Wednesday, April 03, 2013

The Gender Pay Gap

Underlying reasons and suggested ways out

Various surveys have confirmed that women are paid less than men for equivalent jobs across he world. I couldn’t help wondering why this is so, based on my own experiences in India.  This is what resulted:

1. Govt is the only employer, in the Indian context, that has a fixed pay-scale for jobs. Its normally dependent on the length of tenure that an eligible candidate has worked at a particular level. So a pay band of say Rs 10,000 to Rs 15,000 is established for a job a Level 1, with Rs 500 increments. After 10 years, the pay levels off at that job at Rs 15,000. A new recruit will start at Rs 10,000/- with no experience at Level 1. A person recruited laterally with say 2 years experience will be recruited at Rs 11,000. There is almost no scope for negotiation.

2. Non govt jobs have a band within which a recruitment takes place. The band widens the more senior the position is. The starting point within the band is a negotiated salary. In practice, virtually all employees join the firm at negotiated salaries. Pvt firms include non-government organisations that are not-for-profit.
It is a normal practice in many private sector for-profit organisations to outsource the payroll. This becomes a single point of resentment with employees, so the approach is to shield such information from others.
It is also normal practice for the employers to seek to employ people at the lowest cost possible to the company. The only exceptions are those deemed outstanding in their work, many of whom are poached from other organisations. Pay hike is an incentive for the switch. Lets safely assume that in a normal A:B:C distribution of performance, the A list will be say 1 in 10. This piece applies to the 9 and could affect even the A list employees.

Given that salaries are negotiated, why do women end up with lower pay?  Please bear in mind that the following observations apply to a majority and not all. There are clearly exceptions to the rule.

1. Women are viewed as the “Second income earner” in families. This is true in terms of how women perceive their own earnings in the context of the family. This is true of how employers perceive women also. The result is that the starting point of the negotiation is lower than that of a male employee. (I worked for two years in a not-for-profit that was about 70% women employees including in top management and that’s how it  was assessed internally).
It is also true that in most homes with a single-earner, in the Indian context, the male is the earning member. This circumstance may not be true for many other countries.
2. Women look for a more wholesome picture in the job beyond pay (this can be related to a desire for dignity also). Working environment and the context of the job is also valued. So often they do not end-up negotiating too hard if the pay is in an acceptable range. The parallel one could look for here is starting pay-scales for those who come from other discriminated or disempowered groups. Aspects such as dignity of the work place play a huge factor in chosing a job.
3. Discriminated groups including women, often reach the interview table with a defensive mind-set, viz., I need the job badly, don’t want to lose the option over pay issues. Women, additionally, have to cope with work discontinuity that occurs due to marriage (husband got transferred), childbirth and child rearing. The location of city (due to husband’s transfer) and child rearing are related to the traditional roles of women in the home. The impact is required rigidity (of timings, for example) or flexibility (work from home, flexi-time) etc. Both of which place women on the back-foot on pay negotiations. The comparator for this would be for men-workers who may require such flexibility due to health reasons, child-rearing or other such responsibilities. The men with such circumstances are smaller in number, but my guess is that they get placed on the backfoot on negotiations.
4. Women who take a break for family reasons (especially child birth and rearing) often feel that the missed years may have taken the edge of the their abilities. I do not believe this to be true (and have experienced it thus). In fact, their maturity levels at handling such a challenge in life, is real value to the work place. The lack of currency in terms of data and developments is something any reasonably competent person can catch up in a few weeks - it isn’t a big issue. Many women at work and who are personal friends, confirm this view to me.
a. the fact they felt “lesser” when starting; and
b. realizing they’re as good as they were anyway and the “usual idiots” at work were still the “usual idiots” even if they had not taken a break!

All these above factors affect the negotiated pay of the recruit as also, the nature of jobs taken. The nature of jobs taken is a separate matter - but its no coincidence that a large number of fixed time jobs, as in hours of work, employ women. Teaching, operations and administration / HR, accounting jobs etc. Govt employment presents a very attractive option - equal pay, plus likely fixed hours - except for the few who reach the very top.

Downstream in a work career, for normal performers, the starting point of low-pay carries on through their career. Each consecutive job offers a hike (even if negotiated) based on previous  pay drawn So an employee being offered say a 25% hike on previous pay, finds it difficult to press for greater pay unless he or she is able to set-off competing employers in a bidding war. The latter happens not often, as jobs options don’t emerge at the same time.

To summarize:
1.Private sector negotiate pay to the lowest level possible for recruitment. In all cases during my working life (govt., private sector, for-profit and not-for-profit), there is no desire to pay less to women. The desire is to pay less for anyone - to the point it can be acceptable!
2. Women, like other discriminated groups, are on the defensive on pay negotiations.
3. The lower “entry” level payscale, thus has a downstream effect on their entire career.

What could be some avenues to explore to redress this?
1. To establish information systems to enable women to have a rough guage of what the job pays at the lowest to highest band (if possible). I can see guys using this service too, especially those from discriminated groups (handicapped, health, ethnicity etc)
2. To have active dissemination of the logic to women that:
a. Taking a break from work does not render them stupid. All that’s happened is that they are out of date on current events. No reason to feel despondent.
b. They are not “second income” earners. They are joint first income earners at the very least.
c. How the family perceives its relative earnings of partners is none-of-the-employers’-business.
d. For fixed-time jobs,  eg at a billing desk at the supermarket or as the person handling the front desk in an office, there is no reason for them to accept less pay for their time. For executive functions, jobs are inevitably outcome linked. So doing things like leaving early to manage the kids at home are NOT of any consequence. Its principally, in terms of time lost for non-work, no different from the golf-game or lunch-meeting around business, when about 5 minutes of actual work becomes an excuse to waste 2 hours! (some jobs this may not be a waste, but my experience suggest that most of the time it is. Its just fun bundled with a little work to make it look respectable!). Of course, managing a child is important while a golf game isn’t.
e. The pay negotiated in the early stages of a career, say graduation plus 3-5 years, stays like a monkey on one’s back. This is an issue that several men also face, if they’ve opted for lower paycheques early in the career. .

The key point I’d like to make is that the pay discrimination observed won’t go away with all the angst, rhetoric etc. Laws in countries can’t mandate private sector to guarantee any kind of pay =- you just have to look at the minimum wages scenario. Most of the perceived “discrimination” is the outcome of negotiations - related to a clutch of factors like those listed above. Its most often not out of a desire to pay less to a woman. Its out of a desire to pay less, full stop! You only need to look at the number of women employed in the recruitment business (flexi-location job), to realize that its often women sitting on the other side of the table negotiating pay. (I don’t have statistics for this, but it would be worth examining).

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