Iceland has just become the world’s first country to make its companies prove they pay male and female employees equally – or face fines. Last year, the UK passed a groundbreaking law that will require all companies with 250 employees or more to publicly state the differences between earnings of male and female workers.
So you could think that closing the gender pay gap is perhaps, finally, on the horizon. But nothing could be further from the truth. At the current rate of progress, worldwide it will take 170 years to close the economic gap between men and women. And early results from the new UK law do not look promising: Virgin Money reported women earn a striking 36% less than their male peers.
Even in Iceland, ranked the world’s most gender equal country for the past eight years in a row, women, on average, earn 14 to 18% less than men, meaning that Icelandic women effectively work for free for around 60 days a year.
Solving this problem will require more than legislating that employees receive equal pay for equal work. Many factors contribute to the gap in men and women’s earnings. Women spend much more time looking after children, the elderly, and sick people than men do. Sectors thought of as ‘women’s work’, such as care and leisure, are typically filled with low-paying jobs. And even within specific sectors, men make up the most senior roles. Just as an example, there are only seven female Chief Executives in the FTSE 100.
Such a complex problem cannot be solved with one new law; it must be confronted on many different fronts at the same time. We have put together some of the most important ideas countries around the world are using to speed up the 170 year crawl.
1. Raising the minimum wage
In most places, minimum wage workers are more likely to be women than men. For example, two out of three Britons earning below $9 an hour are women, and women make up two thirds of workers on the minimum wage in the US. This means that raising the minimum wage can play an important role in closing the gap. Increasing real minimum wages in Brazil from 1997 onwards have disproportionately benefited women. And in South Africa, a high minimum wage for domestic workers instituted in 2002 has had a clear gendered impact – 80% of domestic workers in the country are female. Several US states have now followed suit. In 2016, New York and California passed laws raising the minimum wage substantially to $15 an hour by 2018 and 2022.
2. No more men-only jobs
According to the ILO, approximately half of the world’s workers are in an occupations where one gender makes up more than 80%. One skilled area in which men particularly dominate is science and technology. For example, in 24 out of 28 EU countries, less than 15% of STEM graduates were female in 2014. This male dominance is particularly concerning as the future of work becomes increasingly technology-based. For example, artificial intelligence and automation will affect men and women differently. So the government of Victoria, Australia is promoting diversity in tech with a pioneering scheme to create more role models and diversify its own hiring. It has employed teams of women-only tech experts – designers, programmers and user experience specialists – tasked with hacking solutions to some of government’s biggest challenges.
3. Women on the board
Only 1.6 in 10 of S&P 1500 company board seats are held by women: this is less than the proportion of seats held by directors named John, Robert, James and William. And this even has significance beyond the gender equality perspective. A report last year found that companies with women on the board perform significantly better than their less diverse counterparts. On this issue, Norway has long been an innovator. It was the first country in the world to introduce quotas for company boards in 2003, requiring public companies to fill 40% of seats with women or risk dissolution. Iceland, Spain and France have all since followed suit.
4. Flexible working
After women have children, they tend to drop out of the labour market or move into low quality and poorly paid part-time jobs. Yet, there could be a fairly simple fix. Research shows that women with the option of flexible working are only half as likely to reduce their hours after the birth of a child. In an effort to expand a diminished workforce, Japan has recently been promoting “telecommuting” (working from home). This year, the government organised a designated day in which employees in almost 1,000 organisations, including the Tokyo Metropolitan Government, asked employees to work outside the office. In another take on flexi-work, Swedish parents have a legal entitlement to reduce working hours by up to 25% until a child’s eighth birthday.
5. Investing in care
As long as women continue to spend significantly more time than men looking after children, old people and the unwell, they will have worse economic opportunities.
Countries are tackling the challenge with many different strategies. In Sweden, the government subsidises childcare so extensively that parents only pay 11% of the full cost, the lowest fees across the OECD. Sweden has also been a pioneer in encouraging fathers to take on their share of baby duties, offering 90 days of paternal leave on a use-or-lose basis. But while economists argue that investing in care generates long-run returns by creating millions of jobs, such a national care system is, in the short term, extremely expensive: formal day care costs Sweden a whole 2% of its GDP.
So other countries are taking different paths. Australia is currently running a ‘Nanny Pilot’ scheme in which the government subsidises the cost of nannies for lower-income families. And, in an innovative twist, Japan and the US have increasing numbers of intergenerational care facilities, where elderly people play a key role in looking after children.
The Apolitical view
Strategies such as raising the minimum wage and providing more flexible hours will doubtless benefit women forced into low paid, low quality, or part-time work after having babies. But, they take it as given that women and not men will be spending many unpaid hours looking after those children (as well as other dependents). So, to really bridge the economic gender gap, it is our view that the first and most important step is facing up to the challenge of unpaid care, either by providing all families with comprehensive and affordable child care or by changing our social norms so men do more of this work and women aren’t left holding the baby.
(Picture credit: Flickr / World Bank)