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The wage gap between women and men

Report | Doc. 12140 | 08 February 2010

Committee
(Former) Committee on Equal Opportunities for Women and Men
Rapporteur :
Mr Paul WILLE, Belgium
Thesaurus

Summary

It is unacceptable that, over sixty years after the right to equal pay was first proclaimed, this right remains so widely and systematically violated – without even receiving much attention. The wage gap between women and men needs to be eliminated as a priority, not just in the public but also in the private sector.

The Parliamentary Assembly should therefore recommend that member states ensure that the right to equal pay for work of equal value is enshrined in their domestic legislation (if they have not already done so), that employers are obliged to respect this right (and incur penalties if they do not), and that employees have recourse to the judicial process to pursue their claims with regard to this right, without incurring risks to their employment.

Member states should promote fair job classification and remuneration systems, including in the private sector. They should also be encouraged to copy the Norwegian model and the recent French initiative of requiring a minimum of 40% female members on certain companies’ boards, as an enabling factor to reduce the gender wage gap.

The Assembly should recommend that the Committee of Ministers reinforce its efforts to guarantee that the right to equal pay for work of equal value is respected in all member states, and instruct its competent committee to initiate a comparative survey of the causes of pay differences in part-time and full-time work, and to send the results of this survey to the Assembly.

A Draft resolution

1 Discrimination against women in the labour market has a long history – and so have efforts to fight this discrimination. One of the key principles in this domain, the right to equal pay for equal work, was already enshrined in the 1948 Universal Declaration of Human Rights and in the 1957 Treaty of Rome which founded the European Community. Enlarging this right, going further, the right to equal pay for work of equal value was enshrined in the 1961 Council of Europe Social Charter (as well as in the 1996 revised charter) and in the 1975 European Community Directive devoted to the subject.
2 Despite the recognition of this fundamental right, the wage gap between women and men, measured as the "relative difference in average gross hourly earnings between women and men", is estimated to be 17.4% in the European Union at the moment – and even higher globally. Measured over the lifecycle rather than on the basis of hourly earnings, the wage gap grows wider still, explaining the feminisation of poverty (in particular for single mothers and in old age).
3 Several factors are put forward to explain the wage gap between women and men: horizontal and vertical segregation in the labour market (commonly referred to as “glass walls” and “glass ceilings”), women’s supposedly lower qualifications and lesser experience, and their atypical working hours and career structures due to childbirth and care responsibilities. However, over half of the typical gender wage gap cannot be objectively explained through such “structural” factors and is, in reality, due to old-fashioned discrimination against women: to differences in access to education, training, and the labour market itself, to biased evaluation, pay and promotion systems, and to nefarious gender stereotypes and outdated gender roles.
4 It is unacceptable that, over 60 years after the right to equal pay was first proclaimed, this right remains so widely and systematically violated – without even receiving much attention. The wage gap between women and men needs to be eliminated as a priority, not just in the public, but also the private sector.
5 The Parliamentary Assembly believes that there is a link between the gender wage gap and gender equality in other spheres, such as equal rights and opportunities for girls and boys, equal participation of women and men in political, public and economic decision-making, and a fairer sharing of care and household responsibilities between women and men – and that progress in one sphere has the power to influence progress in the other sphere and vice versa. The Assembly refers to a number of resolutions and recommendations it has recently adopted on these subjects (in particular Resolution 1669 (2009) and Recommendation 1872 (2009) on the rights of today’s girls – the rights of tomorrow’s women), stresses their continued validity and calls for their full implementation.
6 The Assembly recommends that member states:
6.1 ensure that the right to equal pay for work of equal value is enshrined in their domestic legislation, if this is not already the case, that employers are obliged to respect this right (and incur penalties if they do not), and that employees can have recourse to the judicial process to pursue their claims with regard to this right, without incurring risks to their employment;
6.2 collect reliable and standardised statistics on women’s and men’s wages, not only on the basis of gross hourly earnings, but also over the lifecycle;
6.3 promote fair job classification and remuneration systems, including in the private sector, by:
6.3.1 opening discussions with the social partners to eliminate discrimination in job values and job classifications between men and women;
6.3.2 starting discussions with the social partners to raise the status of “women’s” sectors;
6.4 aim to increase women’s labour market participation rate and work against the pitfall of part-time work by encouraging all measures seeking to improve the care of children and the elderly outside the home, and a more equal sharing of care and household responsibilities between women and men;
6.5 follow the Norwegian model and the recent French initiative of requiring a minimum of 40% female members on certain companies’ boards, as an enabling factor;
6.6 file an annual progress report with their parliaments on 8 March, indicating the progress of consultations with the social partners and the elimination the gender wage gap and of segregation in the labour market, until such time as discrimination in job values and job classifications and the gender wage gap and segregation in the labour market have been eliminated.
7 The Assembly calls on the social partners, the employers’ associations and the trade unions, to respect and defend the right to equal work for work of equal value, inter alia by promoting and adopting fair and transparent job classification systems and wage scales.

