1) Introduction
2) Definition of the “gender pay gap”
3) Status quo
4) Reasons for the gender pay gap
5) Measures and policies to close the gap
Governmental policies
Non-governmental measures
6) Benefits
7) Conclusion
8) References
9) Register of Illustrations
In this paper the issue of the gender pay gap, a challenge women are still faced with at the workplace, will be considered. It will deal with the definition of the gender pay gap and the status quo in the European Union, especially in Austria. What is more, reasons for its existence, measures and policies how the gap can be closed will be outlined and the benefits in case of the closure will be presented, too. Closing the gender pay gap is an important step towards gender equality and does not only benefit the female workforce itself, but also companies and the economy as a whole.
Key Words: pay gap, EU/Austria, gender equality, measures policies
“We don’t get what we want; we get what we think we deserve … Ask for more.”
(Sarah Silverman (O'Brien, Sara Ashley 2015))
The gender pay gap is one amongst many challenges women are faced with at the workplace. The reasons for the gap are as manifold as the measures and policies which should be taken to close the gap. The main questions this paper covers are:
1) What is the current situation of the gender pay gap?
2) What are the reasons for the gender pay gap?
3) How can the gender pay gap be closed?
Due to this limited scope of the paper, the focus will solely be on the EU and especially on Austria. The question now is: Why is this research being done at all? The answer is 3.602.569.227. According to the United States Census Bureau (2015), this is the approximate number of women living in the world in 2015, rising every second. All of them should receive the same pay as men for equal work. Female workforce should not be discriminated against for their gender, which already the Universal Declaration of Human Rights (United Nations 1948) states: everybody has the same rights and duties. There should not be made any differences on account of skin colour, country of origin, gender or religion. Everybody has the same right to life, protection and freedom.
According to Cambridge Dictionaries Online (n.d.) the gender pay gap is “the difference between the amounts of money paid to women and men, often for doing the same work” . The Organisation for Economic Co-operation and Development (2016) adds that the “Data refers to full-time employees”. The Justice and Consumers of the European Commission ((ed.) n.d., 1) explains that the earnings are based on “gross hourly earnings”. The Gender Pay Gap is calculated by the following formula :
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Picture 1: How to calculate the gender pay gap? (Source: American Association of University Women (ed.) 2015, 5)
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Picture 2: Gender pay gap in unadjusted form in the EU and its member states (Source: Justice and Consumers of the European Commission 2015)
The graph above shows the gender pay gap of the member states of the EU in 2013 – unfortunately there is no data available which is more up to date. The average gender pay gap of the EU is 16.3%.
The average gender pay gap of the EU in the year 2006 stood at 17.7%. Obviously, one could conclude that the gender pay gap has decreased because the women’s income increased. Actually the gap only decreased due to the fact that men’s income decreased as a result of the economic crisis. (European Commission 2015)
In contrast to Estonia, the country which has the highest gender pay gap with a rate of 29.9%, Slovenia can record the lowest gap with 3.2%. Although Austria has an outstanding good Better Life Index in categories like education, housing or environmental quality (OECD Better Life Index 2015) it has a very high gender pay gap, namely 23% which is markedly above the EU average. Even the Scandinavian countries, being pioneers for its gender equality policies, have to record a relatively high gender pay gap.
The picture below shows the development of the gender pay gap in Austria. Since 2007 the gender pay gap has been following a downward trend – it has been decreasing constantly.
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Picture 3: Development of the gender pay gap in Austria (Source: Eurostat 2015)
According to Martin Gleitsmann (Medek 2014), working in the department for social policies and health of the WKO gives an answer on the question why the gap is so high, especially in Austria: 71% of the Austrian gender pay gap can be explained by neutral factors such as age, education, line of business, experience or working hours. The remaining 5.4% of the gender pay gap are related to gender differences.
So as to find out whether only the biological sex influences the career development, a so called “twins-study” was carried out in the 1990ies, in which 52 student twins participated, a man and a woman each. Personal characteristics of the twins like age, social background, study success and some other factors should be as congruent as possible. The only difference should be the gender. Surprisingly there were not found any differences concerning pay within the first three years of career entry. In comparison to their male twins, women were paid € 60,000 less after ten years. Having a child and the maternity leave “cost” € 35,000 extra and it took women three times longer than men to get one subordinate employee. Interesting was the fact, that despite the pay differences men and women were equal satisfied with their job. (Mayrhofer et. al. 2005, 211-242)
In order to raise awareness for gender equality the equal pay day was initiated. It was founded in America when 1963 the Equal Pay Act (The White House n.d.) was established. That act says that “no employer […] shall discriminate […] employees on the basis of sex by paying wages to employees […] at a rate less than the rate at which he pays wages to employees of the opposite sex […] for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions […]” (U.S. Equal Employment Opportunity Commission 1963). The equivalent legislation in the EU was declared in 1975 (Publications Office of European Union Law 2008).
