Bengaluru: Reams have been written about the difference in pay between men and women, which has emerged as a hot-button issue when it comes to gender equality at work.
According to various surveys, the pay gap is estimated to vary anywhere between 19% and 27%. But on a closer look, the difference is far less, finds a recent global report.
Indian men, overall, earn an average 18.8% more than women, according to Korn Ferry Hay Group’s report released on Tuesday.
But on comparing the salaries of men with women at the same job level, the same company and in the same function, the study shows that men earn only 3.5% more than women.
The global study analysed gender and pay of about eight million employees in 33 countries, including 57,000 employees in India.
“Our data shows that when it comes to thinking about pay on the basis of gender, a man and a woman in the same company, doing the same job will usually be paid nearly the same—but still favouring men by 1.6% (globally),” said Ben Frost, a global reward expert at Hay Group, adding that this is true across geographies form Sweden to South Africa.
So just where is that huge pay gap coming from then?
It exists partly because there are fewer women in better paying job functions and industries such as science, technology, engineering—all of which pay above average, and are very male-dominated.
Lesser-paying sectors such as hospitality and tourism are women-dominated. This pushes the overall average male salary above the average female salary, resulting in a wide average pay gap, said Frost.
“Getting more women into these higher-paying functions and industries will push up average female salaries, and help to close the overall pay gap,” he said.
The other reason is also the lack of women in senior functions and in leadership positions.
“If we want to close the pay gap and make a difference, it is the road to the top jobs that needs to be the focus. This is the pay gap problem,” added Frost.
Globally, Hay Group’s research found that women make up 40% of the workforce for clerical jobs, but only account for 27% of manager roles and 17% of executive-level jobs.
In India, that number is worse—only 10% of managers are women and 5% of women hold executive-level jobs.
But it is also important to note that the study considered only the base salaries when comparing the pay of men and women.
“There is some evidence that the gaps for variable pay are slightly larger than for the base salary, which is mostly explained by women working fewer overtime hours than men on average,” said Frost.
Experts, believe that not including variable pay does not give the complete picture as variable pay accounts for a significant part of the compensation.
“Without variable pay, the data is not representative, as women lack the ability to sell their performance as well as men, affecting their ability to earn more for their performance,” said Geetha Kannan, managing director of The Anita Borg Institute, a non-profit that works to foster gender diversity in the technology sector.
Also, even within a function, the pay that employees can earn within a band varies much more than 3.5%; so a pay gap of 3.5% seems to be on the lower side, said Kannan.
Job site Monster.com last week released a report that said the gender pay gap varies as much as 34.9% in the manufacturing sector to 17.7% in the banking, finance and insurance sector.
Sucharita Palepu, global head of people policies and practices at Tech Mahindra Ltd, however, said that even if one includes variable pay, there is not a perceivable difference in what men and women earn in a similar role in a company.
But she did concede that as a function of negotiation, men tend to earn more than women, as men possess better negotiation skills.
“All good employers do not have any element of compensation that gets governed by gender. So, by design, pay is designed based on the role, the criticality and the performance,” said Sandeep Chaudhary, chief executive officer at Aon Hewitt India.
However, he said that employees have different preferences based on their gender, age and income, and that could influence the way the employees are paid, thereby creating a pay gap.
In India, women account for only 23-24% of the total labour force and generate a mere 17% of the share of the gross domestic product (GDP), a 2015 McKinsey Global Institute study found.
This figure is far below the global average, where female workers generate 37% of the world’s GDP.
Also, a gender pay gap usually emerges over time.
“Women and men in the technology sector start out with equal pay, responsibility and aspirations. However, by the time they are 12 years into their careers, women tend to receive Rs.3.8 lakh lesser salary than men,” said Shachi Irde, executive director, Catalyst India WRC, a not-for-profit that works to expand opportunities for women.