Why the gender pay gap is growing across the world

09 January 2018

BBC's Carrie Gracie has raised the issue of the gender pay gap after resigning from her post as China editor because of the disparity with her male counterparts. Marianna Fotaki, Professor of Business Ethics, writes that the issue is actually worsening.

The issue of gender pay gap is more important than ever. In every country and every profession women are paid less for the work of same value when compared to men.

Despite substantial gains in reducing the gender pay gap the rate of progress has decreased in recent years and, in some cases, reversed. 

The gender pay gap is reported to have widened since 2006 from 92 to 95 per cent globally. The recent World Economic Forum Gender Gap Report shows this to be even higher when compared to its 2015 data.

Research shows that the wage gap starts from day one and grows continuously throughout a woman’s career while the ‘narrowing’ of the pay gap when it happens is mostly confined to the early stages of women’s careers. 

The gender pay gap is growing especially, in highly paid professions such as accountancy, law, consultancy and business (), but even in ‘feminized’ sectors men tend to be over represented in top paid jobs.

The gender pay gap typically affects older women who have been in employment longer and who occupy senior positions rather than junior women who are usually younger.

Related course: MSc Management

Research by the American Association of University Women shows that the ‘narrowing’ of the pay gap when it happens is thus mostly confined to the early stages of women’s careers.

Indeed, when the gender pay gap is shrinking this is the result of men's wages dropping faster than women's wages in real terms and women bearing the brunt of long term unemployment in higher numbers than men in recent years, according to the Institute for Public Policy Research. 

It therefore masks pay inequalities that women continue to experience at work. For instance, the gender pay gap in the UK persists mainly because the growth in men’s earnings outstrips that of women at the top end of the earnings distribution.

There are many reasons and explanations why women do not get the same opportunities for career progression and pay as men do.

Cultural assumptions stereotyping women as less willing or able and historical patterns reflecting men’s social power explain the persistent undervaluation of women’s work.

Why does the gender pay gap exist?

Behavioural ethics research suggests that many such assumptions are due to unconscious bias that both women and men share.

Social psychologists found that self-professed egalitarians may also be prone to such unconscious biases.

These concern feelings and knowledge (often unintended) about their social group membership, for example concerning age, race/ethnicity, gender and class. 

Power operates at a subconscious level and discrimination is often tacit and rationalised post-hoc.

Unconscious bias, can in part, explain the propensity of many executives to hire in their own image which reproduces the lack of diversity on the companies’ boards.

But in organisations that adopt meritocratic policies, managers tend to favour a male over an equally qualified female employee and award him a larger monetary reward, perhaps because they no longer see the necessity to address the existing inequalities or for the fear of discriminating against men.

Human Resource departments have an important role to play in identifying and acknowledging such bias via training and addressing this in recruitment processes. 

Senior female managers should take steps to teach women tactics and strategies that are most effective in gaining promotion.

Making pay scales explicit could also have a major impact on transparency in promotion. Legislative protection is important, but we should not assume that a convergence in men’s and women’s earnings will automatically continue into the future without organisations taking proactive measures.

Marianna Fotaki teaches Ethical Leadership on the suite of MSc Business courses and Governance and Corporate Responsibility on the MSc Management. She also lectures on Ethical Issues & Social Responsibility in Contemporary Business on the Undergraduate Programme.