What is the Gender Pay Gap? And What are its Causes

The latest stats from the Global Gender Gap Report states that only one-third of senior roles in firms globally were occupied by women. This shows that the gender pay gap, also known as the gender wage gap, is a common issue that prevails across industries, economic sectors, and geographical boundaries.

The Gender Pay Gap is an issue that focuses on how women and men are paid differently for the same job. It is concerned with women getting less money for similar work. A Pew study shares that on an average women earn only 82% of what men earn.

To investigate the gender wage gap, this article will give you a brief overview of the issue and discuss the factors that escalates the gender pay gap.

Definition of Gender Wage Gap

The European Institute for Gender Equality defines the gender pay gap as the “Percentage of men’s earnings and represents the difference between the average gross hourly earnings of female and male employ­ees”.

Whereas the UN defines it as “..the difference between average monthly earnings of male employees and of female employees as a percentage of average monthly earnings of male employees”.

The definitions give us an idea to calculate the average difference of pay received by women and men. This can be done by calculating the gross hourly earnings and the average monthly earnings.

Types of Gender Pay Gap

The disparities in the gender pay gap are measured by two different methods. Both methods provide insights into understanding the cause of the pay gap.

1. Unadjusted Gender Pay Gap

The unadjusted pay gap, also known as the uncontrolled pay gap, is measured by calculating the average difference in pay received by women and men.

This type of pay gap is measured without considering factors such as education and level of experience. Pay without any deduction of tax or security is considered for this type.

The differences are easy to understand. So if there is a 15% difference in the gender pay gap it means that women earn 15% less salary than men.

2. Adjusted Gender Pay Gap

The adjusted pay gap, also known as the controlled pay gap, is measured by calculating the difference in pay after considering factors such as education, level of experience, and job role.

This type of pay gap gives more detail and is ideal to measure differences in sectors and occupations. Such as, are women and men equally paid in the field of technology? or the senior or management jobs equally paying to both genders.

Causes of Gender Pay Gap

Below you will learn about seven causes that result in the gender pay gap in our society.

1. Occupational Segregation

One of the major factors that contribute to the gender wage gap is occupational segregation. Broadly it means that people of different genders, and demographic backgrounds are not evenly represented in different kinds of jobs.

For women, this bias can be a result of social and cultural patterns. As well as policies that promote occupational segregation.

Occupational segregation widens the gender pay gap because occupations that pay better are dominated by men. On the other hand, jobs that comparatively pay less are dominated by females.

This pattern can be seen despite the fact that these jobs require the same level of education and skills.

For instance, educational jobs, personal and health care are the jobs that are dominated by females yet these jobs offer less money. Whereas STEM (Science, Technology, Engineering and Mathematics) jobs and business services that pay well are dominated by men (AAUW, nd; Folbre, N., et al., 2023; IWPR, 2020).

2. Motherhood Penalty

Motherhood is considered a strong factor that strengthens the gender wage gap.

Women entering motherhood face pay gaps to fulfill their parenthood responsibilities. Women having children are more likely to take career breaks or to switch to low-level, part-time jobs that offer flexibility.

Whereas men have the opposite effect. They are determined to hold jobs and look for better opportunities. 

Switching jobs or taking longer career breaks impacts women’s experience levels and professional growth. Such women are less likely to be promoted and are at higher risk of being demoted or getting fired (Ivona Hideg., et al., 2018).

3. Women in Part-time Roles

Another major reason that strengthens the gender wage gap is the fact that women are inclined towards doing unpaid work, such as childcare, elderly care, or house chores.

This leaves them with less time and opportunities for full-time paid work and their options are limited to part-time work.

As Caroline Criado-Perez (2019) states in her book, women receive less money also because part-time roles offer less money than full-time roles. Additionally, it is very unlikely that higher-level jobs offer flexible working hours.

Part-time roles offer the required flexibility to work. Therefore, women end up doing jobs that are below their skills and the pay they deserve.

4. Occupational Discrimination

According to Gender Equality Index 2020, “…women earn 16% less per hour than men”. Ideas like sexism at work or occupational discrimination widen the gender wage gap.

Occupational discrimination is the idea that women and men have different skill sets and they should be concentrated in certain fields.

Therefore, employers prefer men for male-dominated jobs and women for female-dominated jobs. Even if a woman equally qualifies for a role that is male-dominated still she might face discrimination and rejection on the basis of her sex.

This practice reinforces that men are suitable for male-dominated jobs related to science, technology, engineering and mathematics.

This process widens the gender pay gap. Also because male-dominated jobs tend to pay higher salaries than female-dominated jobs related to care and education.

Additionally, men are considered best fit for leadership roles therefore they are more likely to get senior and managerial positions that pay higher salaries.

5. Few Female Managers

Women are left with limited options to work; hence they hold few executive positions.

For instance, in 2020 in the EU almost half of the all employed people were women i.e. about 46%. Still, women managers were only 34% of all the managers in the EU.

Whereas, in 2021 only 28.2 percent of women held managerial positions across the world.

The percentage of fewer women managers increases the proportion of the gender wage gap. Because, collectively men managers earn money than their female counterparts. 

6. Automation Leading to Gender Gap

The exponential increase in technology has increased the risks of automation. It means that simple jobs that were performed by humans are now done by machines. Machines are replacing humans and increasing unemployment across countries.

A study conducted by the International Monetary Fund (IMF) in 2019 concluded that women are at higher risk of being replaced by machines in the future.

The study included 30 countries, among which 28 countries were members of the OECD. In these countries, 26 million female jobs are at risk of automation within the next two decades.

Such studies raise our concerns about the gender pay gap that might increase in the future.

7. Unpaid Work and Lack of Access to Employment

Women play an important role in a country’s GDP growth. According to McKinsey’s report, the GDP of the US would be 25% smaller without female participation in the labor force.

Similarly, the World Economic Forum reports that female labor participation played an important role in European economic growth.

On the contrary, Asian countries and the Pacific as a region lose several billion dollars because women have limited or no access to employment opportunities.

Women in these countries are predominately engaged in unpaid work. Work that is highly ignored which can be “…account for more than half of the GDP in OECD countries”(OECD).

Women could be well off if their work is recognized.

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Concluding remarks

As discussed above, there is no single explanation but several factors that impact the gender wage gap. Despite efforts the gender pay gap still persists in developed and developing countries. However, this gap has narrowed down but the difference is stalled.

Have you witnessed or faced gender pay discrimination? Share your insights in the comment section below.

FAQs

How to calculate the gender pay gap?

There are two methods to calculate the gender wage gap.

1- The Unadjusted pay gap is calculated on the gross salary received by women and men.

2- The Adjusted pay gap is calculated by considering factors such as education, level of experience, and job role.

What are the causes of the gender pay gap?

There are seven causes of the gender pay gap. These are;
1. Occupational Segregation
2. Motherhood Penalty
3. Women in Part-time Roles
4. Occupational Discrimination
5. Few Female Managers
6. Automation Leading to Gender Gap
7. Unpaid Work and Lack of Access to Employment

What is the occupational gender pay gap?

The occupational gender pay gap emphasizes the difference in money earned by women and men in the same occupation or industry.

It focuses on the inequalities in the amount of money they receive for similar work. Disparities in pay exist even though a woman or a man has the same experience and level of education.