Gender Pay Gap Rises for Higher-Earning Women

December 5, 2014
Editor: Frank Zhao

Women's average wages are between 4 to 36 per cent less than men's but the gap widens in absolute terms for higher-earning women, according to the ILO's Global Wage Report 2014/15. 

For example, in Europe in 2010 (see chart below), the bottom 10 per cent of women workers earned about 100 euros per month less than the bottom 10 per cent of men. Conversely, the top 10 per cent of high earning women earned close to 700 euros per month less than the top 10 per cent of men. A similar trend is observed in nearly all 38 countries analysed in the report.

Parsing Pay Gaps

The report points out that the gender pay gap arises for complex reasons, and that the reasons differ to some degree from one country to another. 

The actual wage gap can be divided into an "explained" part – which is accounted for by observable characteristics, such as an individual's level of education, that are expected to influence remuneration – and an "unexplained" part which captures what remains after adjusting for these observable characteristics and therefore suggests discrimination in the labour market. 

The report shows that if this "unexplained" wage penalty were erased, the gap would actually be reversed in nearly half of the 38 countries and women would earn more than men based on work-related characteristics (see figures below). Some of the countries where this is observed include Sweden, Lithuania, Slovenia, Brazil and the Russian Federation. 

The "motherhood wage gap" – which measures the pay gap between mothers and non-mothers – is also considered in the report. It points to motherhood as one of the underlying reasons for the overall gender pay gap. For example, in Mexico, mothers earn about 33 per cent less than non-mothers while in the Russian Federation it is about 2 per cent.

'Still Below Pre-crisis Levels'

At the launch of its global salary review, ILO economists warned that the little progress there had been in the last two years was driven by emerging economies.

China's been responsible for more than half this salary growth, along with other Asian economies including Viet Nam and Cambodia, ILO said.

This meant that in reality countries in the Eurozone had seen zero growth.

Just as worrying is the growing gap between workers' rising productivity and their wages, the UN agency added.

That's because it shows that households are getting a smaller share of economic growth and have less to spend at the end of the month.

Policy Responses

To redress pay inequity, the report suggests a number of recommendations, including policies which promote gender equality at work and in the home. 

"Overcoming unequal pay between men and women is crucial to ensuring inclusive growth and requires sustained efforts at various levels," says Manuela Tomei, chief of the ILO's Conditions of Work and Equality Department. 

"Equal pay between men and women needs to be promoted, including by combatting gender-based stereotypes about women's roles and aspirations, addressing gender bias in wage structures and wage-fixing institutions, advocating for an equal sharing of family responsibilities, and strengthening policies on maternity, paternity and parental leave," she added.

ILO economist Sandra Polaski offered a solution.

"What can you do about the increasing inequality that arises from wages, there are a number of policy tools there, minimum wages being one…Minimum wages began to be used very aggressively in a number of Latin American countries over the last 10, 15, 20 years and beginning about 15 years ago China also decided to use minimum wage policies as a major tool to increase incomes."

The UN agency also called for anti-discrimination laws and policies to combat inequality after noting significant pay gaps between men and women and migrants.

The report calls for legislation to provide the right to equal remuneration for work of equal value in line with the Equal Remuneration Convention, 1951 (No. 100) and judicial access to claim this right.

Eliminating the unexplained gender wage penalty: Average wage gap before and after adjustment in selected economies *

a) Developed economies

 
b) Emerging and developing economies
 
* In 2009 for China; 2010 for all developed economies and Viet Nam; 2011 for Chile, 2012 for Argentina, Brazil, Mexico, Peru, the Russian Federation, and Uruguay.
 

(Source: ilo.org and unmultimedia.org)

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