B Draft recommendation

1 The Parliamentary Assembly, referring to its Resolution No. … (2010) on the wage gap between women and men, commends the Committee of Ministers’ efforts to ensure respect for the right to equal pay for work of equal value, in particular via its inclusion in the Council of Europe (revised) Social Charter.
2 The Assembly recommends that the Committee of Ministers give this subject the priority it deserves in the field of fighting discrimination against women, and reinforce its efforts to guarantee that the right to equal pay for work of equal value is respected in all member states so that the gender wage gap may be eliminated.
3 The Assembly recommends that the Committee of Ministers instruct its competent committee to initiate a comparative survey of the causes of pay differences in part-time and full-time work and to send the results of this survey to the Assembly.

C Explanatory memorandum by Mr Wille, rapporteur

1 Introduction

1 As its name implies, the wage gap refers to the differences in remuneration that exist between men and women. Although the principle of equal pay is defended by most European democracies, since 1948 it has also been enshrined in the Universal Declaration of Human Rights. Nevertheless, the number of judgments by the Court of Justice of the European Communities and everyday practice in the world of work are enough to show that the equal pay principle is still regularly trampled underfoot.
2 The wage gap can be found in almost all European firms but, even more seriously, it is also common in the public sector, which should be setting an example. The wage gap should not, like most of the problems connected with human capital, be attributed solely to traditional factors such as age, training and experience. Moreover, the argument that the wage gap is due to women’s failure to invest in training is no longer given much credence. Developments in European states show that a growing number of women are taking more and more courses in higher or university education,Note and that their involvement at all levels of working life has clearly increased. In most Council of Europe member states, reference to gender plays a decreasing part in these traditional individual factors.
3 Sociological and statistical studies emphasise that the wage gap is mainly attributable to continuing segregation in employment and to the impact that this has on the pay structure. It is becoming ever clearer that it is not the classic individual criteria used to justify differences in pay that are mainly responsible for maintaining the gap either. The focus is instead on the discriminatory machinery (whether concealed or not) in political and employment strategies and everyday practice in the labour market, where institutional agreements, the “norm” and social management permeate the pay structure to a great extent, thereby helping to maintain the wage gap.
4 The labour market still places constant emphasis on the fundamental difference between "men's jobs" and "women's jobs", and even goes further, referring to sectors reserved for women and sectors reserved for men. That being the case, this report will focus on this issue of segregation. An ancestral community governance system and its models of employment practice, giving rise to yet more segregation, also need to be addressed in many countries.
5 The absence of a balanced classification of jobs is another relevant factor. Such classification involves assigning a wage to each grade in the job, the nature of the job being the sole criterion, irrespective of who holds it. In combination with the "equal pay for work of equal value" principle, classification can help to guarantee a fairer pay structure. This system does not apply in many member states, or it allows discriminatory machinery to remain in place to the detriment of women. It is easy to explain the failure thoroughly to review these job classification systems. It is not in the interest of employers or employees for a modern analytical system to replace the now outdated systems. For the employers this would mean a substantial increase in the wage bill, and the unions would face the likelihood of internal dissension and argument if historically overvalued salary scales were revised.
6 Even if women feel that they are underpaid or not treated equally, recourse to the courts seems to be of little benefit and is not customary. Action by unions will often be tentative, for fear that their previous negotiations and gains will be challenged in court. The unions’ discouraging attitude is an additional factor in the legal isolation of working women. The emotional pressure involved in taking their own employer to court also acts as a brake. Even if, in the meantime, quite precise legal guarantees have been laid down in most states, their application is far from straightforward in the majority of countries. The labour market and the omnipresent wage gap which millions of European women still regard as an unjust penalty are evidence of this. Their resentment is all the greater because they still suffer structurally from the wage gap, despite the historic commitment enshrined in national legislation and given expression by international treaties and directives. Discrimination, although not always obvious, persists.
7 The persistence of the wage gap between women and men results from direct discrimination against women and structural inequalities, such as segregation in sectors, occupations and work patterns, access to education and training, biased evaluation and pay systems, and stereotypes.Note
8 This report aims at defining the presence of the wage gap, discerning the determining factors as well as drawing conclusions and making recommendations. This is not the first report of the committee on the subject: the report on discrimination against women in the workforce and the workplaceNote of March 2005, presented by Ms Anna Čurdová, which led to the adoption of Parliamentary Assembly Recommendation 1700 (2005), already defined the gender wage gap as one of the three principal problems women face on the labour market (the other two being: lack of access and the “glass ceiling”) – all of which are due to discrimination against women.

