Why Does Gender Pay Inequality Persist?

With the increasing trend of the remarkably importance of the gender pay equality during the past few decades, organisations and many commentators have been paying particular attention to the relative trends, legislations, news, economy and global labour market as a whole to address the persistence of the gender pay inequality occurred nowadays. Pay equity is defined as “a particular strategy for reducing or eliminating the wage gap between or among groups such as women and men, or various ethnic groups” (Thomas 2006). It was mentioned in the CONSAD Research Corporation’s paper (2009) that there have been significant increase for women to participate in the labour force, to acquire higher education level and to make substantial real earnings. For instance, Lander & O’Neill (1991) indicated that Australian women participation rate in the labour force has doubled since 1947. Moreover, it was showed in the Education International’s report (2010) that the average female graduation rate in higher education in OECD countries is 16 percent more than the male graduation rate. Yet the challenge is that women have been earning less than men all through the developed countries around the world even they are well educated and actively participate in the workforce (Hatt1997). Taking an example in Australia, women earn approximately 80 percent of men’s wages (Lander & O’Neill 1991). The persistence of the gender pay gap is puzzling although the gender pay equity ratio has been steadily rising and a wide range of legislations such as Equal Employment Opportunity and Affirmative Action were implemented to address the issue (Smith 2009; Lander & O’Neill 1991). This paper will briefly demonstrate the historical overview with respect to the topic. It will proceed to identify the comprehensive reasons for the existence of gender pay inequality. It will then illustrate the advantages of having pay equality worldwide. Last but not least, the paper will recommend some of the strategies which organisations can best address the challenge by utilising appropriate non-discriminatory workplace practices and policies.

Historical Overview

The ancient time of keeping women staying and working at home while men were responsible for earning a living had passed after the World War II (Amaram 2010). The participation rate of women joining the labour force has greatly boosted due to the establishment of some legislation to remove obstacles of women’s employment and to allow women working in certain kinds of work such as metal industry (O’Donnell & Hall 1988). The booming economy and labour shortage triggered the fact that women were encouraged to replace men, who were resisting in the war, in the labour market (O’Donnell & Hall 1988). Campaigns were also formed by many women’s organisations to fight for the equal pay between men and women (O’Donnell & Hall 1988). Some supporters advocate the theory of comparable worth that “there should be equal pay for jobs entailing similar skill, effort, responsibility and work conditions, and that this parity should occur regardless of respective job market values” (Grider & Toombs 1993). However, even there were legislation, theories and women’s organisations to protect women from getting unequal pay; the gender wage gap has been existed for many years. To explain this gap, there are a couple of complex reasons which directly and indirectly result in the gender differences in pay.

Occupational Segregation

One of the primary reasons for the gender pay differences is due to occupational segregation. Men and women are not evenly allocated in all occupational categories. Women tend to be distributed in low-paying industries or occupations which directly affect their average earnings (Smith 2009; Hatt 1997; McAuley 1981; Mumford 1989; Lander & O’Neill 1991; Education International 2010; Curlew & Weber 2010). It was pointed out that women were mainly employed in community services, the wholesale and retail trade, clerical work and catering; whereas men were generally employed in mining, electricity, gas and water, manufacturing as well as construction industries where men are more likely to receive well above average pay (O’Donnell & Hall 1988; Hatt 1997). The consequence of setting women apart in certain occupations with low-status and low-paid partially results in the gender pay gap.

Vertical Segregation

Rather than constraining women in particular occupations or industries, vertical segregation occurs in both public and private sectors when women are located in lower positions and men are placed in more senior positions such as executive or managerial roles (Mumford 1989). Women are given very few opportunities to engage in promotion to higher positions, and therefore women are constrained their mobility upwards to the organisational hierarchy and they are under-represented at senior positions in all occupations (Hatt 1997). This phenomenon is closely related to the glass ceiling effects for women that refer to “those artificial barriers based on attitudinal or organisational bias that prevent qualified individuals from advancing upward in their organisation into management-level positions” (U.S. Department of Labour 1991). Hence, vertical segregation is another factor that leads to the gender pay gap.

