The Global Gender Pay Gap
What Is Happening?
On July 13, the World Economic Forum (WEF) released the 2022 Global Gender Gap Report.1 The findings indicated that in the past year, global gender parity in labor force participation reached its lowest value since 2006, measuring at 62.9%.2 This means that on a global average, women were disadvantaged nearly 40% more than men, both in opportunities to join, and to excel in, the workforce. Furthermore, the Global Gender Gap Index, which features a time series analysis of relevant data from 102 countries, showed that global gender parity in the workforce has been declining since 2009,3 despite the enactment of equal pay policies and other anti-discrimination measures in a multitude of countries. At this rate, the WEF estimates that it will take 151 years for the global gender gap in economic opportunity and labor force participation to close.4 Policymakers, both at regional and multilateral levels, need to accelerate collective efforts to pass effective legislation and long-term policy solutions in order to curb this growing crisis. In light of the multi-sectoral impact of the COVID-19 pandemic, a continued decline of gender parity in the labor force stands to jeopardize economic growth, both in domestic and global markets.
Mainstream discussions of the global gender pay gap tend to overlook a critical aspect of the issue, namely, the quantitative methodology behind the figures presented, and the variables utilized. The gender pay gap is often calculated through two distinct methods: with or without control variables. These refer to all constant and unchanged aspects of a calculation.5 For example, controlling for the level of experience in the gender wage gap means looking at how wages differ between men and women if all individuals considered have been in the workforce for an equal amount of time. This would eliminate instances where the wages of a woman with one year of work experience, who therefore earns less, is compared to those of a man with ten years of experience, who earns significantly more. Control variables also ensure that only the direct effects of the studied variable, which in this case is gender, is presented in the final figure. In this way, depending on whether control variables were used, the data can produce vastly different results regarding where the global gender wage gap stands, which can be misleading if the necessary context has not been provided.
The raw, or unadjusted, global gender pay gap does not account for controlled variables in the calculations. As such, the figures show how much women around the world make in comparison to men, regardless of other factors that might impact the wages. In the United States, for example, the raw gender wage gap indicates that, when comparing median salaries, women earn 82 cents for every dollar men make.6 This means that the domestic wage gap stands at a striking 18%.7 On the other hand, the controlled global wage gap limits the effects of all other factors in the calculations. These factors include education levels, years of experience on the job, differences between industries and sectors, position and rank within an organization, number of working hours, and so on.8 According to a 2022 report, the controlled wage gap in the United States, for example, points to a 1% difference between genders, with women making 99 cents for every dollar men make in comparable positions.9 As such, there is a 17% difference between the raw and the controlled gender wage gaps, which, if not labeled correctly, can lead to divergent conclusions about equal pay in the country.
However, when it comes to validity, it is important to note that the controlled figures are not necessarily preferable to the raw figures, or vice versa. Instead, they point to different reasons for the persistence of the gender pay gap. A 2021 report by the Organization for Economic Cooperation and Development (OECD) termed these reasons as “sticky floors” and “glass ceilings.”10 The former refers to “persistent disadvantages” throughout women’s working lives, from entry until retirement.11 These disadvantages are caused by conscious or unconscious biases regarding women’s competency in the workforce, as well as social and cultural norms that denote women to “caregiver” rather than executive or decision-making roles.12 An example of this can be observed in the healthcare sector, where female doctors report being mistaken for nurses or other healthcare professionals by patients or by other, typically male, physicians.13 Over time, these biases tend to be reflected in wages, with men earning more than women with the same or comparable job titles. In this way, the controlled wage gap figures are useful in illustrating “sticky floors.” As all factors that affect earnings are held constant, the data reflect differences in wages that are based solely on gender. The difference, then, correlates to social or cultural gender norms, or conscious and unconscious biases.
