Gender Pay Gap: What Does The Latest Data Say?

15 mins read

What has remained one of the most persistent things about the workforce? Something that has survived the transition from traditional workplaces to modern offices? It’s the gender pay gap!

The issue of unequal pay based on gender continues to be a prevalent concern affecting many individuals. Despite advancements in workplace equality, disparities in compensation between men and women remain a significant challenge. And the gender pay gap? It begins right after college - even today.

Per the Unstop Talent Report 2024 (UTR’24), female students from the Arts, Science and Commerce streams are being paid less than men - by a wide margin. The most common offer for females in the domain was half of what the men received.

Understanding the root causes and implications of the gender pay gap is crucial for creating a more equitable and inclusive work environment for all.

What is the Gender Pay Gap?

Defining Gender Pay Gap

The gender pay gap is the difference in average earnings between men and women in the workforce. It's usually expressed as a percentage of men's earnings. For example, if the gender pay gap is 15%, it means women earn 15% less than men on average.

The gender pay gap extends beyond individual roles! Gender pay gaps reflect systemic issues that result in women earning less than men on average. These disparities exist even when individuals perform similar work or hold comparable positions within a company.

Equal pay ensures that individuals receive the same pay for the same work, regardless of gender.

Calculation Methods

The gender pay gap is calculated by comparing the average or median earnings of all women working full-time or part-time to the earnings of all men working full-time or part-time within a specific timeframe (e.g., annually, monthly).

Gender Pay Gap (%) = (Average Male Earnings - Average Female Earnings) / Average Male Earnings x 100

This gap can be measured in different ways:

• Unadjusted: This compares the average gross hourly earnings of all working men and women.
• Adjusted: This takes into account factors like education, experience, occupation, and hours worked, aiming to isolate the difference in pay due to gender alone.

Is the Gender Pay Gap Real?

The short answer is yes. The long answer looks at the history of women in the workforce, reflecting on the societal and economic causes behind the gender pay gap. And it’s still a yes.

Women have always been a part of the workforce, predominantly contributing to unpaid labour, in the form of domestic duties. Women entered the paid workforce in the early 20th century - but societal norms led them to earn less for the same work men did. The equal pay movement started gaining traction in the 1940s.

Through the progress and challenges, the movement has continued pushing for workplace equality.

Global Gender Gap Index

While different countries have different measures in place to calculate the gender pay gap and implement gender parity, the Global Gender Gap Index by the World Economic Forum (WEF) is a globally accepted standard.

As per WEF, “(the Index) annually benchmarks the current state and evolution of gender parity across four key dimensions (Economic Participation and Opportunity, Educational Attainment, Health and Survival, and Political Empowerment). It is the longest-standing index tracking the progress of numerous countries’ efforts towards closing these gaps over time since its inception in 2006.”

Its Global Gender Gap Report 2023, based on the data of 146 countries, shows that women continue to earn less than men on average worldwide.

Per the report, the global gender pay gap score in 2023 stands at 68.4%. At this rate, it will take 131 years to reach full parity.

Gender Pay Gap in India

The gender pay gap in India is significant, with women generally earning less than men across various sectors and industries. According to reports, women in India earn, on average, around 28%-35% less than men for performing the same work.

As per the International Labour Organization, the pandemic has “reversed decades of progress in India”.

In 1993-94, on average, Indian women earned 48% less than their male counterparts. The gap declined to 28% in 2018-19. However, preliminary estimates from the Periodic Labour Force Survey (PLFS) 2020-21 show an increase in the gap by 7% between 2018-19 and 2020-21.

India has implemented laws and policies to address gender equality and equal pay, including the Equal Remuneration Act, 1976, which prohibits discrimination in wages based on gender. However, enforcement and compliance with these laws remain challenges.

Factors Affecting the Gender Pay Gap

The gender wage gap is influenced by various factors, including occupational segregation, unequal access to opportunities for career advancement, and societal norms around caregiving responsibilities that often disproportionately affect women's earnings.

Workplace Discrimination

Employed women often face discrimination in the workplace, leading to lower wages compared to their male counterparts. Biases can manifest in various forms, such as hiring practices favoring men over women or promotions being based on gender rather than merit.

Other underlying biases that make it challenging for women to achieve equitable pay in the workplace are:

• Women are more likely to face challenges in negotiating salaries compared to men.
• Stereotypes and biases can lead to undervaluing women's contributions in the workplace.
• Organizations may have policies or practices that unintentionally perpetuate gender-based pay discrepancies.

These discriminatory practices perpetuate gaps in earnings and opportunities, highlighting the need for organizations to address and eliminate such biases.

Job Segregation, i.e. Gender Pay Gap by Profession

One of the major reasons behind gender wage disparities is job segregation, where either men or women dominate certain industries or roles. For example, fields like technology and engineering are predominantly male-dominated, while women often fill caregiving and administrative roles.