Family Responsibility

As a result of the family obligation to give birth as well as take care of the children and elders at home, there has been a greater percentage for women to participate in more flexible part-time and casual employments than men who tend to have full-time employments (Smith 2009; CONSAD Research Corp 2009; Curlew & Weber 2010; Amaram 2010). It was indicated in Amaram (2010)’s study that pregnancy leading to the absence of women is 36 percent more than men and married men are more likely to work longer hours to make up the loss of the earnings for the family. Undoubtedly, it was claimed by many reporters that part-time employment pays relatively less than full-time employment, thus the unbalanced participation in part-time works causes women to be classified in lower level of income groups without adequate chances for skill advancement and promotion opportunities (Education International 2010 & Parliament of the Commonwealth of Australia 2009).

Women’s Tendency of Education and Work Choices and Patterns

The educational paths that men and women decide for their majors in higher education or universities are different, indirectly affect the real earnings between men and women in the workforce (Amaram 2010). Amaram (2010) showed in his paper that men generally prefer sciences as their majors whilst women prefer humanities and education. The assumption is that men and women are likely to choose their desired majors at colleges or universities that can reflect what they are going to choose for their careers in the future, which leads to the conclusion by Hartmann (2004) that the pay of the male-nominated occupations tends to be higher than female-nominated occupations. One of the explanations can be attributed that women tend to choose a safer work environment such as being a secretary, teacher or receptionist and they are willing to accept less-paid jobs (Education International 2010 & Farrell 2005). In addition, based on the GAO’s report (2003) showing that women normally work fewer hours and take more breaks away from work than men, women are therefore less work experience and human capital at work that brings about the consequence of earning less income.

Historical and Social Stereotypes of Under-Valuating Women’s Work and Skills

Based on the historical overview mentioned in the first section, up until the Second World War, women were supposed to stay at home for cleaning and bringing up the children while men were taking the main role to be the breadwinner for the whole family (Amaram 2010; Elias & Purcell 1988). According to Press (2006), companies advertised for job vacancies in the newspapers listed separately for men and women, as well as women’s pay was greatly lower than men. In no doubt, the historical factors generated the hypothesis that women’s works are semi-skilled and unskilled (Smith 2009). This hypothesis was supported by Lander & O’Neill (1991) and Parliament of the Commonwealth of Australia (2009) that women’s skills and works are always under-valuated and unrecognised, which causes the social stereotypes on the perception of female’s capability to work in certain occupational categories. In other words, women may earn less than men as a result of their skills and works were devaluated by the community and organisations based on the social stereotypes.

Direct Gender Discrimination

There are many theorists agreed that direct gender discrimination partly account for the gender wage gap (Curlew & Weber 2010; Parliament of the Commonwealth of Australia 2009; Hatt 1997 & McAuley 1981). It happens when women and men are treated unequally facing the same job requirements with the same educational level and work experience (Education International 2010). Although it is unlawful to discriminate women from being recruited in male-nominated occupations in most of the developed countries, gender discrimination indeed moderately initiates the gender pay differences. It was even reported that gender discrimination and bias comprise half of the gender pay gap (Lander & O’Neill 1991). Consequently, no matter the organisational and societal sex discrimination is intentional or unintentional, it is clear that gender bias is an essential element of the persistence of wage gap between men and women.

Other Reasons

Apart from the major factors brought up previously, there are other reasons which should account for the wage gap as well in terms of the problem of the merit-type payment systems, union affiliation, and women’s value on non-wage benefits such as health insurance. Firstly, it is important to understand the rise of the individual contracts together with the meaning of less collective bargaining like the decline of trade unions at workplaces (Bamber, Lansbury & Wailey 2004). Also, merit-type payment including merit increments and merit bonuses is the most popular individual performance pay plans that are widely used in the USA and many other Western countries today (Shields, 2007). One of the disadvantages of the merit-type payment systems is that it lacks of transparency of the pay structure, hence, it is always up to the management’s discretion of any individual performance and pay where there are probably the existence of discriminatory components (Grider & Toombs 1993). Secondly, it was claimed that the formation of a trade union will bring a wage rate of 17.6 percent up for union members (Hatt 1997, Amaram 2010). With the significant rising trend of women participating in part-time and casual employments stated earlier, it is less possible for women to become union members that they comparatively earn less than men who normally work as full-time employees and are union members. Lastly, research was also done by the CONSAD Research Corporation (2009) that there is a greater probability that women may relatively value more on non-wage benefits and other employee benefits such as childcare, health insurance and advisory services when comparing to men. Accordingly, women may value other aspects of benefits other than wage that may cause the gender wage differences.

