Women in Business and Management

Understanding
the gender pay gap
The International Labour Organization (ILO) estimates that women on average continue to be paid about
20 per cent less than men across the world. There are large variations between countries, from a high of
over 45 per cent to hardly any difference (see figure 1). The gender pay gap has been reduced in some
countries while in others there has been little change.1

Figure 1. Mean gender pay gaps using monthly earnings, selected countries by income group

a) High-income

50
45
40
35
30
25
20
15
10
5
0
-5
Czech Republic
United States
Average

United Kingdom
Republic of Korea

Sweden

Portugal
Switzerland
Australia
Estonia
Norway

Argentina
Italy

Malta

Lithuania
Latvia
Hungary
Spain
Uruguay

Finland
Belgium
Slovakia
Chile

Slovenia
Panama
France

Luxembourg

Poland
Netherlands

Canada

Cyprus

1
This brief is based on findings from the ILO report on Women in Business and Management: The business case for change (Geneva, 2019).
(b) Upper-middle income
50
45
40
35
30
25
20
15
10
5
0
n
e

ia

ca

ia

ay

ia

ia

nd
y

a
o

r
ru

il

an
ca

do
ke
ag

tio

ni
az

in
ic

ar
en

ib
an
ri

gu
Pe

Ri

la
rd
ex

ba
Ch

r
Br

ua
am
er

Af

lg
ra
m

m
Tu

ai
a

Jo
ra
M

Al
Bu
Av

de

Ec
st

Th
Ar

Ro
h

N
Pa
ut

Co
Fe
So

n
ia
ss
Ru

(c) Lower-middle income

50
45
40
35
30
25
20
15
10
5
0
-5
-10
lia
e

an

ne

ka

am

ia

or

de

es
sh
yp
ag

si

is

ad

in
go
an

de
ai

r
st

ne

N
Eg

Ve
er

pp
kr
ki

Tu

lv
la
iL

on

et
do
Av

Pa

bo
U

Sa
ng

ili
Sr

Vi
M
In

Ph
Ca
Ba

El

(d) Low-income

50
45
40
35
30
25
20
15
10
5
0

Average Sierra Leone The Gambia Nepal Malawi Madagascar United Republic
of Tanzania

Source: ILO: Global wage report 2018/19: What lies behind the gender pay gaps (Geneva, 2018), p. 25.

2 Women in Business and Management: Understanding the gender pay gap

The gender pay gap is a measurable indicator of inequality between women and men. Most govern-
ments have legislated to guarantee equality of treatment between men and women in remuneration.
The ILO Equal Remuneration Convention, 1951 (No. 100) is one of the most highly ratified conven-
tions. Yet, the gender pay gap persists and the World Economic Forum estimates it will take 202 years
to close the global gender pay gap, based on the trend observed over the past 12 years.2

Even when women advance to higher paying jobs in management, the gender pay gap is frequently
found. Figure 2 shows that the gap ranges between a high of 43 per cent in Honduras to a low of zero
in Albania, El Salvador and Thailand. In some cases, the gap is similar to the overall gender pay gap
and in other cases it is larger or smaller depending on the economic sectors and industry profile of
different countries, the kind of jobs where women or men are concentrated in the labour market, as
well as gender norms that reserve management jobs mainly for men.

2
World Economic Forum: The Global Gender Gap Report 2018 (Geneva, 2018), p. 15.

Women in Business and Management: Understanding the gender pay gap 3

Figure 2. The gender pay gap in management for selected countries, latest available year

Thailand 0%
El Salvador 0%
Albania 0%
Costa Rica 3%
Myanmar 4%
Bangladesh 6%
Greece 9%
Viet Nam 10%
Serbia 12%
Indonesia 15%
Mexico 16 %
Mauritius 16 %
Finland 18%
Norway 19%
Bolivia 20%
Ecuador 23%
Egypt 24 %
Brunei Darussalam 24 %
Australia 25%
United Kingdom 26 %
Uruguay 27%
Republic of Korea 27%
Czech Republic 27%
Slovakia 29%
Argentina 29%
Jordan 30%
Brazil 30%
Rwanda 32%
Russia 32%
Switzerland 33%
Uganda 36 %
Honduras 43%

Note: Mean nominal percentage difference in monthly earnings of female and male managers, 2017 for all countries except
Australia (2014), Egypt (2015), Jordan, Mali, Switzerland (2016), Brazil, Ecuador, Mexico, Serbia (2018).
Source: ILOSTAT.