2 The presence of the wage gap

9 The wage gap is often calculated/defined as the difference between the average hourly gross pay of women and men: M-V/M*100, in an easy-to-remember mathematical formula. Estimates of the wage gap may vary widely, depending on definition, reference data and calculation methods. Thus the results differ greatly from one European state to another. If only the mean differences in gross private-sector pay are taken into account, the figures will be more negative than if results from the public sector are included. In fact, there are proportionately more women in higher posts in the public sector, which is also often more sensitive to a policy of equal opportunities for men and women. Be that as it may, in both the private and the public sector, gross or net hourly, monthly or annual pay clearly reveals a structural difference to the disadvantage of women. Calculated over the lifecycle, the gender wage gap widens still further, explaining to a large extent the feminisation of poverty in many of our countries (in particular for single mothers and women in old age).
10 Discrimination often takes the form of factors that are difficult to measure. Thus the results will be especially sensitive to major differences between the sectors which, at first sight, do not raise the spectre of discrimination. Many studies show that there are proportionately more women working in sectors that pay less well. This is a key finding, because these effects flow from the structure of the labour market as such, and it is that market which is to a large extent responsible for the (maintenance of the) wage gap. As Ms Čurdová explained in 2005: “Women are often paid less than men for work of equal value. This type of discrimination is usually based on ‘horizontal occupational segregation by sex’. For example, the level of education and experience required to work in a certain job might be the same, but women are paid less (e.g. chauffeurs/taxi drivers are usually paid more than cleaners or receptionists). In some countries, wage levels have gone down in certain professions when more and more women enter them (for example, doctors and teachers in central and eastern Europe).”Note Even in these highly segregated professions, there are often more men in the higher-paying posts: for example, although women account for more than 70% of all teachers in some countries, there is a proportionally larger number of male school directors. This is very often the result of a “reverse action”, when the need for more men in the profession is felt, and thus their pay-rise and promotion are faster.Note
11 Alongside the wage gap concept, the question arises as to the reliability of data which sometimes show sizeable and incredible differences in two consecutive years in a single country’s mean wage gap.Note We must therefore be very cautious when dealing with data in our study of the changing wage gap. There is no such thing as the wage gap. This report does not aim to make a quantitative analysis or to take the academic route, but rather to establish causes and effects, so as to come up with some critical thoughts enabling recommendations to be made about how to end this deep-seated injustice. We are taking as a basis Eurostat data from 1994 to 2004 for public and private undertakings, which analyse a whole range of figures and in which the mean wage gap analysed represents the difference between the average gross hourly wage of men and women expressed as a percentage. We arrive at a mean figure of around 25% for European Union member states.Note Mixing the private and the public sector, the mean figure stood at 17.4% for the 27 European Union member states in 2007Note (the latest available data from Eurostat).