This segregation leads to gaps in pay as male-dominated professions tend to offer higher salaries than female-dominated ones. Addressing job segregation by promoting diversity and inclusivity in all sectors is crucial for closing the gender pay gap and ensuring equal opportunities for all employees.

Also Read: How Walmart, struggling to find female coders, partnered with Unstop and exceeded its gender mandate through a diversity hackathon - CodeHers.

Disproportionate Division of Responsibilities

Women are often disproportionately burdened with caring responsibilities, such as childcare and eldercare, which can impact their career advancement and earning potential. Balancing work and caregiving duties can result in women taking leave from their jobs or working part-time, leading to reduced hours and lower wages.

By recognizing and accommodating these needs, organizations can help reduce the impact of caring responsibilities on women's careers and narrow the gender wage gap.

These are the primary causes of the gender pay gap. These, in combination with factors common to all genders, like age, education, and economic forces, impact the pay gap between genders. Let’s study these factors in detail.

How Age Impacts Women’s Earnings

As workers age, their average earnings tend to increase due to accumulated experience and expertise. However, research indicates that older women face challenges in earning equitable wages compared to their male counterparts.

With greater access to education and upskilling opportunities than their predecessors, younger women can step into traditionally male-dominated fields - a chance they are grabbing by the horns. As per UTR’24, in E-schools—a field dominated by men—the average salary offered was nearly the same for men and women.

However, several reports indicate that while the gender gap may be shrinking for entry-level roles, it’s actually widening for women in senior leadership positions. In a 2015 study conducted by the financial services firm Wells Fargo, women over 45 are likely to earn 25% less than their male counterparts.

A more recent study in 2023, conducted by IIM Ahmedabad, shows that not much has changed. At an individual level, women earn 2.2% less than men in similar roles.

However, women in managerial positions earn 3.1% less than men - and a whopping 4.9-6.1% less than men as directors and senior executives.

This gap can be attributed to increased unpaid labour that women are subjected to as they age, especially after marriage or motherhood. These unpaid but time-consuming and energy-intensive activities often force women to reduce the time and energy they can spend in building their career.

It’s a fact! In April 2023, Australia passed a law requiring firms with 100+ employees to release data on the wages of men and women in the firm. Dubbed the Australian Gender Pay Gap Report, the data revealed that a few of Australia’s top corporations had a pay gap bigger than the national average of 19%, reported Reuters.

The ‘Motherhood Penalty’

Women also encounter what is termed the "motherhood penalty," where their earnings decrease significantly after having children. This phenomenon stems from various factors, including reduced work hours, taking time off for childcare, and encountering bias in the workplace.

Conversely, fathers may experience a "fatherhood premium," where they receive higher pay following the birth of a child. This disparity highlights the societal norms and expectations surrounding gender roles within families and workplaces.

These pre-set gender roles negatively impact both men and women - men are under greater pressure to financially provide for a family. In contrast, women are forcibly pushed out of the workforce. The other alternative, for women to balance home and career, puts undue pressure on them, leaving them guilt-ridden over their choices.

In an interview with Livemint, Geeta Kapur, Director HR, SJVN (Hydroelectric power generation company), clearly stated that society still expects women to “take a break to look after the children in their growing up years. The concept of collective responsibility is yet to sink in and finds favour with very few.”

Balancing work commitments with childcare duties can overwhelm many working parents, especially new mothers. The lack of affordable and accessible maternity leave policies further complicates this juggling act, leading to career interruptions that impact lifetime earnings.

The struggle to maintain a work-life balance often makes women more likely to opt for part-time roles or positions with flexible hours. These choices, while necessary for caregiving responsibilities, can contribute to the widening gender pay gap over time.

Looking to apply for maternity leave? Explore this guide, which has detailed explanations, rules, and samples on maternity leave application.

Education's Role in Wage Differences

Education levels play a crucial role in wage differences, significantly influencing the earning potential of individuals. Studies consistently show that higher levels of educational attainment correlate with increased wages. For instance, individuals with a college degree typically earn more than those with just a high school diploma.

Yet, wage disparity based on education level is particularly pronounced when comparing genders. Even with similar education and work experience, women often earn less than their male counterparts. The Untop Talent Report 2024 also reported that among B-Schoolers, 55% of men received an offer of over INR 16 LPA. Only 45% of women received an offer above INR 16 LPA.

This wage gap highlights the complex interplay between educational opportunities, gender biases, and workplace structures.

Racial and Ethnic Disparities in Pay

Minority ethnic groups, such as the African-American or Latin-American population in the US, often face discrimination in the workplace, resulting in lower salaries compared to the majority groups. When you add gender to the mix, the pay gap widens.

Racial and ethnic biases prevalent in many workplaces can manifest in hiring practices, promotion opportunities, and salary negotiations, further exacerbating existing disparities.

Women of color often encounter unique challenges due to the intersectionality of race and gender. Thus, despite advancements in gender pay equity, minority women continue to earn significantly lower wages earned by men from a majority group.

For example, studies have shown that Latinas and Black women experience compounded discrimination that results in even lower earnings compared to white women or men of their race.

