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24 March 2017

Demystifying the gender pay gap

In a re-issue of a March 2016 multi-country study recruitment giant Glassdoor® reveals the “unadjusted” and “adjusted” gender pay gaps among employees in the United Kingdom, United States, Australia, Germany and France. The report has been republicised in the light of the gender pay gap reporting regulations, which come into effect in April this year.

Using Glassdoor’s unique data set of hundreds of thousands of salary reports from employees online, the study goes much further than simply looking at average salaries by gender, as is the case for the statistics produced by the UK’s Office for National Statistics.  In producing this report, Glassdoor has statistically controlled for factors such as employee characteristics, location, job title, employer and more. In addition, the study reveals what is – and what isn’t – causing the gender pay gap and provides policy recommendations to target these causes and help reduce the gap.
Demystifying the Gender Pay Gap reveals the gender pay gap is real and significant across each country, consistent with official sources. The study finds that in the UK on average, women earn about 77p for every pound a man earns. The study refers to this simple explanation of the gap as the “unadjusted” gender pay gap. However, to better understand what’s going on at the individual employee level, the study also reveals the “adjusted” gender pay gap by controlling for a wide-range of factors including employee age, years of experience, education level, location, job title and employer.
For example, in the UK, the adjusted gender pay gap is 5.5 percent, and while smaller than widely reported figures, it is significant a gender pay gap remains even after comparing similar workers down to the specific job titles and companies. In other words, a woman with the same job title, at the same employer, in the same location, with a comparable age, education and years of experience, will still be paid over five percent less than a man. This finding is consistent across each country the report studies.
To better understand the causes of the gender pay gap, the study divides the overall gap into what can be “explained” due to differences in worker characteristics (e.g., age, education, etc.) and what remains “unexplained.”

Glassdoor researchers found that the majority (64 percent) of the overall UK pay gap can be explained, while 36 percent of the overall pay gap cannot be explained by any factors observable in Glassdoor data. This means the unexplained pay gap may very well be attributed to workplace bias (whether intentional or not), negotiation gaps between men and women and/or other unobserved worker characteristics. It comes as no surprise that the study reveals that the largest contributing factor to the gender pay gap is explained by differences in how men and women sort into occupations and industries with varying earning potential. This finding is consistent across all five countries, and in the UK, it makes up more than two thirds (38 percent) of the unadjusted gender pay gap.

 “Women and men tend pursue different career paths early in life and then sort into different industries and occupations, which, in large part, is due to a variety of societal expectations and traditional gender norms. This is the single largest factor we see contributing to today’s gender pay gap,” said Dr. Andrew Chamberlain, Glassdoor’s chief economist.

This may explain the gender pay gap, but it doesn’t excuse it. First, why should the work that women do be valued any less than the work that men do – why do we pay people more for looking after our cars than for looking after our children and our frail elderly? Second, why do women feel bound by societal expectations? And third, how much do young women starting out on a career path know about the extent to which following societal expectations will impact on their lifetime earnings?

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