Women seem to be their own worst enemies when it comes to closing gender pay gap

The gender pay gap reporting regulations, which come into force here this month, are a positive step towards making Irish workplaces more inclusive. But while legislation can inform the letter of the law and raise awareness of the disparity, an even bigger challenge lies ahead: changing public perceptions about gender pay equality, especially among women. Even with diversity, equity and inclusion now driving the corporate agenda, it seems that women are still their own worst enemy when it comes to salary expectations.

“Even as students, women expect to earn substantially less than their male counterparts and this gap in expectation mimics the actual wage gap that exists when they get into the workforce,” says economics professor Pia Pinger from the University of Cologne, who estimates that the gender pay gap could result in women earning about half a million euro less than men over their careers.

What is most surprising about Prof Pinger’s findings is that they were based on research conducted with young people about to enter the workforce, not with older employees who had accepted the gender pay gap as something they had to live with. The research cohort comprised more than 16,000 students and recent graduates from universities all over Germany studying a broad spread of subjects. They ranged in age from 18 to 28 and despite being confident in their own abilities, the women among them had apparently already accepted gender pay disparity as a given.

“As women start by expecting lower wages, this leaves little scope for negotiation and they are more likely to be pulled down to a lower wage. By comparison, men are much bolder. They enter the salary conversation with higher numbers in mind and expect to be negotiated down,” Prof Pinger says.

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Prof Pinger found that female students expected an average starting salary of about €33,400, while male students expected to start at just more than €39,000. She believes uncovering these gaps is critical because they potentially determine choices around education, labour market, household bargaining and wage setting.

“In terms of relative magnitudes, females would need to work on average around four hours more per week in the same occupation and industry, or major in medical sciences rather than the humanities to catch up with the starting wages of their male peers. It would also take them about nine years more of accumulated work experience to make up for the gender penalty,” Prof Pinger says.

“In addition, we need to be aware that the gender pay gap is not only affecting women now. It also has wide-ranging implications for their future financial wellbeing with wage disparities likely to matter for important decisions around pensions and savings provision.”

Under the new gender pay gap reporting regulations applying here, businesses will have to publish statutory calculations showing the extent of the gap between what men and women earn as a group every year based on the gross average hourly pay rate (This is not the same as equal pay for equal work which is already part of Irish employment law.).

Companies employing more than 250 people will have to publish details of the gap from this year while organisations with more than 150 employees will be brought into the net in 2024 and those with more than 50 staff will be included from 2025.

To comply, companies must take a snapshot of the gap as it exists in their organisations during June. They then have six months to crunch the data before reporting the outcome and stating publicly how they intend to address it.

This is not just an exercise about money. It is also about representation and whether women are equally represented at every level within an organisation. If women are in more of the lower-paid jobs than men, then the gender pay gap in that business is wider.

Ireland’s gender pay gap currently stands at an estimated 8.3 per cent according to 2020 figures from Eurostat, but it is a worldwide problem which the World Economic Forum says will take 100 years to close at the current rate of progress. Gender pay gaps are typically wider in male-dominated sectors and sectors where wage levels are largely determined by negotiation.

Prof Pinger notes that women also have lower expectations about the maximum salary they can earn during their careers and often underestimate the losses associated with raising children and its impact on their salary trajectory.

“It’s a bit of a chicken and egg situation. Are women expecting less so they’re asking for less?” she says.

“What definitely does matter is boldness in initial wage negotiations with important consequences for expected starting and lifetime wages. So, maybe targeted negotiation training for women is one way of closing the gap in people’s minds and in reality, while a more realistic view of the career costs of raising a family might also lead women to bargain for a more equal distribution of child-rearing responsibilities within households.”

That said, Prof Pinger adds a caveat as there are studies showing that women who negotiate in a way that is seen as too forceful often pay a price for doing so.

“When a female has negotiated very strongly and people are asked if they would like to work with her they often say no and this happens more for females than for males,” she says.

“So, we know that women are being punished for negotiating hard and perhaps because they are anticipating this behaviour they ask for less to avoid it.”