4 Women in Business and Management: Understanding the gender pay gap

The gender pay gap needs to be considered in
the context of overall gender inequality. It is one We have been talking about
of the more visible examples of structural gender gender equality, and the ILO is
discrimination stemming from the horizontal and invested here, and has been for
vertical segmentation of labour forces. The greater a very long time. Equal pay for
participation of women in the labour market and their equal value is in our constitution
higher levels of education alone have proven to be from 100 years ago. We adopted
insufficient to dismantle this segmentation. the key ILO conventions on
equality 60 years ago. And yet
we still have these problems like

What causes the gender pay gaps and lower work

participation.
gender pay gap? It is clear to me that just adopting
Under-representation in leadership. Far fewer laws, just doing the obvious good
women than men are in management and leadership things – important as they are –
positions, especially at higher levels. When women are is not enough.
managers, they tend to be more concentrated in man- Guy Ryder, Director General, ILO
agement support functions such as human resources Source: Nordic Labour Journal: ILO’s DG Guy
and financial administration than in more strategic Ryder finds inspiration from problem-solving
Iceland (12 Apr. 2019).
roles. This brings down the average salary of female
managers compared to that of male managers.

Working hours. The gender pay gap is often a consequence of the different patterns of workforce
engagement by women and men. In the Global wage report 2018/19: What lies behind the gender pay
gaps, the ILO highlights that women work on a part-time basis more than men do in all but five of
the 73 countries where data are available.3 This is often linked to women taking on more of the un-
paid family responsibilities. On the one hand, women may be in part-time employment as a result of
the lack of affordable and sufficient child care. On the
other hand, women’s opportunities for full-time em-
To reduce differences between
ployment may be more limited than men’s, resulting in
average earnings of men and women taking part-time employment. Part-time work
women, we instead need to does not always provide benefits that are proportional
tackle gender segregation in to those of full-time work, which can affect the remu-
education and in our labour neration package over time.
markets. Societies should do more
Time out of the workforce. Women more than
to address the long established men are likely to take career breaks from their employ-
cultural reasons leading to a ment in order to raise children or care for the older or
persisting gap. This means ill members of the family. This means that when they
promoting gender neutral choices return to work, they are likely to have fallen behind in
advancement and in remuneration. In many countries,
of individuals at all stages and in
the issue of part-time work and career breaks may not
all aspects of their lives.
arise as domestic workers and extended family help
Source: BusinessEurope: Addressing the gender pay gap are readily available. Nevertheless, as labour markets
– a BusinessEurope position paper (23 June 2015).
evolve, this situation can easily change.

3
The report does not consider trends in productivity as part of the analysis due to the lack of data (see p. 23). The effect of productivity gaps
could also partially explain gender pay gaps.

Women in Business and Management: Understanding the gender pay gap 5

What causes the gender pay gap?

Working hours Education

Time out
of the
workforce
Feminized
jobs

Under-representation
in leadership

Education. Women are surpassing men in most regions as tertiary graduates, and they are advanc-
ing into the science, technology, engineering and mathematics (STEM) disciplines. Nevertheless,
women still lag behind men in STEM areas that are associated with higher paid jobs. Even when
women are qualified in STEM subjects, it can be challenging for them to obtain and maintain a job in
these areas because they are traditionally male dominated.

Feminized jobs. Occupational gender stereotyping results in certain jobs being held predominately
by women, and that leads to “female jobs” being undervalued for purposes of wage rate determination.
This brings down wages across the board for women compared to men as feminized occupations and
industries tend to pay less than those occupations and
industries dominated by men. Also, enterprises that
employ a majority of women tend to have lower wages
How you structure your than businesses employing mainly men.
workforce is explicit, needs
to be architected and you Unexplained parts of the gender pay gap. While
have to know which things to there are a number of objective elements that explain
do first. From our research the gender pay gap, research has shown that those
conducted a few years ago
elements do not account for the whole gap. There may
on gender participation in
be factors that are unknown or unaccounted for, but
the workforce, we found that
also there can be an aspect of discrimination on the
across all economies that
basis of sex, whereby a job done by a woman is per-
increasing gender participation
adds a significant amount to ceived as worth less than a similar job done by a man.
all economies. If we get the In the absence of objective job evaluation methods
big things right, like gender and practices, gender bias can easily occur in deter-
participation, health and safety mining pay scales for women and men.
standards, technology training
standards, we would make a lot
of progress. Benefits of closing the
Vivian Hunt, Managing Partner, United King-
dom and Ireland, McKinsey & Company
gender pay gap
Source: Speech given at the event “How to The benefits of women earning the same as men in-
shape a future that works: Transforming
the global response to the future of work”, clude an increase in their purchasing power which in
organized by the Financial Times and the ILO turn helps stimulate consumer spending and the econ-
(Geneva, 11 Apr. 2019).
omy. This is also the case with more contributions to
pension schemes and spending of pension incomes.

