Equal pay for equal work
Erola Palau Pinyana
Researcher of the Operations, Technology and Science Dept.
Globally, women are paid 68% less on average than men for doing work of equal value (World Economic Forum, 2021). Although there has been a great improvement in recent decades, if the trend continues, in 2021 it is estimated that it will take 136 years to equalize gender pay. In 2020, it was estimated that it would take 268.
Pay inequality is found in the vast majority of professions worldwide, also in Spain, where men are paid 21.4% more than women (INE, 2018). This situation is described as "highly dangerous" by the United Nations, as it can prevent women from achieving economic independence and security.
Women are paid 68% less on average than men for doing work of equal value, according to World Economic Forum
For this reason, preventing gender discrimination is part of the European Employment Strategy (EEO) and Sustainable Development Goal 5 calls on all countries to achieve gender equality and to empower women and girls, including in the workplace.
The strategy in Spain
In Spain, the wage gap is wide in all areas except in the extractive industries sector. The highest gender pay gaps are found in the health and social services sector; in the wholesale and retail trade sector; and in the professional, scientific and technical activities sector.
In view of this situation - and with the aim of correcting this trend in Spanish companies - on April 15, 2021, the Spanish Minister of Labor and Social Economy, Yolanda Díaz, and the Spanish Minister of Equality, Irene Montero, presented the "Spanish Equal Pay Tool IR". This is a free and easy-to-use tool that allows the preparation of a pay register with the intention of diagnosing significant wage differences between men and women for jobs of equal value in Spanish companies.
This tool comes in parallel to the entry into force of the Royal Decree on Equal Pay, which compels companies and public administrations to show the remuneration record of their personnel, including management positions.
Companies that exceed 25% pay inequality must justify is not gender discrimination.
The "Spanish Equal Pay Tool IR" allows detecting inequalities in the average remuneration. Thus, companies that exceed 25% of inequality must justify that the reason for the difference is objective and that it is not gender discrimination. Another key point of the tool is that it makes it possible for workers to access the pay register and report possible discrimination.
What do we gain by closing the wage gap?
Achieving equal pay for work of equal value is a struggle based on the commitment of the United Nations and Human Rights. That is why individuals, companies, organizations and governments must strive to close the gap.
For organizations, the cost of having a pay gap is high and, in fact, those that do not prioritize equal pay generally end up having negative repercussions on aspects such as productivity, talent retention and reputation:
- Productivity. Many studies show that companies with more women managers are more profitable. This is the case of the study by Peterson Institute for International Economics (2016), which analyzes 21,980 companies and shows that those with 30% female managers add 6% net profit per year. In the UPF-BSM exploratory study (2020), it is concluded that people working under the leadership of women in Catalan SMEs are more satisfied than those working in companies led by men.
- Talent retention. For companies, having gender-equal pay is a way of communicating that all male and female employees are valued equally. For this reason, a commitment to pay transparency and closing the pay gap is crucial to retaining talent and avoiding wasting money on avoidable staff turnover.
- Reputation. Achieving a well-recognized brand and a good reputation are essential elements for the future of a company. Thus, allowing a pay gap in the company is a management error that has a direct impact on its reputation.
Consult the UPF-BSM exploratory study on job satisfaction and gender perspective in SMEs
For companies, the use of tools such as the "Spanish Equal Pay Tool IR" is a good way to diagnose pay differences between men and women in jobs of equal value in the company. Other actions that can be taken are:
- Provide contract negotiation training for male and female employees.
- Set pay equity goals.
- Hire women leaders to challenge the company's status quo.
- Promote gender inclusion policies.