Posted on Monday, 20 May 2013 in Women in Business

The income gap – Why women earn less!

Leading on from last month’s debate of women’s progress in the business world, another relevant topic is wage disparity between men and women globally. This is not just a gender equality issue, but one which has a real effect on the economy.

Statistics from the World Economic Forum Report sourced from Equal Wages, Better GDP,  in Fortune Magazine (October 2012) emphasize the importance of equal wages by commenting that a country’s competitiveness is judged by its human capital.  If the female half of the workforce is ignored, the economy and GDP suffers.

Income Statistics

Looking at female earned income as a percentage of male income, women in the US earn equally to their male counterparts, women in Brazil, China, Canada and Russia earn between 60% and 80% of their male counterparts’ income, and women in India earn only 20% to 40%.  South Africa ranks in the 40% - 60% category, which represents a significant decline since 2010 when, according to the January 2010 edition of Fair Lady, as sourced in ‘Deal Diva’ by Kim Meredith, the wage gap between South African men and women was only 25%.

 

 

It is encouraging that some countries have developed educational and social tools to ensure women become equal players in the workforce and thereby, decrease the wage gap. Michael Silverstein, co-author of The $10 Trillion Prize: Captivating the Newly Affluent in China and India, writes that in China, female earnings are expected to increase ten fold between 2000 and 2020. A key reason for this is that women are becoming more well educated and earning advanced degrees.  Professor George Subotzky from UNISA reports encouraging statistics closer to home.  In 2010 provisional registrations at UNISA  reflected that 59.74% of applicants were women.

 

The wage disparity is however not just an educational issue or a matter of wage discrimination.  It is often women themselves who contribute to the wage gap simply due to their differing attitudes, values and skills compared to their male counterparts within an organization.

 

For example:

  • Many women do not dare to negotiate
    In their book, Women Don’t Ask: Negotiation and the Gender Divide, authors Linda Babcock and Sara Laschever revealed that 2.5 x more women than men said they feel a great deal of apprehension about negotiating and tend to come away with 30% less reward on average. 20% of women say they never negotiate even though they recognize negotiation as appropriate and even necessary.
    The importance of this begins from the first time a salary is discussed. Men are 4 x more likely to negotiate a first salary and hence have been known to improve their starting salaries by 7.4%.
    However, women should not undersell themselves when it comes to this skill. Another more recent article by Fortune shows that if women are negotiating on behalf of others, they are actually better negotiators than men. "Women outperform men in representational negotiations by 14 to 23 percent," said Margaret Neale of the Stanford Graduate School of Business in her ‘Lean In Lecture’ on negotiation. Another study shows that when women expect to do well in a negotiation, they easily out-negotiate their male counterparts.
  • Women also tend to value themselves differently from men when it comes to the work they do and in terms of remuneration. Their male counterparts often show greater self-confidence when it comes to asking bosses for an increase or promotion, whereas women tend to ponder the consequences of asking, such as, ‘Can the company afford it?’ or ‘What happens if the boss says ‘No’?’ and so they often just ‘settle’ for whatever comes their way.

 

When it comes to women in dual income houses and/or with children, they may be even less likely to consider career opportunities if it means the following:

  • Relocation - They are more likely to let their husband’s career take preference. 
  • Frequent travel – women who take on most of the household/child-rearing duties are less likely to consider opportunities which require  frequent travel, compared to their male counterparts. 
  • Further daily travel to their workplace, especially if their day is more structured around fetching and dropping of children, compared to their husband’s.

In addition, women often value other benefits over their actual salary as part of a bigger picture, such as working flexi-time, having daycare at the office or having a great work environment.  

 

Although companies can certainly encourage women within the workplace and ensure that they receive equal wages and benefits, it is important for employers to consider the other factors which contribute to women considering fewer career opportunities over time and ultimately cause them to “fall behind” their male counterparts in terms of earnings.  

Can you think of any other reasons why women tend to be paid less than men in the South African context?

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