The International Labour Organisation (ILO) estimates the average wage gap between men and women globally to be 23 percent. There is considerable difference, however, in the size of the gap depending upon the country.
Before getting into the various reasons why the wage gap varies so greatly across countries, it is important to understand the limits to using the gender wage gap as an indicator of gender equality (or lack thereof) in a particular country.
The pay gap generally refers only to the difference in wages earned by male and female employees. By this definition, income from employment earned by self-employed workers is excluded. Workers not receiving a wage (e.g., unpaid family workers), unemployed and inactive people are also excluded from the gender wage gap by definition (they don't earn a wage).
Understanding these exclusions is particularly important since women are often underrepresented among these non-earning groups, leaving only a segment of women to study in the workforce. This can be seen in the case of Saudi Arabia. In 2014, Saudi women earned only 0.4 per cent less than men. However, the extremely small wage gap can be explained by the low labour force participation rate of women, and the relatively higher wages of the very few women working as employees.
This example points to the danger in directly associating the size of the wage gap with the extent of gender equality. It also points to the importance of measuring gender equality by including other statistical indicators, as well as more qualitative studies, to fully understand the labour market structure in a given country.
For example, in the ILO's most recent Global Wage Report 2014/15, the authors used differences in education, experience, occupational category (managerial, high-skilled, etc.), economic activity (manufacturing, services, etc.), location (urban, rural), and work intensity (hours worked) to explain the average differences in wages between men and women.
Across the sample of 38 countries, a wage gap was observed in all of them. However, once the aforementioned factors were taken into account, the wage gap reduced considerably, or in some cases, reversed.
In other words, in countries like Germany or the United States, much of the wage gap is due to differences in the levels of education, experience, and the other variables mentioned above. In Sweden, Brazil or the Russian Federation, the analysis indicates that women earn less than men even with all of these factors included (even though, using these factors alone they should actually be earning more than men). In these latter countries, other unobservable factors in the work place, like discrimination, risk taking, higher mobility, etc., may play a considerably greater role in explaining the wage gap between men and women. In the former countries, discrimination may very well still be present in the work place and especially in the pipeline that readies individuals for education and higher-level jobs, but this is difficult to measure.
The Global Wage Report 2014/15 advances our understanding further by calculating the pay gap among the lowest and highest paid male and female employees. The analysis reveals that the wage gap varies even within an individual country. For example, in the United States the majority of the gap in wages between the lowest paid men and women can be accounted for by differences in education, experience, hours worked, and the other observable variables mentioned above. By contrast, among the highest earning men and women, only 75 percent of the difference in wages is due to these variables. Unobserved characteristics, such as wage discrimination in the work place, may account for the remainder.
Gender inequality
Wage gap analyses can also point us to the origins of gender inequity. For example, while women have made significant advances in matching or surpassing the educational achievements of men in some countries, in others, social or cultural norms prohibit or discourage girls' access to the same quality of education made available to boys. So efforts to address the gender wage gap require attention to policies before women enter the labour market. At the same time, for the highest earning women with educational levels equal to those of men, other policy approaches will be required.
Another factor the analyses point to is that women tend to have less experience and work fewer hours than men. Indeed, across the globe, women are overrepresented in part-time work and assume a greater share of the unpaid household and care responsibilities. While some women choose to work part-time voluntarily, according to the ILO report, Women at Work Trends 2016: “the lack of adequate paid parental leave, good quality, affordable and accessible childcare and other social care services for family members, and also of family-friendly flexible working arrangements pushes women, who are often lower paid than their male counterparts, to leave the labour market either temporarily or permanently.”
The overrepresentation of women among part-time workers has considerable implications. First, part-time workers may often be excluded from certain types of benefits, like professional training, social security protection, or unemployment benefits afforded to their full-time counterparts. Second, the opportunities for career advancement tend to be more limited and generally confined to certain, largely female dominated sectors, where the work is often undervalued. Both of these factors contribute to the gender wage gap and have long-term implications for the lifetime earnings of women as well as their labour protection.
It is clear from different analyses of women in the labour market that reducing gender inequality - and the gender wage gap - cannot be achieved without greater equality in the home. Whether it is lower levels of female participation, hours worked, wages, career mobility, CEO representation, or other variables that measure gender equality in the workplace, women fare more poorly. This outcome is the result of women's more unequal position in the household and the greater care and domestic responsibilities that they have. Men are equally capable of taking on domestic and care responsibilities. Public policies can help facilitate greater equality in the home through for example, parental leave policies and the provision of access to affordable quality childcare.
In sum, gender inequality and the gender pay gap manifest in distinct ways for different women and for various reasons. Redressing both will require an integrated approach which recognises the various entry points for gender inequality from childhood, to education, within the home, to the world of work and beyond.
Kristen Sobeck is the Officer in Inclusive Labour Market Institutions in the ILO's Country Office for Argentina. She is one of the authors of the three latest editions of the ILO's Global Wage Report. The opinions expressed in this article and any errors are her own; its publication does not constitute an endorsement by the International Labour Office or IOL of the opinions expressed therein.
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