3 steps every business can implement to reduce the gender pay gap
Max and Lena are two recent master’s graduates. Both graduated with outstanding results, majoring in “Global Finance”. Logically, the next stage in their professional careers was to enter into the world of working professionals meaning that it was their time to finally start working. And this is exactly what happened. They soon began their careers. Max started as a financial consultant – so did Lena. They both worked for the same company but at different locations. Little did they know that gender pay gap was a thing… And after three years of hard work and dedicated commitments they coincidentally meet again. Twenty minutes later, Max asked Lena a question:
“How much do you make in your current job?”
Lena replied: £3400 per month, you?
Max said: Interesting, I make £4200 per month.
Unsurprisingly, Lena earned about 18% less than Max. Same educational background, same age, same race yet one difference:
So, what is happening here?
The issue behind unequal payment between a male and a female worker is called the gender pay gap.
The gender pay gap is calculated “as the difference between average hourly earnings (excluding overtime) of men and women as a proportion of men’s average hourly earnings (excluding overtime).” For this, all jobs done by women vs all jobs done by men are equally considered.
If you want to calculate your current gender pay gap rate you can use the Gender pay gap calculator for your business (it’s completely free to use).
Generally speaking, women do get paid less than men.
Labour income inequality applies to women doing different jobs as men but also to women doing the same job.
The reasons behind the payment gap revolve around women’s preferences in education, part-time work, and taking care of the family. Sometimes, circumstances call for female professionals to work less due to family responsibilities.
Studies show that: “women are more likely to accept lower pay in favor of a shorter commute.”
And here is why:
“Women prefer short commutes because they do more childcare and unpaid work.” (Gov.uk)
As many women decide to become mothers, their monthly salary automatically shrinks.
This is a reality most women are facing in their careers.
Wage gap research done by the Equality and Human Rights Commission doubtlessly proves it:
For women, “having a child increases the pay gap considerably”
But not every woman wants to have children. Contrary to public narratives, the story at the beginning of the article illustrates: If men and women start working in the same profession with equal educational backgrounds men still get paid more.
So the discussion around the gender pay gap is not only related to mothers but also to women without children.
Let’s have a look at current statistics in the EU:
According to the European Commission, the gender pay gap in the EU is “13%”. Italy ranks with only 4.2% in place four.
These numbers are quite general – we are not informed about each woman’s personal and professional background – yet these figures demonstrate a general claim that women are paid less than men.
Overall, with and without children, married or unmarried, women tend to be at a disadvantaged position when it comes to money.
In the UK, the current rate lies at 8.3%. When taking a closer look at the different regions it turns out that: Depending on the area the wage gap greatly differs.
According to the UK Government, “London stands out as being the only region where the gender pay gap is very similar now to its 1997 level.” Here, the current gap reaches 11.2%, which is quite high in comparison to other regions in the UK.
The impacts of gender pay gap on business
- Employees are the heartbeat of every organization. If female workers are paid less than men, they are more likely to quit and look for a job with a higher salary. This has a negative impact on your public image and brand reputation as a business. Because: The words of unhappy employees spread like wildfire.
- (Single) women often face difficulties to cope with western European living standards. A wage gap contributes to such struggles, especially for single women trying to adapt to the prosperous lifestyle most Europeans are pursuing.
- Female employees who get paid less than men have to deal with low self-esteem which inevitably affects your business. How can you have success without a strong team? Low self-esteem among women is a serious problem – for those who suffer it and for your business too.
Overall, this is a topic that can be linked to SDG 5 – Gender Equality. Global efforts to reduce the gap remain current. Together, we can seek to create more socially just environments for women to thrive and businesses to act as supporting hands.
So what can you as business owner or manager do to contribute to SDG 5?
Three steps to close the gender pay gap
With the following three points we’ll share three practical steps you can take to start closing the gender pay gap in your business.
1. Review your hiring procedure
Ensure that male and female applicants are paid equally for the same job position
Have you heard about the gender pay gap experiment by Terre de femme? In short, the experiment reveals how employers intentionally decide to pay men more than women for the same profession. This was proved by a person who went to the same job interview, one time as a man and the other time as a woman. The recruiter was willing to pay the male applicant more compared to when he pretended to be a female job seeker.
So what can you learn from that?
- Treat employees equally. If two people apply for the same job position, ensure that your policies align with gender equality goals. Equal payment for female and male employees doing the same job is a precondition for sustainable business growth.
- During your next job interview, focus on what the person can contribute to your organization regardless of their gender.
2. Hire women who have children, are single, or are married
Research shows that “investing in women and girls can lead to increases in productivity, organizational effectiveness, return on investment, and higher consumer satisfaction.”
Are there any job positions you have to offer where women can express themselves despite their backgrounds? Your business won’t lose – it will win.
If you hire a married or single mum, she can bring valuable skills to the job such as attention to detail, discipline, multitasking, and ever-needed people skills.
Mothers bring specific qualities to the job market that can’t be found elsewhere.
3. Create environments where men and women can thrive together
Often families choose to let the woman go on maternity leave while the man continues to bring stable income home.
Imagine this scenario:
In a married couple, the man earns more than the woman. Who is more likely to continue working after a pregnancy? – The man because it will benefit the family’s financial situation.
In many cases, families deeply depend on a good income and if the woman earns less than the men, there is no other option but to let the man continue working. Consequently, the woman stays home to take care of the house and children.
And that’s without considering the scenario of same-sex couple where two women have to sacrifice at least one salary to go on maternity, even if they’re both earning less than a male counterpart would.
Now we already know that the biggest factor in the gender pay gap is children. In real life, even if families have the option to let the father take paternity leave, they simply cannot afford to do so. It is true that both men and women are equal according to the law and every individual in Europe is under a safe protection of human rights, yet private circumstances call for decisions that prevent women to continue working the same amount of hours.
And this is where you as a business owner can create environments where both men and women thrive.
- Invest in family-friendly working conditions. If women don’t have the option to physically come to the office, allow them to work remotely.
- Promote flexible working schedules and opportunities to earn a high income proactively.
Your business can start making a meaningful impact. If we want to create environments where people can prosper, we have to responsibly consider equal pay for equal work between women and men.
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