The equal pay day in 2016 in Austria will be March 10th (Business Professional Women Austria 2016). Due to different calculation methods there is another date in autumn, too. According to Linda Lowen (2012), a member of the Women's Media Centre Progressive Women's Voices program, it is a “symbolic day that illustrates how far into the year a woman must work to earn the same amount made by a man in the previous year”. For Austrian women this would mean that they need to work until March 10th, 2016 in order to receive that amount of pay, men already earned in 2015.
The former conservative minister for women and equalities in the UK, Maria Miller (Perraudin 2015), claims that the gender pay gap predominately affects women over 40 and that measures taken by the government do not improve their situation. The main problems of this age group are the missing job prospects. Lowen (2011), referring to the U.S. Census Bureau, outlined that women between 16 and 34 years receive slightly over 90% of the men’s pay but from that age on they only receive 79% or less compared to the men.
After having described the situation of the gender pay gap in the EU and in Austria in particular the next important aspects that have to be analysed are the reasons for the gender pay gap.
Julie Coates, banking and capital markets leader at PwC outlines that at the time of graduation women receive 4% less pay than men, though they have the same qualifications, age and motivation to work. Furthermore, Coates outlines that job prospects are limited for women because they are considered to get pregnant which means a loss of working power for the company. For that reason Julie Coates recommends promotion quotas: a certain percentage of leading positions in a company should be occupied by women. (Bullock 2016)
The Justice of the European Commission (2015) outlines various factors influencing the gender pay gap in a negative way. Apart from the conscious underpayment of women, the job women do is often considered not to be of equal value compared to the job men do. Especially when men have to carry out physical tasks or women are responsible for people the gender pay gap drifts apart enormously. Some other reasons are that women tend to prefer working in the health and educational sector. They also can be found in lower-skilled jobs, like in supermarkets, as hairdressers or cleaning staff. In those mentioned sectors the paid wages are lower in general (The World Bank (ed.) 2011, 204-205).
The incompatibility of family and career often force women to take on low-skilled, low-paid part-time jobs, which makes it impossible for them to accept higher positions. Another reason for the gender pay gap is the underrepresentation of women in politics and in management positons of companies. (Justice of the European Commission (ed.) 2014, 6-7) In 2014 only 25.9% of the members of the supervisory board of the largest companies in Austria were women who only received 82.9% of the income of their male colleagues. 20.3% of management positions in 2014 in Austria were occupied by women who were only paid 73.1% of the income men receive in the same management position. (Der Rechnungshof (ed.) 2015, 20-22).
According to the World Development Report 2012 (The World Bank (ed.) 2011, 17-19) the fact that women spend more time on running the household and caring for the children has a further impact on the gender pay gap. The gap increases and women have less time for being an active part on the labour market. Additionally women are often confronted with obstacles when they decide to work in a certain (male-dominated) business sector. Employers then wrongly reason lower output and productivity from the fewer women in this field of business.
The challenge now is to set up policies and measures in order to close the gender pay gap. International organisations like the EU or the OECD, individual countries but of course companies and the employees themselves can make their contributions to advance the closure so that it will not need another 118 years to close the gap worldwide (Grimley 2015). The questions now are how this can be achieved and which steps to close the gap have already been taken.
According to the Trade Union Congress in the UK the pay gap amongst the high earners is about 55% (Kollewe 2015). Therefore the prime minister in Great Britain, David Cameron, wants to close the gender pay gap as soon as possible. All companies in Great Britain with more than 250 employees are forced to publish their internal gaps between what women earn and what men earn. The government also planned to set additional steps to close the gap like making the re-entry into work easier for parents, showing girls their career opportunities and guaranteeing women a safe workplace free from discrimination. Besides, Cameron announced the National Living Wage which should rise from £ 7.20 in April, 2016 to £ 9.00 in 2020. (Government of the United Kingdom 2015) According to the National Living Wage Foundation (2015) it is “an hourly rate set independently and updated annually”, “calculated according to the basic cost of living in the UK” and “good for business, good for the individual and good for society”.
Austrian companies have to publish reports on the income of their employees on a two-year basis. Hence income transparency can be guaranteed and gender pay gaps can be closed. Since 2014, it has been compulsory for each company with more than 150 employees. (Justice of the European Commission 2015) German companies with more than 500 employees have to publish their policies which should ensure gender equality at the workplace by supporting women and closing the gender pay gap (Government Equalities Office (ed.) 2015, 20).
The Global Gender Gap Index “benchmarks national gender gaps on economic, political, education and health criteria, and provides country rankings that allow for effective comparisons across regions and income groups” (World Economic Forum (ed.) 2015, 11). Finland, one of the top 10 countries with the highest gender pay gap index (World Economic Forum 2015), puts a lot of emphasis on gender equality and has developed an “Action Plan for Gender Equality 2012-2015” to fight against pay discrimination by publishing pay survey analyses. Moreover, the target of the Equal Pay Programme for 2006-2015 is to decrease the gender pay gap by 5% and includes measures for developing pay systems and closing the gender pay gap. (Justice of the European Commission 2015)
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