What causes the gender pay gap?

 

 

 

 

 

 

In this weeks’ blog post we will look into the gender pay gap. It’s always a touchy topic why women still earn less than men for doing the same job. Therefore, we thought it was time to not necessarily look at the difference in salaries but to look deeper into what the causes of the pay gap are.

A diverse workforce encourages innovation, revenue growth and product quality. If this is true you would ask yourself, why is the tech industry such a male dominated industry? The technology industry is admired for being such an innovative industry, yet it must do more to institute a culture where women can thrive. If diversity is so important for a company’s innovation, revenue growth and product quality you would assume that changing the workforce to a more even divided workforce would be top of the list. But it’s a bit more complicated than that of course.

The technology industry has the reputation of being a “boys club”, where 75% of the industry is male. Although this does differ per role level. In more Junior roles the women vs. men workforce is almost even, with 51% of the workforce being male. When it comes to midlevel professional roles the divide is 75% men to 25% women. Then the percentage of men in the tech industry rises when it comes to executive roles. In high-end roles 87% is taken up by men. These numbers show a lack of progression for women in the tech industry.

This does not just go for the technology industry. In general, women are under-represented in managerial and senior positions. For example, women represent only around 17% of board members in the biggest publicly listed companies within the EU, around 4% of chairs of boards, and a third of scientists and engineers across Europe.

So why do women progress less in their careers and what effect does this have on their salary?

 

 

 

 

 

Work done by women simply isn’t valued as highly


Women, are now better educated than men, have nearly as much work experience and are equally likely to pursue many high-paying careers. A study from researchers at Cornell University found that the difference between the occupations and industries in which men and women work has recently become the single largest cause of the gender pay gap. Another study shows, when women enter fields in greater numbers, the salary declines for the very same jobs that men were doing before.

It’s more frequent that women earn less than men for doing jobs of equal value. One of the main causes of this is that women’s competences are valued in a different way compared to men’s. It’s not that women are always picking lesser things in terms of skill and importance. It’s that employers decide to pay less. A Research suggests that women are not necessarily kept out of or choose not to enter high-paying and prestigious professions. Instead, when a job is dominated by women, it’s just not seen as important, and therefore pays less, even if it requires the same skills and education.

 

The 24/7 work culture


Companies don’t put obvious sings up saying we don’t hire women, we pay women less etc. Instead, the workforce disadvantages women in subtler ways. The pressure of a round-the-clock work culture in which people are expected to answer emails at 11 p.m. and take cell phone calls on Sundays is increasing. It has been said that these 24/7 work cultures lock gender inequality in place, because these types of job penalise workers who have caregiving responsibilities outside the workplace. And let those people mainly be women.


When it comes to balancing work and private life women face greater difficulties than men. More women choose starting a family over having a successful career than man do. Instead of prioritising their careers, the family comes first. Which of course is everyone’s personal choice. There are plenty of women who work full time and have a family, but many choose to work part-time or leave the labour market once starting a family.

It’s more common for women to start working part time or leave the labour market than men when starting a family. The numbers show this as well; 65.8% of women with young children in the EU are working, compared to 89.1% of men.

Working part-time may be a personal choice, women have greater recourse to part-time work in order to combine work and family responsibilities. Consequently, women have more interruption or work shorter hours than men in their careers. This has a negative impact on their career development and prospects of getting promoted. This also means a less financially rewarding career.

The pay gap


Equal pay for equal work. It sounds so easy and reasonable, it’s hard to believe that today the day, we’re still talking about the gender pay gap. And yet the fact remains that there is no country in the world where women earn the same as men.

Yes, women sometimes voluntarily choose lower-paying occupations because they are drawn to work that happens to pay less, like caregiving or non-profit jobs, or because they want less demanding jobs because they have more family responsibilities outside of work. But many social scientists say there are other factors that are often hard to quantify, like gender bias and social pressure, that bring down wages for women’s work.

5 truths about the pay gap

  • Discretion is the enemy: Women are often penalised in the areas of pay discretion (starting salaries, pay on promotion, pay for performance and ad-hoc pay decisions, such as retention bonus). Studies find that women negotiate their salaries less frequently than men — but also that they may choose to do so with good reason. It has been found that managers were less interested to work with women who asked for higher salaries in job negotiations.
  • Family: Having a family hinders women. Married women earn 31% less than married men. Where women who are not married and don’t have any children earn 13% less than men.
  • Careers: Women get promoted less often and are more often put into part-time roles
  • Values: We value male-dominated jobs and industries. Jobs with higher pay (for example, computer software engineers, actuaries, network and computer systems administrators) are often dominated by men. Caring and emotional skills are undervalued.
  • Blame: Everyone is to blame. Unconscious bias is a major driver of human, group orientation behaviour — the quick assumptions about what is appropriate are deeply rooted in our biology. All humans make unthinking judgements on themselves and others that shape different outcomes at work for men and women.
    (source: Gender Pay in the UK High-Tech Industry)

 

 

 

 

 

 

What can be done?
We discussed several reasons that cause the gender pay gap, so now it’s time to look at what can be done to change this.

  • Improve the culture around flex work policies: Research suggest that making working hours more flexible and workers more interchangeable will improve the economic benefits of the rigid work schedule. Of course, there will always be positions where someone has to be there 24/7 with i.e. on-call and all-the-time employee positions. The list of positions that can be changed to more flexible hours is considerable. Closing the wage gap means making jobs work differently. There are some jobs where this is not a possibility and adding more flexibility to jobs won’t erase the gender pay gap overnight. But it’s part of a larger shift to changing the pay gap.
  • Improve performance reviews and feedback: Unconscious bias is prevalent in the workplace, particularly when it comes to performance reviews, as men and women’s performance sometimes receives different types of evaluation. An effective strategy is to increase accountability in performance evaluations by setting up criteria upfront and having a third party monitor the process. If reviewers do not specifically call out where women excel, where they need to build skills, and which technical projects they should target next, women are at a subtle disadvantage for promotion.
  • Transparency around pay as a tactic for pay equity: Transparency around pay helps remove the question of gender-influenced pay. Pay transparency lets everyone know what their colleagues are earning and would make women aware if they are making less than their male counterparts. Some tech companies are already implementing these strategies in order to reduce the gender pay gap.
  • Eliminate negotiation: Study after study show that women don’t perform as well as men in negotiations. Often women avoid negotiation altogether, accepting the first offer presented by a prospective employer. Many women report that they fear they will not be liked if they aggressively pursue a higher salary. It seems odd to favour men, just because they’re better negotiators – especially if negotiation is not a criteria for the job being offered. It may be difficult to completely eliminate negotiation when hiring senior employees with varying degrees of experience, but it would be trivial to apply when hiring entry-level employees.

 

Of course, these examples are not going to solve all the problems that women face at work. But it would be a great start for organisations who want to be leaders in achieving gender parity in the workplace.

What are your thoughts about the pay gap?

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