Pay transparency: The next step to end the gender pay gap
EIGE's Director Carlien Scheele delivered this speech at a public hearing on pay transparency organised by the European Economic and Social Committee on 5 May 2021. The speech was part of a panel discussion titled "What role for the EU?".
The EU’s founding treaty includes a commitment to end the gender pay gap. Since 1957, we’ve been signed up to the principle that equal work of equal value should be paid the same, regardless of who’s doing it.
And yet, women are still paid on average 14 % less per hour than men.
At the European Institute for Gender Equality, we collect data and try to find out why we can’t seem to shake certain inequalities, like the gender pay gap.
Using our data, I’ll briefly look at why the gender pay gap goes beyond pay discrimination, why pay transparency legislation could be transformative, and what else we should do to close the gender pay gap.
First, the myriad of reasons behind the gender pay gap.
Women are paid less than men because they hold less senior positions, work in fields with lower pay, and spend significantly more time doing childcare and housework.
Behind all these factors lies the same reason: gender stereotypes and beliefs around who should do what job, and for what pay.
Let’s start with women in leadership. Our data shows women hold less than 10 % of CEO positions in the EU’s largest companies.
Why? Women make up the majority of university graduates in most countries of the EU.
Part of the reason behind that is motherhood, as well as other caring responsibilities. Let’s remember that Europe is an ageing continent and women are often taking care of their parents, as well as children.
Our data shows that the gender pay gap actually widens the older women get, with having a child and getting married both having a negative impact on pay.
In the workplace, women are rated as less competent once they become mothers, which can affect their promotion and pay.
And education doesn’t help, with the pay gap biggest for the most highly educated women.
Little surprise then, that men keep being chosen to lead companies and countries. Or that when people are asked to draw a leader, the vast majority will draw a man.
But it’s not just leadership, where women are seen as worth less than men.
So called ‘horizontal gender segregation’, where women are concentrated in poorly paid fields like care work, while men dominate highly paid fields like ICT, is a huge driver of the gender pay gap.
“That’s women’s choice,” you might say. “The type of work they prefer to do is just badly paid.”
Yet decades of research suggests it is the fact that it is women doing the work, rather than the work itself, which makes it badly paid.
This can be seen in the fact that salaries in a profession go up once men enter, and go down with the entry of women.
Computer programming, for example, used to be dominated by modestly paid women. It only became lucrative once men entered the profession and the perceived value of the work suddenly shot up.
Also, men are happy to join these badly paid professions for the right price. Even in fields where the vast majority of employees are women, such as healthcare, the most senior and best paid posts are held by men.
Indeed, our research shows that women are paid less than men in every single sector in the EU.
No wonder it’s been difficult to implement the principle of equal pay for equal work. Some people’s work is clearly just more equal than others’.
How to clear all this bias out of our labour market?
Pay transparency legislation would certainly help.
Employees would know the true value of their work and be able to negotiate their salaries accordingly.
Employers would have to come up with watertight justifications for why some people are paid less than others.
And if companies end up having to reveal their gender pay gap on an annual basis, as the Commission’s legislation proposes, they would probably begin to see some patterns: Is there a certain group whose pay consistently stagnates after becoming parents? Is there a group that’s repeatedly passed up for promotion, with no good reason?
Pay transparency will force companies to face up to some tough realities.
Of course pay transparency will not be able to sweep away all our prejudices about who should be doing what work for what pay.
When it comes to paid work, we should have just as many campaigns to get men into care work as we do to get women into ICT. Both should be seen as respected, gender-neutral professions.
Of course, to be respected, are work should also be better paid. I see a strong role here for social partners to negotiate higher wages for occupations like care work, which will only gain importance as our societies age. This would also help close the gender pay gap.
In the home, men will need to share the care load more equally so women can have equal opportunities at work. Countries should earmark healthy amounts of parental leave for fathers to help make this a reality.
Last, affordable care services, for children and for older people, would help both women and men in the workplace. A report we prepared in 2019 at the request of the Romanian presidency found that using childcare services boosts both women’s and men’s incomes, and results in more equal pay.
While social policies largely rest with member states, there is much scope for the EU to lead the way. It is what citizens want, with a Eurobarometer poll finding that around 90 % of people want Europe to ensure equal opportunities and fair working conditions.
Pay transparency would certainly help achieve those goals.