Action needed to bring about a change in pay gap culture

If the Government is serious about reducing the gap, it will require a systemic effort across a number of departments, writes Siptu economist Marie Sherlock      

Action needed to bring about a change in pay gap culture

Today marks European Equal Pay Day. Over the past 40 years, almost every advanced country has introduced laws outlawing gender discrimination in terms of pay, eligibility for job interview, and promotion. All OECD countries provide for maternity leave and with the exception of the US, each country offers income support during this time. Yet every single country across the OECD and EI has a gap in the average wages earned by males and females. Ireland is not the worst in the class — we are ranked 9th in terms of an hourly pay gap of 13.9% across the EU’s 28 member states.

Women in Ireland have made significant strides in education and in the workplace over the past two decades. Females outperform males in education and have taken up three out of every five jobs created in the Irish economy since 1998. Yet, there remains a large gap both in terms of pay and employment as women enter the labour market and progress through the world of work. In the first half of 2017, the female employment rate was just over 60%, some 10.75% behind that of males.

All too often, the gender pay gap is mistakenly attributed to the so-called motherhood penalty and those taking time out for caring duties. However, the gender pay gap is present when females enter the labour force and this gap persists and increases over the course of their working lives. If you look at the CSO earnings data from 2014 it shows that women earn 91% of male median earnings in the early stages of their working lives between ages 25 and 29. This rises marginally to 92% between the age of 30 and 39, reflecting the reality that more highly educated females enter the workforce at a later stage. It then falls to 74% from the age of 40 and is down to just 61% of male median earnings by the time female workers reach the 60-years-plus age group.

Occupation and sector go some way to explaining this. Those private-sector industries where females make up the majority also tend to be the lowest paid. Annual average wages in catering and hospitality were just 47% of the economy-wide average in 2016 and females accounted for 55% of those working in the sector.

But occupational segregation, a greater share of females in part-time employment, and a drop-off in the female employment rate during the peak fertility years do not tell the full story. Successive studies on the gender pay gap problem can only explain between 60% to 80% of the factors, according to recent US studies. The clear implication is that gender-specific actions to keep women in full-time work will help but will not be sufficient to eliminate this deeply rooted inequality in the Irish workplace. Instead, action is needed on the bigger structural issues.

Ironically, the key to eliminating the gap is to not solely focus on women.

What is to be done? Countries with higher levels of unionisation and more centralised or coordinated bargaining tend to have the lowest wage dispersion, between the lowest and the highest earners, and also have less of an earnings gap between men and women in the labour force. So there are important structural factors which suggest that narrowing the dispersion of wages between all workers is key to reducing the gap between men and women. The implication is that there is a need for a stronger collective bargaining mechanism across female-dominated sectors such as hospitality, childcare, homecare, and healthcare. So if the Government is serious about tackling the gender pay gap, it must start by supporting and facilitating the functioning of wage bargaining systems that were promoted by the previous administration and enshrined in legislation.

As part of the operability of the Industrial Relations (Amendment) Act 2012, the Government listed six typically low-paid sectors that were appropriate for the establishment of a joint

labour committee, where employers and unions negotiate employment regulation orders governing pay and other issues for sector. These are: Contract cleaning, security, hotels, contract catering, retail grocery, and hairdressing. With the exception of security, the rest are predominantly female employing industries. To date, the Government has done nothing to support or facilitate the operability of these mechanisms.

Support for gender-neutral parental policies is the second key action. Greater workplace flexibility for working mothers should not be confined to an offer of part-time work. Research in the US suggests that part-time work typically institutionalises low pay and limits career progression. Similarly, the offer of periods of leave of two years-plus and more will negatively affect future lifetime earnings potential. Instead, we need to have additional leave on the birth or adoption of a baby beyond the existing 26 weeks’ statutory leave and that this parental leave be shared between both mothers and fathers.

The third key action is mandatory pay reporting within companies. The Human Rights and Equality Commission (Gender Pay Gap Information) Bill 2017 is currently going through various legislative stages in the Oireachtas. If enacted, it should force greater transparency within companies with regard to pay distribution and progression.

Research using the British Household Panel survey has found that women do not do as well financially out of promotions as men do, when all other factors are accounted for. The thinking here is that while procedures for promotions within organisations may be well defined, the post-appointment negotiation may not.

Ultimately, if the Government is serious about reducing the gap, it will require a systemic effort across a number of departments. Third-level education and the apprenticeship system will have to be better equipped to take on older workers and recognise their prior experience. Entitlement to flexibility across all employment contracts should also be explored. The Government will also have to lead by example and consider its own under-representation of females in the cabinet and in the higher levels of the civil and public service.

A change in culture surrounding the pay between men and women cannot be left to chance. Specific action will need to be taken.

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