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In the past few decades, companies across the globe have evolved into diverse multicultural organisations where men and women participate equally. These changes have created the need for a transparent system ensuring fair opportunities for all. Compensation, amongst other matters, has come under close scrutiny. The issue of gender pay gap has become an area of focus and urgent action.
In India, the gender pay gap story holds true. However, the reasons for this gap could reveal a very different story. The gender pay gap is primarily a manifestation of the underlying diversity challenges that organisations currently face.
First things first: The gender pay gap exists. The overall gender pay gap across India Inc. is 24 percent and is the highest in the manufacturing and technology sectors, closely followed by FI and Pharma. The FMCG and FMCD sectors have the lowest pay disparity.
A closer look at the compensation data by levels across multiple industries reveals that the pay gap is approximately 11 percent at junior management levels (work experience of 5-8 years) and increases to about 13 percent at middle management grades (work experience of 8-12 years). But interestingly, at approximately 10 percent, the gap is less at individual contributor levels (team members with 0 to 5 years experience).
As per a typical employee lifecycle, the average age of an employee in junior management is around 27 years and at middle management around 32 years.
We witness that there is a reduction in the female population from junior to middle management levels by almost 50 percent, as most of them take a break from their careers to start a family. Furthermore, a survey conducted across a group of 1,000 women working in the NCR region found that only 18-34 percent of women continue to work after their first child.
It is essential to note that the number of women in the workforce has a significant bearing on the gender pay gap. In FMCG and FMCD sectors, women comprise around 23 percent of the overall workforce and 13 percent of the top management, whereas in manufacturing, women comprise around 12 percent of the overall workforce and only 2 percent of the top management workforce. The gender pay gap is inversely proportional to the percentage of women in the workforce, especially at senior levels.
Another key factor that affects the gender pay gap is the nature of business. Typically, sales and manufacturing roles have less than 10 percent women in the workforce and consequently also the highest pay gap of 21 percent. In corporate functions on the other hand, women constitute 32 percent of the workforce and there is a relatively lower pay gap of 14 percent.
We feel that the important point to highlight is that India Inc. does not make any conscious differentiation in pay based on gender. The gender pay gap across sectors is a manifestation of the lack of gender diversity.
A lot of organisations have made gender diversity their agenda, with increased focus on hiring more women and retaining new mothers as they return to the workforce. If we are to see the gender pay gap reduce, more organisations need to adopt concentrated initiatives to include women in the workforce.
- By Nishtha Sharma, Consultant, Rewards Consulting Practice & Manasi Jain, Consultant, Rewards Consulting Practice