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Women at work: Can we bridge the gender pay gap once and for all?

Income disparity is a result of systemic biases, socio-cultural norms, and low representation of women at the workplace, which companies can address by being more intentional about equity, and the government, through policy change

Divya J Shekhar
Published: Jun 23, 2022 01:25:12 PM IST
Updated: Jun 23, 2022 04:15:17 PM IST

Women at work: Can we bridge the gender pay gap once and for all?Gender parity has become a steeper uphill battle in the wake of Covid-19, with the economic participation of women falling further Image: Shutterstock

On Twitter, the @PayGapApp is a bot account that calls out gender income disparities in companies listed on the UK government’s gender pay gap service database. On June 20, when technology company Tech Mahindra put out a tweet about LGBTQ+ inclusion, the account quote-tweeted it saying, “In this organisation, women’s median hourly pay is 1.2 percent lower than men’s.”

Since 2017, the UK has mandated public disclosures of average gender gaps between men and women for companies with 250 or more employees. Disclosures made by other Indian tech companies present in the UK indicate that on a median hourly basis, female employees in Infosys earn 0.7 percent less than their male counterparts, while the pay gap is 7.5 percent in Tata Consultancy Services (TCS) and 9 percent in Wipro.

In the US, on June 12, technology giant Google agreed to pay $118 million to settle (without admitting wrongdoing) a class action lawsuit that covers some 15,500 female employees in California. The suit was initiated by three former employees in 2017 who said the company had discriminated against women in pay and promotions, The Wall Street Journal reported, adding that Google placed women in “lower-job levels than similarly qualified males, leading to lower pay, and denied the women promotions or transitions to other teams that would have led to better career advancement.”

In India, an article in February by recruitment firm Randstad says that women earn as much as 20 percent less than men. A study published by IIM-Ahmedabad in the same month shows that senior female executives in India on an average earn Rs85 for every Rs100 that senior male executives earn. The research, based on responses from 109 out of 200 NSE companies with a sample size of over 4,000 executives for 2021, says women senior executives (including top management) earn an average compensation of Rs1.91 crore compared to Rs2.24 crore paid to their male colleagues.

Gender parity has become a steeper uphill battle in the wake of Covid-19, with the economic participation of women falling further. According to Azim Premji’s State of Working India Report in 2021, during the lockdown and the months after, 61 percent men remained employed compared to only 19 percent women, while just 7 percent men lost their jobs compared to 47 percent women. The World Inequality Report 2022 states that while women represent 50 percent of the population in India, they earn only 18 percent of the labour income for it.

Women at work: Can we bridge the gender pay gap once and for all?

A tough climb

Pay gap has been one of the major challenges faced by women in the workforce, and this gap only widens as women advance in their careers, says Kishore Poduri, country head-HR, DBS Bank India.

According to him, while overall low workforce participation of women means there are less women to recruit, “if they have to take career breaks, their salary might take a hit when they come back”, he says. “Conscious and unconscious biases against women also play up within organisations, which is particularly visible as women rise up the hierarchy.” He says these everyday biases could be, for example, not giving promotions or pay hikes to women just because they want to apply for maternity leave, or judging someone’s performance by whether they will be available beyond work hours.

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According to Poduri, at DBS India, the pay for female employees is higher than their male counterparts by 0.2 basis points since the past two years, while at their tech hub in Hyderabad, the DBS Asia Hub 2, there is a pay gap of 0.9 basis points, but it has reduced from 4.1 percentage points in the past year. Companies are moving the needle, he believes, but more needs to be done.

One of the main reasons for income disparity is inadequate representation of women at the workplace, particularly in leadership roles. “In the tech industry, for instance, women are seen more in enabling functions like program management, finance or HR, while men are seen more in core roles like consulting, engineering, field sales etc. The further you are from the roles that drive P&L (profit and loss) and/or value chain of the company, more will be the likelihood of pay disparity,” says Mansee Singhal, rewards consulting leader India, Mercer, an HR consulting firm.

Quoting from Mercer’s 2021 India Total Remuneration Survey (TRS) that covered over 14 lakh employees across 900 tech and non-tech companies in India, Singhal says while the ratio of men and women at the entry level in the tech industry is about 57:43, by the time they reach senior roles with 15-plus years of experience, the male-female ratio drops to about 89:12. “In the non-tech industries, representation at the entry-level itself is lower, at 80:20, and it moves down to almost 88:12 at the managerial levels,” she says.

Women at work: Can we bridge the gender pay gap once and for all?

Girls are often raised with the idea that home is their primary responsibility, so growing up, they are already thinking of careers that will help them have more flexibility, definite hours etc, even if that comes at a cost of lesser pay, says Nirmala Menon, founder and CEO of Interweave Consulting. “Until we have enough role models in male-dominated jobs, we will not have too many women making it to leadership levels,” she says. “Societal mindsets take a long time to change. And because women are constantly told to juggle work and home, they are prepared to make—what they believe—more practical choices. That is to take up roles that will help them manage life at home, even if they make less money.”

Companies, Menon explains, often use women’s need for flexibility to justify paying them less. “They say women make these choices. What they do not understand is that these ‘choices’ have been internalised since childhood.”

