The latest findings from our third annual update of the PwC Women in Work Index show that overall performance across the OECD has improved slightly, with the Nordic countries once again paving the way for gender equality in the workplace. Norway remains in pole position (a position it has retained for all the years we have analysed between 2000 and 2013), followed by Denmark, Sweden, New Zealand and Finland (who have all retained their 2012 positions).
Other OECD countries, such as the US and Hungary achieved notable improvements in their performance this year. The UK also moved ahead by four places to 14th, owing to an economic recovery that has benefitted both men and women, but more so for women. However, Poland and Ireland failed to sustain the gains they made thus far, slipping by five and four positions respectively on the Index. Australia and Portugal have also been on a steady decline since 2010, largely due to a widening of the gender pay gap.
More women are in work than ever before. However, the gender wage gap persists. A female worker in an OECD country who works full-time earns £15 less on average for every £100 her male counterpart earns, a gap that has barely narrowed since 2000.
Several factors account for this gap: women are more likely to have their careers interrupted by caring for young children or the elderly, which can affect their income levels when they return to work, if they return at all. Women are significantly more likely to sacrifice their careers due to responsibilities at home. In Europe, the female employment rate decreases by around 12 percentage points in the presence of a child under 12 than without a child, whereas it boosts the male employment rate by almost 9 percentage points. Part-time working may allow women to juggle a career and family responsibilities, but this comes at a price: part-time jobs are typically lower paid, and workers often face dim prospects for promotions and training opportunities.
Women are also more likely to work in lower paid occupations such as nursing, administrative and secretarial roles. In contrast, men tend to work in professional or higher-skilled occupations such as technical and professional roles, or in senior-level management, which are associated with higher levels of pay. Sectors that traditionally employ women also tend to pay less than in male-dominated industries, such as in banking, mining, energy and utilities.
It appears that the gap exists even when qualifications have been accounted for. Research by Catalyst – a thinktank based in the US – found that female MBA graduates from 26 leading business schools in Asia, Canada, Europe and the US were paid US$4,600 less in their first job than men with similar qualifications. In the UK, research by the Higher Education Careers Services Unit (HECSU) has shown that women earned less than men who studied the same subject.1
Although the pay gap in the OECD has narrowed since 2000, it is yet to fully address the underlying structural factors in the labour market that influence the gender pay gap and the share of women in employment. Unless it is addressed, these inequalities will continue to discourage women from the workplace, depriving businesses of half the talent pool.
In the short-term, improving pay transparency via salary reporting requirements could provide women with better tools to detect and address pay discrimination. Longer-term measures include encouraging shared parental leave and access to affordable childcare, which will also enable more women to return to work, and could influence a change in culture where men and women both have equal responsibility for childcare. Take-up rates in countries where similar legislation has been introduced, such as Sweden, Norway, Iceland and Denmark were low initially, but has since increased significantly. Reducing occupational segregation by encouraging women to enter male-dominated industries and improving the representation of women in higher-paying roles and sectors will also help narrow the wage gap over time.
There are no easy solutions for tackling these issues. What struck me most from Lean In is that women are promoted based on performance, whereas for men it’s based on potential. Unless these inequalities are addressed, they will continue to discourage some women from the workplace, depriving businesses of getting the most from half of the talent pool. Women are clearly ambitious and eager to reach their full career potential: our research on female millennials indicates that women rank opportunities for career progression as the most attractive employer trait. We must do more to ensure that women at all levels are fairly recognised and remunerated for their contribution and performance.
Yong Jing Teow is an economist in PwC's UK Economics and Policy team, with experience in macroeconomic research and analysis.