Human Resources Management
Despite the growing role of gender equity policies in industrialised world, the gender pay gap remains a well-established phenomenon, impacting the quality of organisational interrelationships between employees and employers, and depriving women of a chance to earn better wages. A variety of factors predetermines the still significant difference between the material rewards, which women and men receive for similar work. The current state of empirical research suggests that the existing difference between male and female salaries is difficult to decrease; moreover, with the growing complexity of the social and economic environments, employers and states appear unable to fight with the increasing gap between the wages which women and men earn in similar working conditions (McGregor 2008). In this situation, a detailed review of literature is needed to investigate the complexity of causes, consequences, and factors that drive or impede the development of gender wage differences in different organisational contexts.
What is gender pay gap?
The term “pay” usually includes all types of benefits, which employers provide to their employees (Cotter 2004). Regardless whether employees receive these benefits on a voluntary basis, or under contract, or whether these benefits are of material or non-material character, they should carry the same value for the same work, regardless the employee’s gender. Objectively, gender is a social construct, and in the light of the numerous discrimination policies, male and female workers should be protected from inequalities. Female and male workers should receive the same pay for the same work; nevertheless, under the impact of dramatic social shifts, researchers and business professionals have become increasingly concerned about the growing gap between female and male pays. The term “gender pay gap” or “gender wage gap” has come to symbolise the whole set of factors and notions regarding the discriminative difference in pays, which male and female workers tend to experience in their relationships with employers. The Organisation of Economic Cooperation and Development states that “gender differences in wages provide an indicator of the degree to which men and women receive similar incomes from work. The ‘gender wage gap’ is measured here as the difference between male and female median full-time earnings expressed as a percentage of male median full-time earnings” (OECD 2001). Given that literature in economics and sociology still lacks a single definition of gender pay gap, the definition provided by OECD remains the most objective and the most successful attempt to define the meaning of the pay gap in economic terms.
How is gender pay gap measured?
OECD (2001) suggests that the gender pay gap can be measured and reviewed through the prism of the three different factors. First, the gender pay gap can be measured with respect to work experience, firm size, economic sector, skills, and job tenure. Second, the gender wage gap can also be measured against the returns, which each of the abovementioned factors creates in relative wages. Third, the gender wage gap is frequently linked to discrimination (OECD 2001). Whether countries choose to measure the gender pay gape against the firms’ size, or relative to the extent, to which women are discriminated against, statistical research always reveals the dramatic differences in pays, which women and men in industrialised countries receive for the same work. The current state of empirical research of the gender pay gap suggests that discrimination is the major driver of differences in female and male salaries. Beyond the fact that “women’s relative pay increased from 66% in 1984 to 73% in 2003” (Annesley, Gains & Rummery 2007), there is a whole set of causes and economic and social drivers, which prevent women from making a successful and materially justified career.
Gender pay gap: the major causes
From the viewpoint of the standard neoclassical theory, the pay which workers receive for fulfilling a particular set of workplace obligations is determined by the interrelationships between the demand and supply in the labour market. A worker’s pay is usually measured against his marginal productivity (i.e., the additional value he is able to add to the firm’s output – Michie & Burchell 2003). Does that mean that women display lower levels of marginal productivity or that the patterns of labour supply and demand for women are different than those for men? In reality, to have a higher marginal productivity, workers usually require education and skills; and in this context, women are no worse than men of similar profession. “The theory of Human Capital argues that people can increase their productivity by investing in themselves” (Cotter 2004); and it is highly improbable that women are less capable or do not realise the importance of investing in their professionalism and education, as compared to men. Literature lists a whole set of factors that may be responsible for “not-decreasing” gender pay gap. These include human capital differences; part-time working; travel patterns; occupational segregation; and workplace segregation.
When writing about the gender pay gap, researchers and business professionals devote a great deal of time to investigating the impact of discrimination on male and female wages. According to Armstrong (2007), discrimination is displayed in human capital differences; i.e. differences in educational levels and work experience. The core reason of this inequity is not that women are less talented in education; the problem is that women are more likely than men to leave their jobs to care for children, family members, or other dependants. As a result, not the lack of education, but breaks in career negatively impact women’s experience, and consequentially, the level of pay (Scott, Dex & Joshi 2008). How reliable and effective this explanation could be, it does not explain all factors and complexities in industrialised labour markets; nor does it explain the trends, which are not readily visible to researchers. These usually refer to women, who do not have families but display the growing commitment to work; surprisingly or not, but these women also experience the discriminative differences in pay, when compared to men. Ackerman and Goodwin (2000) suggest that “career-oriented women, who would, in fact, make a long-term commitment to a job, often suffer ‘statistical discrimination’ from employers unwilling to risk hiring any women”. As a result, not human capital differences, but overt discrimination may be primarily responsible for the relatively stable gender wage gaps observed in industrialised countries. This discrimination is logically linked to occupational segregation as one of the critical drivers of the gender pay gap in the world.
