In this blog, NERI senior economist, Dr. Lisa Wilson discusses the gender pay gap. This article was printed in March 2023 in the AgendaNI publication.
The gender pay gap is an issues of continuing concern and debate. In this recent related Working Paper, Dr. Wilson discusses which factors reduce and drive gender differences in pay in Northern Ireland.
As I reflected at the end of International Women’s Day this year, I have to say that it really felt like there was an awful lot of virtue signalling going on, as everyone from politicians to global businesses to Instagram ‘influencers’ pledged their support to gender equality. I witnessed little to no pledges to action, writes Lisa Wilson, Nevin Economic Research Institute (NERI).
One of the things that really got my goat on International Women’s Day this year was the trending of the phrase: ‘Here is to strong women: May we know them. May we be them. May we raise them.’ I lost count of the numerous pictures I saw posted on social media pages quoting the above.
Not one to usually be triggered by topics that are trending on social media, my frustration was definitely coming from a sense that, even on International Women’s Day, the predominant solution to female disadvantage and inequality seemed to be one which was based on (women) making improvements in the raring of our daughters.
As a mother of two daughters, who as part of my job as an economist carries out research on gender inequalities in the labour market, I felt particularly miffed because I know that even if I succeed in this raising of ‘strong women’, if government, businesses, and men do not take action, it is likely that in the future my daughters will experience disadvantage as a result of their gender when they engage in paid work.
When we look at the reality of how gender gaps in pay come about, the reality is that women are performing extraordinarily when it comes to their role in trying to shift gender pay disadvantages in the labour market. Women are doing this to such an extent that they outperform men in terms of their productivity/pay yielding characteristics in the paid labour market. That is women, on average, have more of those characteristics which are associated with higher pay for work. For example, they are better educated, and on average, they work in better paid occupations.
But still, when we compare the hourly pay of men and women, we see that men continue to receive higher returns for their labour compared to women. Why is this? Why is it that, on paper, women should be the ones who earn more from the labour market, but in reality they are they paid less than men?
I recently published the findings of a research study looking at the extent of gender differences in pay in Northern Ireland and the role of different factors in both driving and protecting against gender differences in pay. The results of this study show that even when we consider differences in how men and women engage in the labour market, because they work in different jobs or work different hours or have different levels of experience, men earn more.
Challenging stereotypes
At this stage, it is helpful to reflect back on the central point, gender differences in pay are based on the interplay between three factors. The first is that the fact that different characteristics obtain different levels of pay. Secondly, men and women have different characteristics. Thirdly, men and women get paid differently for the same characteristics. This interplay determines the gender pay gap.
We know that the women have more higher paid characteristics compared to men – so much so that they narrow gender differences in pay – and hence my opening statement, that women are doing the leg work when it comes to mitigating against gender differences in pay.
All of the disadvantage in female pay is coming from the fact that men and women are being paid differently for the same characteristics. My research paper points to the particular importance of the higher returns to men compared to women for having a degree and the clustering of women and lower pay of women in the lowest paid occupations as fundamental in driving the lower pay that women get from work.
Gender pay equality in the workplace
Recent improvements in the statutory minimum wage have been having a significant impact on narrowing the gender pay gap, such that we know that it is inequalities in pay between higher paid men and women which is responsible for much of gender differences in pay.
There has been a recent turn towards utilising pay transparency legislation as the path toward mitigating inequalities at the top of the earnings distribution, but this is light lifting for the Government. Government needs and can do much more to address remaining structural inequalities which continue to create gaps (address gendered degree choices, value properly that work which has traditionally been seen as ‘women’s work’, and make sure that those who work part-time are not penalised via lower pay throughout their life for not working full-time).
Support the goal of pay transparency legislation and use it as a tool to assist action. Do not see it as something which you must do to avoid getting named and shamed by the gender pay gap bot on International Women’s Day.
Changing attitudes
There are a lot of things that men could do to equalise family/care responsibilities which we know impact significantly upon gender differences in pay. Irrespective of whether we think it is morally right, I think that we do not understand the reasons why we do not see enough men take on more of their fair share of caring.
Men find it much harder to seek flexible working and often take a bigger hit in pay in order to provide caring and know that ultimately if they do, they are going to be penalised. I also think that blaming men is a convenient way of avoiding admitting that we have seen a failure of government action. But I am not going to get into detail on all of that as I would need a whole other column.
But one ‘easy’ thing any man could do without having to really do anything – tell your female colleagues how much you are paid and vote for politicians who prioritise taking serious family-friendly policies.