The raw gender pay gap figures, on the other hand, represent “glass ceilings,” which the OECD defines as the “prioritization of unpaid housework.”14 Also called the “motherhood penalty,” this relates to women not being able to accumulate human capital at the same rate as men.15 Reasons include having to spend less time at the workplace, foregoing networking opportunities to attend to children and all other circumstantial challenges that are compounded over time.16 Furthermore, the raw gender pay gap also takes into consideration gender-based distribution across the labor force. Notably, women are overrepresented in lower-paying jobs, both across different industries and sectors,17 and under-represented in managerial positions.18 By encapsulating all systematic gender-based discrimination, the raw gender pay gap expresses not only societal biases in the workforce, but also the structural challenges that stand in the way of women occupying high-paying jobs, and having access to economic opportunities at the same rate as men.
The persistence and expansion of this global phenomenon relates to the lack of effective legislation and policymaking on the matter. This is partially because the factors that compound gender disparity in labor force participation are hard to quantify or to isolate, and the figures are not always interpreted correctly. A recent study, for instance, found that presenting evidence to policymakers does not necessarily improve their decision-making, especially in the development field.19 The study surveyed close to two thousand civil servants from Pakistan and India, and showed that despite the respondents being well-educated and trained in policy matters, they commonly misinterpreted the data sources presented.20 In a similar study conducted in the United States, close to 60% of surveyed adults were not able to correctly interpret the presented data.21 These examples are in line with global findings, as research shows that without specific training in statistical interpretation, quantitative information tends to be misconstrued.22 As a comprehensive understanding of the global gender pay gap relies on statistical analysis, one of the key challenges standing in the way of effective legislation is attributed to misinterpretation.
Another significant challenge in this debate is how to effectively alter and measure social or cultural norms that fuel gender biases. Policies that would enable effective social change require long-term solutions that factor in unique socio-economic contexts. As policymakers tend to prioritize short-term policies in order to address time-sensitive challenges,23 normative causes tend not to be as actively addressed in policy circles worldwide.
What Is Being Done About It?
Even though structural obstacles continue to stand in the way of widespread gender parity legislation, several countries have made significant strides, coming close to entirely eliminating the gender wage gap.
A notable example is Rwanda, which, since its inclusion in the Global Gender Gap Index in 2014, has consistently ranked among the top 10 economies that are the closest to closing their national gender gap.24 This is because, starting in the early 2000s, Rwanda has regularly enacted legislation and policies that promote gender parity, both in the public and the private sectors. As early as 2003, the country’s Constitution incorporated the equal pay principle, stating in Article 30 that “All individuals… have the right to equal pay for equal work.”25 This principle was solidified in 2009 with the enactment of Law No. 13, which prohibited gender-based discrimination in work matters.26 As well as outlawing the denial of “equal opportunity” and “equal salary” between men and women, the legislation also prohibited harassment based on gender, marital status, and family responsibilities.27
Furthermore, the country implements skills training initiatives to empower women to enter the workforce, especially in low-income and rural areas. One example is the Technical and Vocational Education and Training (TVET), which aims to “modernize the technical workforce for national development.”28 Through TVET, women are provided with skills to take part in off-farm jobs, which also serves the country’s goal of eradicating poverty. In addition, in 2022, Rwanda, along with Kenya, Nigeria, and Zambia, closed its gender gap for workers in senior positions, solidifying its progress in promoting gender parity in the economy.29 With these leaps, Sub-Saharan Africa has registered a 4.4% increase in 2022 alone in the WEF’s economic opportunity and participation index.30
Other developing economies like Nicaragua and Namibia have also joined the ranks of top nations in closing their gender gap. According to the latest numbers, Nicaragua achieved 81% gender parity, while Namibia achieved 80%, ranking seventh and eighth globally.31 Nicaragua is set to close its gender gap in 16 years, which would make it the first and the fastest Latin American nation to do so.32 In order to promote women’s economic rights, the Office of Equality and Non-Discrimination in Employment was established within the Ministry of Labor, as well as the Inter-Agency Network for Equality and Non-Discrimination in Employment.33 Similarly, in 2000, Namibia’s Ministry of Gender Equality and Social Welfare was established to accelerate gender equality efforts in all sectors.34
