As an erstwhile Compensation specialist, I got asked this question often by my leaders – “Is there a gender pay gap in today’s times?” “With the gender sensitization that we do within our Company ideally this should not exist anymore. Do you think it still exists?”

Some leaders may ask out of disbelief while the others may not easily believe that bias could not exist in pockets and want to take corrective action.

The issue is not as simple as it sounds. It’s a nuanced topic and it requires us to delve into its origins. In 2023, Claudia Goldin, an American economic historian at Harvard University won the special Economic Sciences Nobel Prize (the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel). Her work provided a historical perspective on the differences in employment rate and wages between men and women and how and why those differences have varied since the last 200 years yet persisted to the present day. Several facts in this work are surprising and break some of the popular myths. Bear in mind that although her research is limited to working women in the US it can be applied to other countries as well -

1. The U-Shaped curve:Women worked in agriculture and other forms of family business, cottage industries, textiles or dairy goods which were not accurately recorded back in 1890s. The proportion of employment rate of married women was actually 3 times greater than that registered in consensus in US. However, female labor force declined during the industrial era (early 1900s) as women couldn’t combine work from home and family. They couldn’t afford to travel to the factories every day. The rise of service sector and increased levels of education post 1960s led to increase in demand for female labor but not quite fully.
2. Expectation vs outcome mismatch:In the first half of 20^th century, women didn’t expect to come back into labor workforce after marriage. Hence, they didn’t choose to be educated. In the second half when they started to realize that they can come back into the workforce once their children were settled, they realized that they didn’t equip themselves with the right education about 25 years ago. It’s only in the 1970s that expectations and outcomes started converging. More women started educating themselves and choosing career paths. In high income countries today they have higher level of education than men. The emergence of contraceptive pills also helped them prioritize career choices over family planning.

Now what about the earning gaps between men and women?

Between late 1800s and early 1900s pay was determined by the number of pieces produced, both for men and women. But later the concept of monthly wages emerged. So those who worked continuously without any career breaks made more money and received more benefits. Below picture should give a good view of how parenthood led to earning gap between men and women.

Today, this is typical of the Indian workforce. Surprisingly, the data from the World Bank suggests that women in India make up 43% of the total graduates in STEM (Science, Technology, Engineering and Mathematics) – the highest in the world. However, only 14% women are in STEM fields workforce today. Unlike other economies, India doesn’t face the challenge of women not choosing STEM education. Developed countries today face a different challenge where women don’t choose STEM field when the pivotal point of education arrives in the lives of the younger generation.

So how does knowing these historical facts help today?

Gender pay gap is today not majorly bias-induced although one can’t say that it’s 100% bias-free. Companies have become a lot more aware of the gender biases and are working towards bridging gender biases. But the fact remains that a woman who comes back from maternity leave might never be able to catch up with a peer male colleague who would have moved ahead of her either pay-wise or work-wise.

So, here a few checks that we need to consider as a checkpoint –

1. Acknowledgement of pay gap due to overt or covert reasons by leadership. A leader’s commitment and endorsement of the issue is important. If a leader shows bias for action, it naturally percolates to levels below. Action emanates from strong belief for gender equity.
2. Proactively maintain a budgetaside for such corrections during your increment cycles and align with leadership. Unless there is no plan behind action this becomes an ad-hoc exercise and lacks direction.
3. One of the ways of reviewing gender pay equity is to compare peers from the same group for their experience, knowledge, skills, nature of work, tenure, and performance in the role. If all parameters being constant, a female colleague’s salary is lesser than that of a male colleague then explore reasons and evaluate if it needs to be corrected.
4. Evaluate how you consider women who are on maternity break or have just returned or are going on break soon. What performance evaluation and salary increment guidelines have you placed for them and how are you going to objectively communicate the guidelines to Managers? This is a double-edged sword as male colleagues can perceive a certain bias, on the contrary, in this action if not communicated well.
5. We have commonly heard that actions speak louder than words. A long-term corrective action sometimes, though, requires constant communication. Communicate widely to all associates the intent of the organization to encourage gender pay equity. Awareness of this fact indirectly leads to a higher engagement and retention rate of women. In the long run it helps brand your organization as an equitable place to work in.
6. In the long run, appoint more women on the Board and leadership roles. Empower women to become role models for other women to be inspired and work their way through challenges. In times of adversity, it’s important for female colleagues to have female mentors to guide them within the Organization.

This gap in work versus pay is larger in developing countries such as India and needs to be addressed by Companies by taking huge strides of changes rather than making incremental minor changes. The impact of gender-based pay gap which started about 2 centuries ago will take at least a few more decades, if not a century, to address this long-term issue. As per United Nations’ data, at the current rate of progress globally, there will be no equal pay until 2069.