Advantages of the Existence of Gender Pay Equality

Despite the limitations acknowledged which block the way to gender pay equality, there are a series of advantages for individuals, families, organisations and economy as a whole provided that gender pay equity exists. Pay equality increases the empowerment of women and reduces the chances of women’s experience to harassment, violence and exploitation at work (Cornish 2008). Additionally, it brings positive effects to the well-being and wealth of the families as a result of the increased income, which ultimately improves the situation of poverty, economy and social justice (Lander & O’Neill 1991; Education International 2010 & Curlew & Weber 2010). For the organisations, staff morale and productivity will be increased and absenteeism will be decreased if gender pay equity exists in the workplace because employees feel fairness among others (Curlew & Weber 2010). Thus, organisations should proactively take actions to address the problem of the persistence of gender pay inequality in order to benefit itself, employees, community and other stakeholders involved.

Organisational Strategies for Tackling the Challenge

Although government’s intervention of implementing fair pay legislations among male and female employees is indispensable, as Smith (2009) claimed that the legislative reform alone is not enough. Strategic non-discriminatory workplace practices and policies should be carefully planned, designed, implemented and monitored at the organisational level in order to build positive images to the public without violating any relative discriminatory issues, as well as maximise the benefits of balancing the gender pay differences. Therefore, human resource management teams play major roles in making every single decision to align with the organisational strategies. First of all, it is recommended to use objective, systematic and consistent process of job evaluation systems to deal with gender-based inequities in pay (Lander & O’Neill 1991). De Corte (1993) suggested a model-based approach to job evaluation to calculate the probability to gender bias related to pay at work. Secondly, male and female recruiters should be involved in the recruitment and selection stages so that female candidates will not be excluded in a discriminatory way. Thirdly, training and development should be regularly provided to all employees with the intention that women are given chances to promotion in a higher hierarchical level in the organisations. Fourthly, mentoring programs with professional consultants or management should be offered to female employees, who have competent knowledge and capabilities, to encourage them participating in senior positions (Equal Opportunity for Women in the Workplace Agency 2010). Fifthly, flexible workplace arrangements such as home-based assignments as well as childcare services should also be available to allow female employees having work-life balance (O’Donnell & Hall 1988). Lastly, organisations should conduct a gender pay audit annually, which provides detailed information regarding the gender pay structure and figures of the whole organisation and the percentage of female employees being promoted to the senior positions (Equal Opportunity for Women in the Workplace Agency 2010). The strategies proposed above are only few subtle pieces of a complex jigsaw puzzle; beyond doubt organisations should proactively look for other approaches to address the problem of gender pay inequality.

Conclusion

The condition of gender pay inequality has been steadily improved in the last few decades. However, in reality it does persist due to an array of complex reasons in terms of occupational and vertical segregation, parenthood, women’s propensity of education and occupation choices and patterns, historical stereotypes and under-valuation of women’s skills and work, direct gender discrimination, the setback of the merit-type payment systems, union affiliation, and different values on wage and non-wage employee benefits between men and women. These factors illustrated are merely the key causes and further research should be done to elaborate the thorough formation of the wage gap. It is clear that the pursuit of gender pay equality brings individuals, families, organisations, community and economy positive effects. Consequently, organisations should better equip themselves and contribute to the attainment of eliminating the gender wage gap. Systematic and appropriate non-discriminatory workplace practices and policies should be well implemented to encourage fairness among male and female employees in pay and promotion according to their knowledge, skills and competencies. On account of the increased staff morale and happiness at work, organisations can also build a healthy and positive public image that in turn increasing the organisational attractiveness and competitive advantages in the labour market. In conjunction with the practical support by government, community and unions, it is believed further reduction of the gender wage gap is feasible.