World Economy

Reasons for Gender Pay Gap

The current survey showed pay gap is caused by fewer women in higher-paying roles
Female employees are actually favored in fast-growing markets where they are paid 1.3% more than men.Female employees are actually favored in fast-growing markets where they are paid 1.3% more than men.

The gender pay gap may have less to do with discriminatory wages and more with fewer women than men holding higher-paying jobs, said a new global study.

That the average woman is paid less than the average man is a statistic that has been demonstrated in a number of studies, said Korn Ferry, which conducted the research, news outlets reported.

It noted that its pay index, which analyses more than 12.3 million employees in 14,284 companies in 53 countries, showed that men are paid on average 16.1% more than women on a global level.

But the gap fell to 5.3% globally when evaluating the same job levels alone, such as people holding a director’s position. The gap was further narrowed to 1.5% when considering the same level at the same firm. If men and women at the same job level and in the same company were also in the same function, the gap shrank to 0.5%.

The magnitude of the gender wage gap may therefore be more reflective of the fact that women are less represented in better-paying jobs, and not firms paying women less for the same kind of work.

Bob Wesselkamper, Korn Ferry’s head of rewards and benefits solutions, said: “This pay gap issue can be remedied if organizations address pay parity across the organization and continue to strive to increase the percentage of women in the best-paying parts of the labor market, including the most senior roles.”

“Our data show that women earn nearly 20% less than men as a whole, which is a real, significant issue, but this doesn’t paint a complete picture,” said Maryam Morse, senior client partner at Korn Ferry. “While there are still a number of organizations that pay women less for the same role, on average, when we compared women and men in the same jobs, the gap is significantly reduced.”

In other words, it’s not that women and men have that much pay disparity when in the same roles, but that men tend to be employed in more senior positions and in higher-paying industries, she said.

 Asia-Pacific Markets

In the Asia-Pacific, the study found that women make, on average, 15% less than their male counterparts. The average gap is widest—at 19.3%—in mature markets like Australia and New Zealand. But in growth markets like China and India, the gap is lower at 14.4% and narrows to 11.5% in fast-growing markets like Indonesia and Vietnam.

Female employees are actually favored in fast-growing markets. Women in these markets are paid 1.3% more than men working at the same level at the same company. Women are paid 3.1% more than men at the same level, company and function in these markets.

Dhritiman Chakrabarti, a senior client partner at Korn Ferry Hay Group, said: “Our research shows women have the skills and competencies needed to ascend to the highest levels within organizations, and it should be a business imperative for companies to help them get there.”

 India Better Than US, UK, Germany

The Korn Ferry Gender Pay Index analyzed the gender and pay of more than 12.3 million employees in 14,284 companies across 53 countries in the world.

At 16.1% India, too, does not fare any better when the overall pay gap is measured. But when the same job level is compared, India fared marginally better at 4%. When considering the same level at the same company, the pay gap in India fell to 0.4%, while it fell to 0.2% when comparing male and female employees at the same level, same company and same function, PTI reported.

India, however, fared better than countries like the UK, the US and Germany. Closer home, India still has to catch up with China.

Reena Wahi, Client Partner, Korn Ferry Hay Group said, “Pay parity is still a very real issue, but it’s an issue that can be addressed if there is an ongoing effort to enable, encourage and select talented women to take on and thrive in challenging roles.”

Korn Ferry is a global organizational consulting firm that helps companies design their structure, roles and responsibilities, as well as how they compensate, develop and motivate their people. They have their presence in more than 50 countries.

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