Gender Pay Gap in Europe: This is How Much Less Women Earn Than MenMarch 8, 2021
In 2020, the world had a lot to deal with, from the U.S. election to the Black Lives Matter protests and, of course, the global pandemic that we all found ourselves in. A month into 2021 and it seems as though a similar chaotic pattern is emerging; however, during this time, New Zealand developed a new law aiming to eliminate pay discrimination against women in female-dominated occupations. The bill, which acts as "pay equity," provides a solution to addressing the seemingly inflexible gender pay gap.
Unlike the expected term of "equal pay," which typically addresses gender pay disparities in the United States, the idea of "pay equity" doesn't just demand equal pay for women doing the same work as men in the same positions. Doing so highlights the role of occupational segregation in keeping women's pay down; for example, if you compare some jobs primarily done by women who are lower paid and others that are still mainly done by men better paid.
This is pay equity
Pay equity is the practice of mitigating employee wage inequalities based gender, and other criteria. The growing understanding of pay equity has created an umbrella of countries and industries aiming to resolve wage disparities across a range of sociopolitical identity markers. The goal of pay equity, similarly to pay equality, is to create workplaces that inspire loyalty, enthusiasm, and trust between employees and the organizations that employ them through establishing an environment of transparency and equitable opportunity.
Under the pay equity umbrella is internal equity. Internal equity is the method of safeguarding the policy and practice of comparing pay across positions within an organization to ensure equitable compensation for comparable work and experience.
What's the difference between pay equity and equal pay?
Every worker has the right to expect equal pay for equal work regardless of where they live, whether they work part-time or full-time, their gender, race, religion, age, or physical/mental abilities. Also, a lot of attention has been given to pay equity in recent years thanks to current laws enacted at the state level as well as greater enforcement of legislation at the federal level (e.g., The Equal Pay Act of 1963, Title VII of The Civil Rights Act of 1964, The Lilly Ledbetter Fair Pay Act of 2009).
Employers engage in pay equity analysis to ensure equal pay between employees in similar roles. The objective is to determine that pay inequities are justified by compensable factors, like location and tenure, not by unjustified factors, like gender or race.
There are two essential gaps to talk about — the uncontrolled wage gap, which doesn't control for any compensable factors like job level or experience, and the controlled wage gap, which contains as many factors as possible, including job title, industry, location, years of experience, education, etc.
For example, the uncontrolled gender wage gap is currently 81 cents on the dollar when comparing all working women to all working men regardless of job occupation, industry, education, geography, etc. This metric is useful in analyzing women's opportunities compared to men holistically, as women are more often funneled into lower-paying positions or incur a wage gap penalty for having children or being capable of having children.
So what's new when it comes to the gender pay gap in Europe?
Why is it growing? Women in the EU are less present in the construction and labor market than men. Europa shares their data "The gender employment gap stood at 11.7% in 2019, with 67.3 % of women across the EU being employed compared to 79% of men. The gender pay gap in the EU stands at 14.1% and has only changed minimally over the last decade. It means that women earn 14.1% on average less per hour than men."
See the chart below from Eurostat from 2018, which shows the considerable differences between the pay gap in different countries European countries. The gender pay gap chart shows less than 3% in Luxembourg and Romania to more than 20% in Austria, Czechia, Germany, and Estonia. In most countries, the gender pay gap is decreasing, even growing in a few.
According to the Council of Europe, the Netherlands has recently violated an act that ensures everyone has equal opportunities and treatment at work and equal pay - this act is called the European Social Charter.
In response to this violation, the Council of Europe responded to a case that stated the Netherlands was in breach of the Charter regarding a pay gap between men and women under the representation in positions within private companies. The University Women of Europe brought this case forward, a network of highly educated women who stand up for women's rights.
The committee found that, while the Netherlands has taken some measures to close the gap, it is not closing at an ample rate. They also stated that governing bodies, such as the Council of Europe, should keep employers open about compensation systems, as it makes it easier for everyone to ask for equal pay no matter their gender.
In Europe, essential efforts are now underway for a higher minimum wage and more domestic workers' visibility. The deeper problem of pay equity is something that we hope to grow in the years to come. As we approach the end of the pandemic, it will be interesting to see how changes in pay go into effect and if the conversation on pay equity among genders is examined further by governing bodies.
At Heartpace we are committed to making salary gender pay gap analysis easier and safer with report building and salary review automation. Heartpace Pay is a module in the our performance-driven HR system suite that assists with salary mapping and analysis. This module delivers according to best practice requirements, minimizes subjectivity, saving you time!