Women are surrounded by a whole set of prejudices, which prevent them from taking male-dominated jobs. As a result, women are being excluded from the majority of jobs, where men dominate, and have to move on to more “female” jobs. These movements and shifts lead to overcrowding and higher competition in some sectors of the labour market, with oversupply of female labor being responsible for the lower wages in female-dominated jobs. Statistical research suggests that 60 percent of professional women are concentrated in less than 10 percent of occupations (Armstrong 2007). Not only are females discriminated against male-dominated jobs; the female-dominated occupations are usually characterised by the lowest wages. While women objectively strive to diversify their labour attempts and to occupy relatively free labour market niches, the majority still has to go into the occupations which society deems the most appropriate for them. “The conclusion is reached by opponents of comparable worth that women desire or choose these low-paying jobs, and therefore the government should not interfere with women exercising their choice” (Shafritz, Rosenbloom & Ricucci 2001); as a result, the processes within occupational markers are highly unregulated and do not leave women a single chance to overcome the social and economic barriers in career.
Occupational segregation is only one out of many factors, which predetermine the emergence and existence of the gender pay gap. Researchers are unanimous in that part-time jobs significantly contribute to the gender pay gap and occupational segregation, creating a conglomerate of factors and drivers of gender pay gap within industrialised labour markets. Responsible for the quality of their family members’ wellbeing, women are more likely to choose part-time jobs. On the one hand, a part-time job is associated with lower qualification and skills; on the other hand, the major portion of part-time jobs is concentrated in low-wage sectors (Rose 2008). As a result, where women have to combine family and work, they do not have any chance to find a well-paid part-time job. Here, special attention needs to be paid to the side effects, which part-time jobs produce on occupational segregation. Shafritz, Rosenbloom and Ricucci (2001) provide an interesting example of women working in hospital nursing – the economic sector well-known for being understaffed and underpaid. Hospitals actually reveal the long-standing character of occupational segregation patterns: bearing in mind the need for additional hospital personnel, employers could offer better salaries and more flexible day/night shifts. Hospitals are, in their turn, reluctant to change the traditional structure of wages and compensation; that is why hospital nursing remains an almost 100% female dominated job (Shafritz, Rosenbloom & Ricucci 2001). In the situation, where numerous factors as well as market forces predetermine the growing gender pay gap, the natural question is how industrialised societies attempt to resolve gender issues in labour. Gender pay gap: policies and cures
In should be noted, that the history of governmental policies regarding female discrimination in labour is extremely controversial. The effectiveness of pay equity policies depends on the extent to which labour markets are centralised. The more centralised the pay setting system in the country is, the more equitable the outcomes of different employment policies will be (Cotter 2004). The policies aimed at increasing the bottom pay for the most problematic population groups traditionally benefit women in low-paid jobs, and the countries with centralised and minimally dispersed wage control are more likely to decrease the differentials between male and female wages.
Scott, Dex and Joshi (2008) write that gender pay gap policy options basically fall into the two distinct categories; the first category is expected to allow women caring for their dependants without leaving their jobs. These include rescheduling or decreasing the number of working hours, which do not cause significant changes in pay. “Flexible working can enable women to stay employed under existing terms of employment through intensive care periods, reducing gender inequality in both labour market participation and the conditions of employment” (Blau, Brinton & Grusky 2006). The second category provides women with an opportunity to shift the responsibility for care to state or private institutions. Minimal wage is also considered to be a tool of decreasing the gap between female and male pays, but this tool has very limited market coverage and cannot solely resolve the whole complex of issues in gender pay gap field.
Beyond the need to provide women with paid maternal care and leave, a whole set of wage-structuring policies can be implemented. “Policies to reduce the gender pay gap include the targeting of rigidities in industry structure caused by cross-firm subsidies, by improving the efficient performance of high-paying firms and pushing low-paying firms out of the market” (Michie & Burchell 2003). The state could significantly contribute to the expansion of equal employment opportunities by rising non-standard forms of employment and promoting dual-earner households. Finally, the development of equal opportunities could substantially transform gender attitudes, as well as the organisation of wages, working time, and employment criteria. Here, collective bargaining remains one of the most effective catalysts of the positive organisational change. At the firm-based level, firms practice regular equal pay policies review, to ensure that no gender-related pay issues emerge and that firms are able to timely respond to any inequities revealed in the process of review (Berbeglou 2001).
Objectively, the wide range of equal pay solutions suggests that none of them is effective enough to resolve the current gender pay issues. Depending on the situation and the labour market conditions, a unique combination of policies needs to be developed. As the whole world is gradually moving to the middle of the new century, the current structure of gender pays is likely to break down; as a result, to prevent the development and expansion of gender inequity hysteria, states and firms will require developing new approaches, which will help them earn widespread praise for decreasing the differences in wages and providing women with an equal access to labour opportunities with men.
The topic of gender pay gap in economy has recently become the subject of intense concern. It is not easy to determine what causes the difference between female and male pays, taking into account that the pay itself is the result and the outcome of numerous factors. The current state of research is concentrated on the role of human capital, part-time work, and occupational segregation in the development of gender pay gaps, with minor attention paid to the importance of wage structure, the centralisation of labour markets, and equal opportunity policies. The difference between male and female pays is mostly due to simple discrimination of female rights, as well as the growing role of prejudices and employers’ reluctance to hire women and to raise their salaries. Given that gender pay gap is characteristic of the majority of industrialised markets, governments and firms should develop complex equal opportunity policies, to ensure that women are given an opportunity to combine work and family obligations without being discriminated against.
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