There is more data to support how socio-cultural prejudices hinder the career progress of women. Saran Balasundaram, founder and CEO of Han Digital, a talent consulting company, says that while men and women start out on an equal footing as freshers, with “women earning at par or even more than men'', the pay disparity can increase to 20 percent, and in some cases, “even 40 percent”  in the mid-to-senior levels. He is quoting from the annual compensation benefit study for FY22 that his organisation conducted with a sample size of over 50,000 people in the tech industry.

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The disparity is more apparent in the case of women taking life decisions like marriage, relocation, extended maternity breaks or other caregiving responsibilities. “This is where the problem of pay disparity actually starts,” Balasundaram says. The bias is visible even at a level of selecting critical resources or undertaking succession planning for leadership roles, particularly customer or client-facing roles. “‘Will she continue working here? Can I take a risk of making her a resource in a customer-centric role? Will she be available beyond office hours?’ are some of the lines on which companies think.”

Women at work: Can we bridge the gender pay gap once and for all?

Even globally, there is a wage penalty associated with motherhood. A 2019 article on the World Economic Forum titled ‘An Economist Explains Why Women are Paid Less’ quotes data from the Organisation for Economic Co-operation and Development (OECD), which states that the “motherhood penalty amounts to about a 7 percent wage reduction per child” for women, while for men, there is some evidence of a fatherhood premium, which means a positive correlation between a man’s wages and the number of his children.

Then there are the self-limiting beliefs women have if they take extended maternity breaks or demand flexibility due to domestic work or caregiving responsibilities, says Menon. “Women are so guilty and apologetic that they rarely negotiate for higher salaries or promotions. It might start off narrowly, but over a period of time, this gap will widen, and women will always be on the backfoot.”

Companies get away with paying women less in such scenarios because of low pay transparency in the country, Menon explains. Since most negotiations are based on previous or current salaries drawn, there is no way of knowing whether it is as per industry standards. And if that pay has not undergone a revision over the years, it leaves women with a much lower compensation than their job profile deserves. “It is no longer about paying someone for the job they perform, but how well they negotiate, which means women often get the short end of the stick.”

Women at work: Can we bridge the gender pay gap once and for all?

Equal pay for equal jobs

One of the best ways to enable equity is to ensure the pay is determined by the value of the job and not linked to a certain individual, says Krishna Raghavan, chief people officer, Flipkart. “We benchmark our pay across role families within the industry. The role incumbent doesn’t determine the value of the job and hence pay is completely gender neutral,” he says. “I believe that the best way to enable gender equality is to ensure gender neutrality in everything we do.” Women, he adds, do not like extra privileges that undermine their merit, so “our job is to create an equitable environment to enable a diverse workforce to thrive”.

Singhal of Mercer agrees that companies need to manage the various “choke points” of a woman’s career in a better manner. This could mean keeping women informed about developments at work during their break, which would help them settle back quickly, making provisions for women to ensure they do not drop off the workforce, or providing them access to a leadership and support network that will assure them that they have partners in their progress.

Women at work: Can we bridge the gender pay gap once and for all?For example, says Sudhir Dhar, executive director-HR at Motilal Oswal Financial Services, the company has an internal community of female employees who are focussed on cultivating a network and support system for women to grow in the organisation. “The aim is for them to tell us what we can do as a company to help them grow within the organisation, so that more of them could rise to the higher level, even to the board.” He adds that hiring more women, particularly at senior levels, is also a priority.

Balasundaram of Han Digital says women must invest in upskilling themselves, and learn how to own up and sell their stories and skillsets. Jobs, and skills, however, are valued differently when women perform them, says Menon. This is because of the common assumption that they are going to be ‘distracted’ by child and family matters, and it is okay to pay them less.

Care work has also been undermined, she says, and it is time companies recognise it, and start advocacy and conversations around it. As per the latest time-use survey on women’s and men’s work released by the National Sample Survey Office (NSSO) in 2020, every day, women in the labour force spend 237 minutes (or four hours) doing unpaid work for household members, compared to 93 minutes (or 1.5 hours) spent by men. This indicates that men perform domestic work when they are relatively free from paid work, but that is not a choice for most women. This disproportionate burden of unpaid care work often results in women dropping out of the workforce entirely. “Care work is hard work, and essential work,” says Menon. Organisations, she says, must have policies where they “look at productivity more than facetime”.

The pandemic has helped turn the spotlight on the merits of flexible and remote work, which has been beneficial for women, Poduri of DBS Bank India says. The company also has an extended work-from-home option post maternity, where new parents can work from home six months after the completion of maternity and paternity leave. According to him, given the diverse kind of companies in India, pay parity is not a priority in many of them. “Some regulatory push has to come for companies to prioritise it—like in the case of sustainability or corporate social responsibility (CSR),” he says, adding that the government has introduced progressive policies with respect to creche facilities and maternity leaves, and is also trying to build infrastructure. “But more needs to be done,” he says.

The Women, Business and the Law 2021 report by the World Bank states that around 190 countries have undertaken reforms in laws to improve economic opportunities for women. The European Union (EU), where the average gender pay gap is 14 percent, is “currently negotiating legislation to shed light on companies’ pay practices, hoping it will bridge the gap between men and women in compensation for comparable work”, says a June 1 Politico report.

According to Singhal, companies must find ways to make men champions of pay parity and flexible work. The only way to counter pre-existing biases is through data, she says. “Data shows women have unique competencies that are fundamental to the future of work—like they are more inclusive and adaptable to change, and have higher problem-solving and emotional intelligence. Then doesn't it make more sense to have more women in managerial and leadership roles?”

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