Furthermore, a regional pioneer for gender parity legislation is the United Arab Emirates (UAE), which was ranked first in the Arab region in the 2021 World Gender Pay Report,35 and in the United Nations Development Program’s (UNDP) 2020 Gender Equality Index.36 For the past decade, the UAE has developed a comprehensive legal and policy framework for addressing gender balance in the country’s labor force. In order to promote women’s inclusion in leadership and executive roles, the country issued a decision in 2012 to ensure that Emirati women are represented on the boards of directors of federal bodies, private companies, and other institutions.37 Then, in 2015, the UAE Council for Gender Balance was established, thus solidifying the country’s position as an exemplary proponent of women’s economic rights in the Arab world.38 The Council is responsible for reviewing national legislation based on their effectiveness in achieving gender balance in the workplace. It also develops and launches country-wide projects and initiatives for this goal, and advances the UAE’s position as a leader in gender balance legislation.39
In line with these commitments, the country’s Cabinet passed a law on equal pay in 2018, mandating that men and women, who are performing the same duties, are paid the same wages.40 This was supplemented in 2021 by the Federal Law Decree 33, which reinforced the equal pay principle, introduced provisions against gender-based discrimination in the workforce, and expanded maternal leave policies.41
Scandinavian countries have also made significant strides in closing their gender pay gaps in recent years. A noteworthy example is Iceland, which, in 2022, became the only economy in the world to have closed more than 90% of its gender gap in labor force participation and economic opportunity.42 In late 2017, the country enacted a law that mandates companies with more than 25 employees to confirm they pay men and women equally for jobs of equal value.43 Such companies are now obligated to draft wage reports on a yearly basis, through which they apply to obtain an equal pay certification.44 It also created a system called “Equal Wage Management Standard,” a job evaluation tool that tracks wages across genders and ensures gender parity in the workforce.45 Similarly, since 2017, Sweden mandates that employers have to conduct salary reviews on an annual basis, and bridge any existing gaps in salaries.46 Along with Finland, Norway, and Iceland, Sweden consistently ranks in the top 5 countries in the world with the lowest gender pay gap percentages.47
What’s Next?
There are a multitude of public policies that can be replicated in wider regional contexts to close the global gender pay gap, especially by ameliorating the tangible causes of the phenomenon. In other words, although addressing gender biases would require a long-winded overhaul of social and cultural norms, often through education reform and the promotion of anti-discriminatory practices in daily life, regional and multilateral organizations have a big role to play in effectively curbing this growing crisis.
Institutions like the Association of Southeast Asian Nations (ASEAN), the Group of Twenty (G20), the African Union, and the League of the Arab States can prioritize eliminating the gender pay gap on a transnational level with more tangible and targeted policy solutions. Considering that wages and labor force participation rates are heavily dependent on economic, geographical, and regional contexts, such collaborations can produce more specific findings, and therefore implement more tailored policy initiatives.
International financial institutions like the World Bank and the International Monetary Fund (IMF) can further incentivize states to enact gender parity policies and strategies as part of their lending mechanisms. These institutions already utilize conditionality in order to encourage social, economic, and at times, political reform in loan-recipient countries. By giving gender equality a higher priority in their operational frameworks, these institutions can make this growing crisis a policy priority. This can simultaneously promote domestic economic growth, as well.
The IMF, for example, has begun developing a gender-based lens in its lending, surveillance, and technical support practices in 2021, as gender disparity in the workforce has been globally compounded by the COVID-19 pandemic.48 Supervised by the Fund’s recently-appointed Senior Gender Advisor, the gender strategy aims to assess how economic policies affect men and women differently.49 However, while the IMF’s existing strategy focuses on research and development practices, more effectual change can be achieved by expanding a gender-informed lens to its loan conditions and its macroeconomic policies.
Certain countries have made significant strides in closing their gender gaps by enacting effective equal pay legislation and launching initiatives that promote women’s participation in the workforce. However, globally, women continue to face significant economic disadvantages, and, addressing gender-based discrimination is often viewed as secondary to achieving economic growth. To the contrary, gender equality and economic growth go hand-in-hand, and an increase in women’s participation in the workforce will continue to significantly increase the gross domestic product of all nations.
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