Gender wage gap examined

A study by the Economic and Social Research Institute (ESRI), published in October 2000, concludes that the "gender wage gap" has narrowed somewhat across the Irish labour market over the past decade or so. In 1987, women earned 80% of average male earnings, while in 1997, the gap had narrowed slightly to 84.5%. The ESRI suggests that the persistence of a gender wage differential can primarily be explained by variations in labour market experience and participation levels between men and women. In addition, the remainder of the gap is deemed to be partly attributable to the overall increase in wage inequality between low- and high-income groups in recent years. This has had a disproportionate impact upon women, who constitute a large proportion of low-paid workers.

The independent research body, the Economic and Social Research Institute (ESRI) published a study on the "gender wage gap", entitled How unequal? Men and women in the Irish labour market, in October 2000. The study is based on an economy-wide survey of gender wage differentials between 1987 and 1997. Previous studies have not painted a full picture of gender wage differentials because they have looked only at manufacturing industry. This is a significant omission, given that more than four out of five women work outside the manufacturing sector.

The ESRI researchers found that while women earned 80% of average male hourly earnings in 1987, by 1997 the gap had narrowed slightly to 84.5%. Thus, the gender differential moved from 20% to just over 15%. The gap was found to be widest in manufacturing, where the differential was over 10% more than the overall figure.

Possible reasons for the gender wage gap

Although it has narrowed, the gender wage gap is still substantial, despite the fact that extensive equality legislation, such as the Anti-Discrimination (Pay) Act 1974 and the Employment Equality Act 1998 (IE9909144F), has been implemented. This legislation was specifically designed to prevent differential rates of pay being applied between men and women. So, how can the persistence of gender wage differentials be explained?

The ESRI researchers suggest that approximately three-quarters of the current wage differential can be explained by variations in labour market participation between men and women, in terms of age and experience/length of service: "About three-quarters of the gap between men's and women's hourly wages can be attributed to the fact that women, under current social and economic structures, typically spend less time in the labour market than men and more time as carers in the home". According to the ESRI, the average female employee has worked for 12 years in the paid labour market, as against 18 years for the average male. Of the factors influencing labour market participation levels, the ESRI data show that it is the arrival of children that is a crucial determinant. Many women leave the workforce to look after children and to perform other caring responsibilities. The lack of high-quality, affordable childcare facilities means that in many cases they are left with little choice.

This still leaves an "unexplained" wage gap of about one quarter of the total. The ESRI suggest that the "unexplained" wage gap is sometimes treated as a basis for measuring the so-called "discrimination index". This index is a calculation of the level of wage discrimination that exists between men and women of equal experience, who, by law, should receive equal pay for work of equal value. While the "discrimination index" was 15% in 1987, by 1997 it had fallen to about 5%. Bearing this in mind, the ESRI researchers then sought to answer the following question: "Why, if the discrimination index was falling by about 10%, did the observed gender wage gap not fall by the same amount?". According to the ESRI, this is partly a reflection of the overall increase in wage inequality in the Irish economy over the course of recent years (IE9911146F). This overall increase in the income gap between high and low earners has had a disproportionate impact on women, who tend to make up a large proportion of the low paid. In short, the "unexplained wage gap" can be partly attributed to the fact that women often work in low-paid occupations and constitute a substantial proportion of the low-paid workforce. The persistence of various forms of occupational gender segregation and gender stereotyping means that many women still find it difficult to enter high-wage occupations that are mainly dominated by men, and to gain promotion once there.

Policies aimed at promoting gender equality

The ESRI believes that a key policy issue for tackling the gender wage gap is that more needs to be done to eliminate the barriers to labour market participation faced by women through increasing the supply of high-quality, affordable childcare facilities and promoting other "family-friendly" policies (IE0009155F). The ESRI also highlights a range of other policy issues that are important for the equalisation of opportunity for men and women, such as: the manner in which new equality legislation is utilised; how the National Minimum Wage is uprated in the future (IE9907140F); and the promotion of collective bargaining over equality issues at local and national level.

Commentary

Although the gender wage gap narrowed slightly between 1987 and 1997, the differential is still substantial at around 15%. If the gap is to be narrowed further, the government and the social partners will have to work together to promote a range of policy initiatives. In particular, the wider diffusion of high-quality, affordable childcare, particularly for low-income families and single mothers, is crucial for promoting equal opportunities so that women can participate, and remain, in the labour market. In addition, the wider diffusion of a range of complementary "family-friendly" initiatives, such as flexi-time and homeworking, will also be required to promote equal opportunity. In this regard, the contents of the forthcoming national budget for 2001 will prove to be critical (IE0009220N). The government is under pressure from many quarters to introduce a range of childcare and family-friendly provisions in the budget.

Even if steps are taken to promote equal opportunities for women through childcare and "family-friendly" provisions, it appears unlikely that any significant reductions in gender wage differentials will occur in the current economic and political climate, given that levels of inequality between low- and high-income earners have actually been increasing in recent years. Unless action is taken to address overall inequalities in income distribution - which at this juncture appears unlikely - a gender wage gap will remain embedded to some extent. This is by virtue of the fact that women are disproportionately concentrated and segregated in low-pay occupations with fewer options for advancement, and constitute a large proportion of the overall workforce who can be categorised as low-paid. In contrast, men constitute a larger proportion of high-income groups employed in high-wage occupations. (Tony Dobbins, UCD)

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