Although many countries have equal pay legislation, the gender pay gap – the percentage difference between the average hourly earnings for men and women – persists. Women workers’ average pay is generally lower than men’s in all countries, across all sectors, for all levels of education, and age groups. Worldwide, women only make 77 cents for every dollar earned by men.

In the US, March 24, 2021 marked Equal Pay Day – the day American women had to work through to equal the same salary earned in 2020 by men: in Canada, April 7. In the UK November 20, 2020 was determined to be the day women cease earning for the year compared to their male counterparts: across the entire European Union, it calculated to November 10, 2020.

In the European Union in 2019, women’s full-time gross hourly wages averaged 14.1% below men: the highest gap in Estonia at 21.7%; the lowest in Luxembourg at 1.3%.

Women working full time in the U.S. are paid 82 cents to every dollar earned by men. For women of colour the gap widens. On average, a black woman earns just 63 cents for every dollar a white non-Hispanic man earns. With the economic fallout of the COVID-19 pandemic, some estimate it will take 135 years to reach parity in the U.S.

Globally, the progress is very slow. The gender pay gap has only changed minimally over the last decade and UN estimates that at the current rate of progress, it will take over 250 years to close the gender pay gap.

Why women are paid less

There are many theories about the gender wage gap and why it persists. Some data suggests career interruptions experienced throughout working life contribute to the disparity. Women are more likely to take career breaks from their employment in order to raise children or care for the elders or ill members of the family. This means that when they return to work, they are likely to have fallen behind in advancement and in remuneration.

Women spend fewer hours in paid work than men on average but more hours in unpaid work. In total, women have more work hours per week than men, which might affect their career choices. Women are more likely than men to work part-time. And part-time work, even for the same kind of job in the same occupation and sector, has a lower hourly wage with fewer social protections and benefits than comparable full-time work. The ‘motherhood penalty’ shows working mothers paid less with the disparity increasing with the increasing numbers of children.

Some estimates illustrate 30% of the total gender pay gap lies at the overrepresentation of women in low-paying careers, including care and education as opposed to their male counterparts who are overrepresented in high-paying fields, such as science, technology and engineering.

Another factor is the lack of women in the management and leadership positions, especially at higher levels. In the US there are seven times as many males in C-suite positions as females. One study from McKinsey found for every 100 males promoted in corporate America, only 85 women moved up the ladder. In the EU, only 18% of senior executives are women.

When women are managers, they tend to be more concentrated in management support functions such as human resources and financial administration than in more strategic roles. This brings down the average salary of female managers compared to that of male managers.

Finally, discrimination, stereotyping and implicit biases still play a role in wage disparity. While there are a number of objective elements that explain the gender pay gap, research has shown that those elements do not account for the whole gap. There may be factors that are unknown or unaccounted for, but also there can be an aspect of discrimination on the basis of sex, whereby a job done by a woman is perceived as worth less than a similar job done by a man. Gender discrimination occurs at all levels of employment practices, from recruitment through retirement.

Closing the gap

As public sentiment continues to push business, the gender pay gap may be shrinking. Organizations are working toward transparency and parity, and customers are responding. At the regulatory level, in the US over 40 state and local governments prohibit salary history requests of job seekers. These laws are aimed at breaking the cycle of wage disparity across genders, but may have a significant impact for women.

On March 4, 2021, the European Commission proposed a directive on pay transparency, aimed at ensuring that women and men receive equal pay, for equal work. The directive would build and expand on existing equal pay laws of the member states to create a more coherent framework. If the proposal is approved by the European Parliament and Council it will give employees the right to comparative pay information and gender pay gap reporting will be required for all companies with 250+ employees.

Beyond regulatory compliance, resolving gender pay gaps begins with an organizational commitment to fairness and equity. It may require taking a hard look at existing practices and dismantling outdated notions and systems.

Pay equity represents a positive message about a company and the value it places on employees. These organizations can experience higher staff loyalty, productivity and innovation. More than a moral imperative, wage equity is a sound business practice that nets results internally and in the marketplace.