Closing the Gender Gap

Here are some ways in which organizations can work on reducing the gender pay gap:

Addressing Age and Parenthood-Related Barriers

It is crucial to implement supportive policies and initiatives to tackle the challenges faced by individuals impacted by age and parenthood in the workforce. Companies can introduce flexible work arrangements, extended parental leave options, and mentorship programs, among other measures, to promote gender equality in earnings.

Furthermore, advocating for equal opportunities for both men and women in terms of parental leave and caregiving responsibilities can help mitigate the disparities caused by traditional gender norms.

Systemic Changes for Equitable Workforce

Systemic changes within economic structures are imperative to address the root causes of the gender pay gap. Implementing transparent salary structures, promoting diversity in leadership positions, and offering equal opportunities for career advancement are critical steps towards narrowing the gap in pay and fostering an inclusive workplace culture.

Addressing Racial Disparities

Addressing racial and ethnic disparities is crucial for achieving true gender pay equity for all women. Recognizing and combating these biases requires a multi-faceted approach involving policy changes, diversity initiatives, and organisational cultural shifts.

Promoting Equal Access to Education

To address the wage discrimination stemming from differences in education, it is essential to promote equal access to education and training opportunities for all individuals. By ensuring that both men and women have the chance to pursue higher education and acquire valuable skills, we can work towards narrowing the gender pay gap.

Training Organizations on Unconscious Gender Bias

By raising awareness about the existence of unconscious gender bias, employees can become more mindful of their own biases and how they may impact decisions related to pay and promotions. Through DEI initiatives and trainings like diversity training, individuals can learn to recognize and challenge these biases, leading to fairer evaluation processes and ultimately reducing the gender pay gap.

Additionally, educating employees on the importance of diversity and inclusion can foster a more inclusive work environment where all employees are valued and rewarded based on their skills and contributions rather than their gender.

Iceland’s Long Fight for Equality

Iceland has consistently ranked first on the Global Gender Index - but it’s still not 100% parity. Thus, the women across Iceland, including the Prime Minister, went on a day-long strike in October 2023 - demanding equal pay and an end to gender-based violence. Women refused to work, clean or look after children - taking to the streets to voice their anger at the prevalent workplace discrimination and gender pay gap. It was in 1975 that Icelandic women first staged a walkout - putting a stop to work, literally, to demand equality. In 1976, Iceland passed a law guaranteeing equal rights irrespective of gender. Since then, women have led several partial-day strikes - but not a full-day strike, as this one.

Yesterday 70-100K women and non-binary people went on strike in the annual Women's Strike in Iceland - a beautiful, unifying, rebellious and inclusive day, where we all rose up against sexual violence, unequal pay and injustice ✊

📸 Sam Monsen pic.twitter.com/FINfswAG82

— Ugla Stefanía Kristjönudóttir Jónsdóttir (@UglaStefania) October 25, 2023

While it’s unfair to say that nothing has changed in the past few decades, it’s also crystal clear that much more is needed at an individual, organizational, societal and political level to bridge the gender pay gap. Closing the gender pay gap is essential for achieving economic equality and fostering a fairer society. It’s only the first step in ensuring equity that treats all genders equally, including the members of the marginalized LGBTQIA+ community.

When women are paid less, it not only affects their financial stability but also has wider implications for families and communities. By narrowing the gender pay gap, we promote inclusivity and create opportunities for all individuals to thrive.

Get the latest insights on what makes the future generation of talent work - and what skills are in demand through the Unstop Talent Report 2024. 

Frequently Asked Questions

1. What is the gender pay gap?

The gender pay gap refers to the average difference in earnings between men and women in the workforce, often highlighting disparities in pay for equal work.

2. How is equal pay different from the gender pay gap?

Equal pay focuses on ensuring that individuals receive the same pay for performing the same job, regardless of gender. In contrast, the gender pay gap looks at overall earnings differences between men and women across various roles and industries.

3. How is the gender pay discrepancy calculated?

The gender pay discrepancy is typically calculated by comparing the median earnings of men and women in a specific group or industry. This comparison helps identify any disparities in wages based on gender.

4. What are some causes of the gender pay gap?

The gender pay gap can stem from various factors such as occupational segregation, discrimination, lack of representation in leadership roles, and societal norms regarding caregiving responsibilities.

5. What can be done to close the gender pay gap?

Closing the gender pay gap requires a multi-faceted approach that addresses systemic barriers and promotes gender equality in the workplace. Strategies include implementing transparent pay practices, enforcing equal pay laws, promoting salary transparency, providing leadership and career development opportunities for women, addressing unconscious bias in hiring and promotion, and challenging traditional gender norms and stereotypes.

6. Is the gender pay gap illegal?

In many countries, paying women less than men for the same work or work of equal value is illegal under equal pay and anti-discrimination laws. However, the gender pay gap can also be influenced by systemic and structural factors that are more challenging to address through legislation alone.

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