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Why Are We Still Failing to Close the Gender Pay Gap?

Bob Little 

January 5, 2018

Earlier this year, the gender pay gap once again hit the headlines after the B.B.C. published details of the salaries of its highest paid stars. What the report revealed was that men working at the broadcaster were earning an average of 9.3 percent more than women. The reason? According to the B.B.C., there are simply more men in senior jobs.

The Gender Pay Gap is a Global Issue

But, it’s not just the B.B.C. who are struggling to ensure equal pay between men and women.

According to data collated by Glassdoor in 2016, men in the U.S. earn an average of 24.1 percent more than women. Similar disparities occur in the U.K., Australia, Germany and France. However, the biggest cause of this gap was not discrimination, but instead “occupation and industry sorting” of men and women into jobs that simply pay differently. Once again, this suggests that men tend to occupy more senior roles.

Access to Top Jobs

Access to top jobs certainly appears to be the biggest obstacle behind the gender pay gap. According to the CIPD, women leaders accounted for just 6 percent of the top jobs in FTSE 100 companies in 2016, but received just 4 percent of the pay.

As Paul Lewis from the FT | IE Business School Corporate Learning Alliance explains, “Having overcome substantial bias to land the top job, you’ll be less willing to leave over pay,” Lewis explains. “By contrast, and especially in knowledge-economy jobs where performance is hard to measure, pay and promotions appear to favour those who ‘look the part’ – at least according to the white, male, privileged bosses who, typically, make the decisions.”

Distorted Expectations

So, what can you do to ensure that you get the salary that you want?

“‘If they don’t pay you what you want, will you leave and, if you leave, do they care?’ was an often-repeated mantra in my first job during bonus season,” says Lewis.

“It explains much of the pay furore in the wake of BBC salary revelations and could provide a guide to approaching top salary negotiations for senior executives and employers.

“Aiming for pay equality isn’t the issue. Instead, executives should be clear about how much they’re really prepared to work for, and why.”

According to Lewis, when top salaries are negotiable – unlike lower-paid jobs that usually offer fixed rates and hours – the emphasis on pay equality can create distorted expectations.

“Few of us would accept the principle of equality if it meant taking a pay cut,” he points out. “And we don’t mind offering varying pay rates to, say, our gardeners, babysitters, or even freelance journalists, according to what they’ll accept.”

The Walkaway Principle

Your “Walkaway” price — when you turn down a desirable position because it doesn’t meet your salary expectations – can also help in salary negotiations, as long as you stick to your guns.

A job interviewee who can skilfully switch from unbridled passion to icy toughness when negotiating salary will likely be able to achieve a better wage than someone who is less confident.

But there is risk involved in this tactic. It can easily backfire. After all, your success ultimately depends on whether you really have somewhere to walk away to. And, if you don’t, it will rely on your ability to bluff your way to a better salary than you perhaps deserve or is fair.

What do You Value?

Walkaway price can also vary significantly from one person to the next depending on what it is that they most value. As Lewis explains, “Your current or future employer won’t try to second guess the personal reasons why you set the limit where you do. They just need to decide whether it’s genuine or a bluff.

“For example, an employer would never suggest that you get less money because you have a well-off spouse even if this is, indeed, the reason you decide to accept a less generous deal. It’s for you – not the employer – to make that decision.

“You might accept less pay to work for a prestigious company – but this is highly subjective. Not everyone values it the same way.

“Or, you might place a premium on family time and will only forgo this for much more money.

“Others want to work with clever or pleasant colleagues. Some research suggests that a congenial working environment may be equivalent, in happiness terms, to a 40 percent pay rise – while some prefer extra money to extra happiness.”

This principle is also likely to a contributing factor to the gender pay gap. The relatively small fraction of women in senior jobs, and thus the assumed lack of opportunity at the top, could mean that their walkaway price tends to be lower than men’s.

The Times They Are a-Changing (Slowly)

The likelihood is that pay inequality will eventually even out, albeit at a much slower pace than desired. In fact, data from the World Economic Forum suggests that it could take 100 years to close the gender pay gap, based on current rates of progress.

Nonetheless, progress is being made in certain parts of the world. For instance:

  • Shared parental leave. Several countries, including the U.K., Canada, Sweden, and France now allow men and women to share parental leave. The aim is to help women return to the workplace and give men the chance to become more involved in caring for their new baby. However, research has shown that only a small proportion of men actually take advantage of these benefits.
  • Ban on the “salary question” in interviews. In 2015, Masachussetts became the first U.S. state to introduce a ban on employers asking interview candidates about their salary history. The aim was to ensure a fairer salary negotiation process for women, and prevent low salaries from following people from job to job. Since the law was first passed, a further eight U.S. states have followed suit.
  • Pay gap reporting. From April 2017, all companies in the U.K. will be forced to publish their gender pay gaps. The aim of this new law is part of a longer-term government objective to achieve pay parity between men and women within a generation (or 25 years).
  • Tougher anti-discrimination legislation. In January 2018, Iceland – which currently has the smallest gender pay gap in the world – became the first country in the world to force companies to prove that they pay all employees the same. The legislation forms part of the nation’s bid to eradicate the gender pay gap by 2022.

 

What do you think employers should do to ensure fairer salaries? Do you think it lies in the negotiation process? And, if so, what are your tips for negotiating a good and fair wage? Please share your thoughts in the Comments section below…

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