3 Determining factors

3.1 Segregation and origin

12 Segregation in the labour market explains the wage gap to a large extent. As certain sectors quite simply pay less than others, and women, as we have said, are over-represented in these, in most member states the resulting wage gap is obvious, and the fact that supply exceeds demand for these jobs will devalue the female workforce.Note In addition, these sectors are stereotyped as being “soft”, less relevant and less valued financially. Thus these sectors as a whole form a segregationist labour market, in which a distinction should be made between vertical and horizontal segregation.
13 Horizontal segregation, or “glass walls”: women and men clearly work in different sectors. More men work in market sectors, and more women in sectors focusing on the development of wellbeing and prosperity. This probably has even more impact on differences in average pay, because the market sector pays better, often applies a bonus and commission system, makes higher profits, and attracts staff with sound experience to such (hyper)competitive sectors by promises of financial incentives such as pay rises (women's pay indicator, 2009). Cleaning, textile production, health care, social services and (basic) teaching are typically female sectors in Europe. Typical jobs for women are as receptionists, check-out operators, salespersons (unqualified), and domestic or office workers.
14 However, data from the former German Democratic RepublicNote seem to dispute horizontal segregation as one of the main reasons for the gender wage gap. There was little gendered horizontal segregation in the former GDR’s labour market – proximity to one of the industrial centres predisposed both women and men to jobs in these centres, and the universities churned out as many female as male engineers. Childcare was socialised, with more than 90% of children over the age of one being looked after in state-run nurseries and kindergartens. Nevertheless, the wage gap was high, at around 25% (women’s pensions were even about 40% lower), and this despite the fact that gender equality was a cornerstone of communist ideology and was meant to have been reached in the GDR’s “really existing socialism” (Realsozialismus). These facts underline the correct evaluation of my former parliamentary colleague Ms Smet, who found in a 2001 European Parliament report that over half of the wage gap could not be explained by “objective”, structural factors, but was due to old-fashioned discrimination against women.
15 Labour market logic and the pay structure that goes hand in hand with it are particularly unfavourable to women. In general, women have less experience on the job market. As the job market in Europe is aimed mainly at rewarding experience, if experience is rewarded more highly the wage gap is likely to grow. So we find that countries with a job market that is highly sensitive to abilities and professional experience will produce more substantial wage gaps. Or, as the sociologists Blau and Kahn define this not immediately perceptible machinery: “If women have less experience than men, on average, the higher the return to experience received by workers regardless of sex, the larger will be the gender gap in pay. Similarly, if women tend to work in different occupations and industries than men, perhaps due to discrimination or other factors, the higher the premium received by workers, both male and female, for working in the male sector, the larger will be the gender pay gap.”Note
16 The result is obvious. The experience argument seems to be a powerful factor in maintaining vertical segregation, better known as “glass ceilings”. For this reason, men and women find themselves in posts at different levels within the same sector or the same undertaking, women holding the lower and less-well-paid jobs and men the higher, better-paid positions. This has a substantial impact on average pay, and another pernicious effect flows from it, namely the "crowding effect": pay will fall in sectors reserved for women (in which there are facilities for part-time working), because there are too many women for a limited number of jobs.

