inequality. 

What are the possible solutions?  
There are many potential solutions to the gender pay gap, including policy changes such as equal pay laws, increased transparency around pay, and efforts to reduce occupational segregation. Employers can also take steps to address the gender pay gap, such as conducting pay audits, offering family-friendly benefits and flexible working arrangements, and promoting diversity and inclusion overall.

The road to gender pay equity

While progress has been made in closing the wage gap between men and women, there is still much work to be done. 

To address the gender pay gap, policy solutions such as the US Equal Pay Act of 1963 and the UK gender pay gap reporting requirements have been put in place. These measures seek to ensure that women are paid the same as men for equal work. However, there is still much work to be done to address the underlying causes of gender inequality and economic disparity.

Scholars such as Branko Milanovic and Thomas Piketty have highlighted the importance of addressing income inequality and the Gini coefficient, a measure of income inequality, in order to create a more just and equitable society. Gender inequality is an important part of this larger problem, and addressing the gender pay gap is one step towards reducing global inequality and promoting economic justice.

Clearly, the gender pay gap remains a significant issue that affects women in many different professions, industries and countries. In the US, for example, women still make only 80 cents for every dollar earned by their male counterparts, and this this pay gap is even worse for women of color, who make only 68 cents to every dollar earned by a white man. 

The situation is only slightly better in the EU, where women on average earn 13% less than men – for doing the same job!

In the EU, there’s a promise of imminent progress: On 30 March 2023, a large majority in the European Parliament approved the new “EU Pay Transparency Directive“. With this directive, Europe aims to implement concrete measures to close the gender pay gap. This new legislation will require EU companies to disclose information that makes it easier for employees to compare salaries and to expose existing gender pay gaps. If a gender pay gap of at least 5% is found, companies will have to conduct a joint pay assessment in cooperation with their workers’ representatives.

In conclusion, addressing gender pay inequality requires a multifaceted approach that includes policy solutions, support for women entrepreneurs and business owners, and efforts to reduce occupational segregation and the motherhood penalty. By working towards greater gender equality and economic justice, we can create a more just and equitable society for all. In the words of Susanne Dumas, the woman whose case prompted the German Federal Labor Court to decide that equal work means equal pay: “I dedicate this success to my two daughters and on behalf of all women [in Germany]. Be brave, be loud and never let anyone take the butter off your bread!”

And that’s what ActionWomen is all about – action and advocacy to enable women to achieve their potential for good – resulting in a fairer, more equal and therefore more sustainable economy for all. Remember to sign up for updates here

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