6 Women in Business and Management: Understanding the gender pay gap

 $5.8
By fully closing the gender pay gap, PricewaterhouseCoopers
estimates that gains to the gross domestic product (GDP) of
trillion economies of the Organisation for Economic Co-operation and
Development could exceed US$6 trillion. Furthermore, women’s
earnings could increase by US$2 trillion.4

Eliminating the gender pay gap can provide incentives for

The ILO estimates that more women to be economically active, which would advance
reducing the gap in gender equality and create a virtuous circle. Studies have linked
participation rates between increased labour participation rates of women with higher levels
men and women by 25 per of GDP. The ILO estimates that reducing the gap in participation
cent by the year 2025, could rates between men and women by 25 per cent by the year 2025,
raise global GDP by 3.9 per could raise global GDP by 3.9 per cent, or US$5.8 trillion.5
cent, or US$5.8 trillion.

Challenges in narrowing the gender pay gap

In analysing the gender pay gap, the current global context needs to be borne in mind. The
ILO Global Wage report of 2018/19 notes that despite some increases in economic growth and
employment, global wage growth in 2017 was not only
lower than in 2016, but fell to its lowest growth rate since An important issue in gender pay
2008, remaining far below the levels observed before gap reporting is understanding
the global financial crisis. Reasons for this include slow exactly what it represents and
productivity growth and the intensification of global the implications of reporting a
competition. Of concern is that slow wage growth has
gender pay gap. The potential risk
become an obstacle to achieving sustainable economic
growth, and it is also affecting efforts to reduce the for any business is that it could
gender pay gap. be perceived as less than fully
committed to fair pay, promotion
“Equal remuneration for work of equal value” is a
and development opportunities
challenging concept for many enterprises to apply,
even when their governments have ratified ILO for women. One of the obvious
Equal Remuneration Convention, 1951 (No.100). In consequences is being seen
particular, there is a general lack of understanding of as a less attractive employer –
the concept of “work of equal value”. This is because
undermining the ability to recruit
women are usually employed in jobs different to
when securing talented people is
those of men. The difficulty lies in how to compare
these jobs within the enterprise and across economic a key determinant of success.
sectors and industries. Some countries have
Darina Barrett, Head of Financial Services, KPMG in
developed job evaluation methodologies that Ireland
are applied to different degrees. The technical
Source: BNY Mellon and others: Women in man-
challenges involved in developing and applying job agement: The leadership pipeline 2018 (New York,
comparisons contributes to the persistence of the 2017), p. 20.
gender pay gap.

4
PriceWaterhouseCoopers: PwC Women in Work Index, Closing the gender pay gap (Mar. 2018), pp. 10 and 11.
5
ILO: World Employment and Social Outlook: Trends for women 2017 (Geneva, 2017), p. 18.

Women in Business and Management: Understanding the gender pay gap 7

What can enterprises do to close the
gender pay gap?
For companies seeking to enhance gender diversity across their organization, it is important to take
stock of gender inequalities, including gender pay gaps, which may be part of their organizational
culture. Enterprises can take numerous measures to help close the gender pay gap in their organi-
zation. As a first step, recognition of the business benefits of improved gender diversity at all levels is
critical as well as commitment from top leadership. More specific approaches to narrowing the pay
gap include:

• Promoting a gender-inclusive business culture while adopting a holistic approach to equal

remuneration for women and men for work of equal value.
• Making equitable salary offers to men and women.
• Basing pay on the position itself rather than previous pay of the employee as the latter
perpetuates the gender pay gap.
• Undertaking a gender pay review in the enterprise to assess whether there is a gender pay gap
and to what extent - conducting regular pay reviews can help a company keep on top of any
discrepancies.
• Making jobs more flexible so that more women access higher-level jobs and, therefore, higher pay.
• Ensuring that unconscious gender bias does not affect performance reviews.
• Selecting and applying a job evaluation methodology to assess the skills and responsibilities of
the various jobs in the enterprise with a view to adjust job titles, contents and corresponding
pay overtime.
• Sharing results with employer and business membership organizations and other companies in
the enterprise’s networks.

For further reading, please see

Women in Business and Management: The
business case for change
ISBN 978-92-2-133168-1

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