3.2 Social normalisation and institutionalisation

17 The pay structure does not only reward individual qualities such as experience or possible productivity. Both the horizontal and the vertical segregation described above reflect current influences and influences that have developed historically in the job market. On the one hand there is the impact of social norms and on the other there are employers' strategies that interact with the labour market and systematically influence pay structure. The importance of this is often at the centre of arguments in the critical literature that dissect the social undervaluation of women's work, which is therefore also a primary factor in the wage gap. The rapporteur is also convinced that the wage gap should not be attributed solely to gender difference in human capital terms, and to direct discrimination by employers, for the more important fact is that various social behaviour mechanisms mean that women's work is greatly undervalued, and that the concentration of women in certain sectors means that these remain badly paid.
18 Part-time working is another factor induced by society and which might go a long way towards explaining the wage gap. The unequal sharing of part-time work is often not a matter of real “choice” for women. Instead, it results from an inequality in the sharing of tasks transmitted by stereotyped patterns in respect of women, as well as the lack of flexible and financially accessible facilities making it impossible to meet employers’ flexibility requirements. Many studies have shown that there is still a long way to go before home and work are shared more fairly between men and women. There is a corresponding impact on the wage gap. Because part-time work mainly affects women and is usually found in less financially rewarding sectors, the care sector described as “soft” (domestic staff, health care, social services), hourly gross pay drops.
19 Part-time work also has adverse effects on career development. Part-time workers not only have less chance of promotion, but also build up less seniority and are granted fewer incidental benefits.Note The success of part-time work in several European countries is striking. More and more women enjoy incentives and facilities making it easier for them to work part-time. The introduction of career breaks and “time-credits” make a substantial contribution. The “cheque services” system has also made it possible for many women to work part-time. Part-time work also adversely affects the hourly pay of women (and also of men), because there are very few part-time jobs at managerial or executive level. Thus part-time work and career breaks to carry out the duties that flow from an unequal sharing of family and household tasks are key factors in the development of inequality in pay.
20 In the private sector there are also incidental family benefits which are often awarded to the “head of the family”, hence more often to men. The most glaring wage gap is between the respective earnings of married men with dependents and women in the same situation. These advantages, unconnected with the work done, have repercussions throughout a person’s career on index linking, on the calculation of replacement income and, above all, on pension calculation.Note

3.3 Classification of posts

21 An objective evaluation of the content of a job should provide the basis for determining remuneration. If used professionally, it is the only objectively verifiable factor on the labour market for tackling the wage gap. Job evaluation starts from this principle. The wage depends solely on what a worker does, and must be completely divorced from the way of working (the how) and the person of the worker (the who). An evaluation of this kind is based on recourse to criteria. Only the choice of well-considered criteria and professional advisers uninfluenced by prejudice or stereotypes can help to establish a balanced system of job classification which can be used both as a yardstick and to eliminate discrimination, and with it the wage gap. These criteria often reflect standards in force in women's work, and then the system of evaluation becomes a hidden instrument confirming the wage gap. Thus they are an example of indirect sexual discrimination.
22 There are many examples in practice. In the case of construction workers who shift stones, reference is immediately made to heavy physical work, but the fact that nurses have to lift patients several times a day is overlooked. Criteria typically associated with male jobs, such as responsibility, decision-making or training, are valued more highly than the communication skills, empathy and accuracy typically associated with women's work. These prejudices are characteristic of human resources staff, job analysts, trade union representatives, management and, unfortunately, women themselves. Because women are for the most part employed in the care sector in subordinate and practical tasks, they are convinced in advance that they will be less valued. As the link between the results of the job study on the one hand and the pay on the other is also often coloured and a matter of discussion, this evaluation system – unfortunately cynically – promotes labour market segregation and therefore the wage gap. We will not consider in greater depth the content of an objective and reliable job classification system.

4 Conclusions and recommendations

23 The rapporteur concludes the following:
i The wage gap is the result of direct and indirect discriminatory machinery which maintains both horizontal and vertical segregation in the labour market, and hence the wage gap.
ii The lack of measures for temporary care, the management of society and stereotyped thinking lead women to unemployment or to opt for part-time work.
iii There is a lack of complete statistical data, and there is no standardised way of calculating the wage gap in member states.
24 The rapporteur bears in mind the following:
i The Rummler judgment of the European Court of Justice has given a certain number of pointers in respect of the requirements which job evaluation must meet from the equality of treatment viewpoint.
ii The conclusions of the Conference of European Union Ministers on Gender Equality, on 4 February 2005 in Luxembourg, took the view that a diversified approach to underlying factors, inter alia, segregation by sector and by work, job classifications and remuneration systems, would make it possible to eliminate inequalities of pay between men and women.
iii A recent study stresses that the first priority in ensuring gender equality is the issue of pay.
25 The rapporteur considers the following:
i The application of the equal pay for equal work principle is crucial in arriving at gender equality.
ii There is a difference between the legal situation and the actual situation in the approach to pay differences in most member states.
iii The working woman is in a situation of legal isolation, preventing her, on her own, from exposing the discriminatory nature of certain job classifications and the corresponding pay.
26 The rapporteur draws attention to the fact that 27 March 2009 was declared Equal Pay Day.
27 The rapporteur suggests that the Assembly request that the member states of the Council of Europe:
i open discussions with the social partners to eliminate discrimination in job values and job classifications between men and women;
ii start discussions with the social partners to raise the status of “women’s” sectors;
iii work against the pitfall of part-time work by encouraging all measures seeking to improve the care of children and the elderly, and a more equal sharing of care responsibilities between women and men in the home;
iv file an annual progress report with their parliaments on 8 March (International Women’s Day), indicating the progress of consultations with the social partners and the elimination of segregation in the labour market, until such time as discrimination in job values and job classifications and segregation in the labour market have been eliminated.
28 The rapporteur recommends that the Committee of Ministers initiate a comparative survey of the causes of pay differences in part-time and full-time work, and send the results of this survey to the Assembly.

