Economics: Gender pays

Marking International Women’s Day 2013 on 8 March, the Grant Thornton International Business Report published research showing that – globally – 24 percent of senior management roles are now filled by women, up from 21 percent in 2012 and 20 percent in 2011. Japan (seven percent of senior roles occupied by women) was the worst performer. The UK (19 percent) and the US (20 percent) were among the bottom eight countries, too, for women in senior management. The report observed that those economies happen to be experiencing low levels of growth.
The situation worsened when boardroom positions were considered. Among G7 countries, just 16 percent of board members are women, compared with 26 percent in the BRIC economies (Brazil, Russia, India and China) and 38 percent in the Baltic states.
The data for this country showed we are no longer world leader. The percentage of women in senior management positions has stalled at 28 percent, but Stacey Davies, partner in Grant Thornton New Zealand, said standing still means we are actually going backwards compared with the rest of the world. Last year we ranked 10th out of 40 countries surveyed. This year we dropped to 17th out of 44 countries. During that time the global average has grown from 21 percent to 24 percent. We peaked at 32 percent in 2011.
Other data from New Zealand were disappointing too. The number of businesses offering flexible hours has dropped from 81 percent to 78 percent and the number of companies looking to employ or promote more women into senior management was only 13 percent against global average of 15 percent.
A few weeks earlier, 21 February was designated Equal Pay Day, marking the number of extra days from the beginning of the year that women would have to work to earn as much as men did in the previous year. This year, it was three days later than last year. The New Zealand Federation of Business and Professional Women bandied data from the Quarterly Employment Survey showing the average hourly wage for men is $29.09, while for women it is $25.15 an hour, difference of nearly 12 percent. Equal Pay Day is calculated using these figures.
Carolyn Savage, president of BPW NZ, argued that the biggest consumer decision-makers are women and if paid equally women would have the capacity to spend or save another $3.94 an hour. “It does not take financial genius to note that an increase in the purchasing power of women would lead to benefits and an overall increase in GDP,” she said, drawing attention to Goldman Sachs research that showed reduction in the gender pay gap would lift GDP.
Green Party Women’s Affairs spokesperson Jan Logie pressed Prime Minister John Key to support her Members’ Bill, crafted to give women the ability to check they are paid fairly under the law. Despite having the Equal Pay Act since 1972, she said, there was anecdotal evidence that many women were still paid less than men for doing the same job. The law required employers to pay workers equally, but “there is no mechanism for most women to check that is occurring and to legally enforce their rights”.
Researchers who have studied the gap between men’s and women’s wages have come up with various explanations other than simple gender discrimination. For example, women may not negotiate for better pay packet as robustly as men. report for Barclays gives some credence to that possibility. Titled “Unlocking the Female Economy: The Path to Entrepreneurial Success”, the Barclay research said encouraging female entrepreneurship should be an economic and policy priority. Women are now better represented than ever before across the labour force, but their participation in entrepreneurship remains low and in some countries, has even declined over the past decade. This low rate of entrepreneurial activity means that societies are failing to make effective use of the full range of economic resources at their disposal.
Much more fascinating, for those who pay differentials, the average annual income among high-net-worth female entrepreneurs was £382,000 while male entrepreneurs earned 14 percent less at £327,000. By contrast, the average income among high-net-worth women who don’t own businesses was £217,000, 21 percent lower than the corresponding average male income of £273,000.
Barclay mused on those data and reached this conclusion: The pay gap indicates that women may be better rewarded in more entrepreneurial environment, which is more market-driven, than within more traditional job role in which pay must be negotiated. Writing for ForbesWomen, commentator Victoria Pynchon had slightly different explanation: “The rewards of entrepreneurism are not driven by outdated historic male metrics for success. They are driven by results.” M

Bob Edlin is leading economic commentator and NZ Management’s regular economics columnist.

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