***

Reporting committee: Committee on Equal Opportunities for Women and Men

Reference to committee:Doc. 11611, Reference 3469 of 27 June 2008

Draft resolution and recommendation unanimously adopted by the committee on 25 January 2010

Members of the committee: Mr José Mendes Bota (Chairperson), Ms Mirjana Ferić-Vac (Vice-Chairperson), Ms Doris Stump (Vice-Chairperson), Ms Sonja Ablinger, Mr Francis Agius, Mr Florin Serghei Anghel (alternate: Ms Maria Stavrositu), Ms Magdalina Anikashvili, Mr John Austin (alternate: Baroness Gale), Mr Lokman Ayva, Ms Déborah Bergamini, Ms Oksana Bilozir (alternate: Ms Olha Herasym’yuk), Ms Rosa Delia Blanco Terán, Ms Olena Bondarenko, Mr Han Ten Broeke (alternate: Mr Paul Lempens), Ms Sylvia Canel, Ms Anna Maria Carloni, Mr James Clappison, Ms Ingrīda Circene, Ms Anna Čurdová, Mr Andrzej Cwierz, Mr Kirtcho Dimitrov, Ms Mesila Doda, Ms Lydie Err, Ms Pernille Frahm, Ms Doris Frommelt, Ms Alena Gajdůšková, Mr Giuseppe Galati, Ms Gisèle Gautier, Ms Sophia Giannaka, Mr Neven Gosović, Ms Claude Greff, Mr Attila Gruber, Ms Carina Hägg, Mr Håkon Haugli, Ms Francine John-Calame, Ms Nataša Jovanoviċ, Ms Charoula Kefalidou (alternate: Mr Dimitrios Papadimoulis), Ms Birgen Keleş, Ms Krista Kiuru, Ms Elvira Kovács, Ms Athina Kyriakidou, Ms Sophie Lavagna, Mr Terry Leyden, Ms Mirjana Malić, Ms Assunta Meloni, Ms Nursuna Memecan, Ms Danguté Mikutiené, Ms Hermine Naghdalyan, Ms Yuliya Novikova (alternate: Mr Ivan Popescu), Mr Mark Oaten, Mr Kent Olsson, Ms Steinunn Valdis Óskarsdóttir, Ms Beatrix Philipp, Ms Carmen Quintanilla Barba, Mr Stanislaw Rakoczy (alternate: Ms Jadwiga Rotnicka), Mr Frédéric Reiss, Ms Mailis Reps, Ms Maria Pilar Riba Font, Ms Andreja Rihter, Mr Nicolae Robu, Ms Karin Roth, Ms Klára Sándor, Mr Manuel Sarrazin (alternate: Ms Marlene Rupprecht), Ms Albertina Soliani, Ms Tineke Strik, Mr Michał Stuligrosz, Ms Elke Tindemans, Mr Mihal Tudose, Ms Tatiana Volozhinskaya (alternate: Ms Natalia Burykina), Mr Paul Wille, Ms Betty Williams (alternate: Mr Tim Boswell), Ms Gisela Wurm, Mr Andrej Zernovski, Mr Vladimir Zhidkikh

NB: The names of the members who took part in the meeting are printed in bold

Secretariat of the committee: Ms Kleinsorge, Ms Affholder, Ms Devaux

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