Wages of Inequality

The pay gap between female and male employees not only exists but also increases as they advance in their careers. What can be done to reverse the trend?

By Sonal Khetarpal  
Monday, September 3, 2018

Radha (name changed), 39, is a Senior Partner at an investment banking firm where she has been working for seven years. She was rising swiftly, managing important clients, cracking multi-million dollar deals. Since last year, when she became a mother of twins, she is not sure where her career is headed. She has been allowed flexi-time - part of company policy - enabling her to work from home, whenever needed, but she is no longer given difficult assignments. She fears she will have little to show when her appraisal comes up. "I have worked hard for so many years. I don't want to give it all up," she says. "But my company seems to have already decided that I will not be able to perform as before."

This is nothing new. Managers often assume that a new mother will not be able to give priority to work and think they are doing her a favour by lightening her workload, whereas they are only reinforcing a gender stereotype. For new mothers, the bias is a lot more deep seated. Managers often assume they will not be able to give priority to work and think they are doing her a favour by lightening her workload.

"It is more of a social issue than an organisational one," says Harjeet Khanduja, a veteran in human resource (HR) management. In some companies, even the six months of maternity leave turns into a hurdle for the woman as her clients are assigned to male counterparts in her absence, and often remain with them after she returns to work, forcing her to start from scratch. "Many companies don't even think about giving a new mother work matching her potential when she rejoins," says Sarika Bhattacharyya, CEO at diversity consultancy BD Foundation.

The corollary is that the new mother's increment is likely to be lower than her male colleagues'. The women question this. The men often say their contribution during that period was more and, hence, they deserve more. Managers want least friction. "So, they go with the masses," says Khanduja. "Think of it as another kind of vote-bank politics. This is how the gender pay gap builds up."

Discrimination exists not just for the new mother, but is prevalent across at all levels in any organisation, from high-end investment banks down to family businesses.

Anjali Bansal, former global partner and MD with TPG Private Equity, says such discrimination is quite common in traditional family businesses where the patriarch ensures that male colleagues get a higher share of bonus.

NEHARIKA VOHRA, PROFESSOR, FACULTY OF ORGANISATIONAL BEHAVIOUR, IIM AHMEDABAD

The gender pay gap is not an India-specific issue and certainly not a recent one. Way back in 1975, 90 per cent of women in Iceland took to streets over this. In 2016, they organised another protest by leaving their office at 2:38 pm, working 30 per cent less that day, as this was the gap between the average income of men and women in Iceland. This year, 170 women employees of BBC accused the broadcaster of paying them less than the men. Their former China Editor, Carrie Gracie, resigned and won the pay battle when she got 2,80,000 pounds in back pay and a public apology from BBC. Though they have not made much news, there are some cases in India. Bimla Rani. a packer who sought equal pay with her male counterparts lost her case since it was found that the nature of work she did was different. India-born London-based techie Shreya Ukil had also sued Wipro in London.

Law Makes No Difference

India passed the Equal Remuneration Act way back in 1976, which prohibits discrimination in remuneration on grounds of sex. But in practice, a recent International Labour Organization (ILO) global survey found India's gender pay gap for formal workers in urban areas at 23 per cent. It ranked India 28th out of 30 countries. Similarly, the World Economic Forum's, or WEF's, Global Gender Gap Index, which surveyed 144 countries, ranked India at 108, far below the global average and behind neighbours Bangladesh and China. "The gender wage gap is a result of many factors such as attitudes towards women, occupational segregation, motherhood, education levels, care burden, access to transport, among others," says Xavier Estupinan, ILO Wage Specialist.

Worse, data shows that for older women with more work experience, the gap is higher. Global employment major Monster's Salary Index 2017 for India revealed that for employees with experience of less than two years, the median gap in wages between men and women was 7.8 per cent, but rose to 15.3 per cent among those with six to 10 years experience, and 25 per cent for those with 11 or more years of employment. The ILO study, using the National Sample Survey Organisation data, reaches the same conclusion - the wage gap gets wider as men and women age.

Proxy advisory firm Institutional Investor Advisory Services (IiAS) has used data from the S&P Bombay Stock Exchange 500 Index to show that women earn less than men even at the CEO level. The median annual salary for male CEOs at these companies was Rs4.4 crore, while for women it was Rs3.9 crore. In fact, there is no woman among the top 20 highest paid CEOs. The highest earning male CEO gets Rs83.2 crore while his female counterpart earns Rs19.8 crore (at No. 25). No doubt, an important reason for this is the sheer paucity of women at the top - of the 500 CEOs in the index, only 24 are women, while among board members, men outnumber women 11:1. In private sector banks, women CEOs account for just 14 per cent of the total, in healthcare companies 9 per cent, and in fast moving consumer goods, 4 per cent. "I'm the only woman CEO in Indian insurance - and that's across some 50 companies encompassing life insurance, non-life insurance, health insurance and reinsurance," says R.M. Vishakha, Managing Director and CEO, IndiaFirst Life Insurance. "Ensuring equality of pay is critical to encourage more women to continue on their career path to reach leadership positions."

Manifold Reasons

Discrimination in salary happens not just at top management but starts right at the recruitment stage. "Ultimately compensation is finalised on the basis of how much the candidate is able to negotiate," says Khanduja. Every recruiter's aim is to lower costs. Many women are poor negotiators, while some have priorities other than the salary. Khanduja shares an instance. While interviewing MBA students, a girl broke down after she was asked one simple question -why do you want to do an MBA after electrical engineering? She said, "If I don't get into an MBA programme, my father will get me married." Hence, some are desperate for work, and less mindful of the salary offered. Others have considerations such as the distance of the place of work from their homes, working hours - since they have domestic responsibilities as well - and whether the work involves travel or not. All this affects the salaries they get. Men are rarely similarly constrained and their salaries reflect it. "Higher compensation is not the main criteria for women as it is for men," Khanduja adds. "Women will negotiate, but not haggle."

These considerations also influence the kind of jobs women take up. "Studies have shown that wage disparity is also due to choice of job roles which, in turn, evolve from gender stereotypes," says Neharika Vohra, Professor, Faculty of Organisational Behaviour, IIM Ahmedabad. Researchers call this gender segregation. For a large part of the 20th century, middle-class women - if they worked at all - were mostly schoolteachers, doctors and secretarial staff, which reinforced their social role as nurturers and caretakers. It was only from the mid-1970s that they began entering other professions in large numbers, but even so the hangover of the past remains. "Safety, work-life balance, desk job become pervasive themes in the career choices women make or are asked to make," she says. "Women were never meant to be primary breadwinners and so a high growth career is never on their agenda."

But the fact that the jobs women traditionally plump for also pay less shows that the society values their work less. A Cornell University study found that the difference between occupations and industries in which men and women work is the single largest reason for the gender pay gap. Another US study shows that salary levels decline in fields where women enter in large numbers. While there have been no corresponding studies in India, it is well known that from the lowest to the highest levels, work predominantly done by women pays less. Cooks and maids are paid less than drivers. An HR head's job will be valued less than that of a sales head. Top male actors are paid much more than top female ones.

Noxious Work Culture

Workplace culture also often doesn't give women the right opportunity to grow and thrive. For instance, one issue is staying late in office or networking outside office hours. "I'm paid at least 30 per cent less than my male counterparts because I stick to institutional ways of making sales instead of wining and dining clients," says a woman director with a power firm. "Many companies make dinner networking mandatory, and since I choose not to join them, I've not been able to move to new jobs as often as I would have liked, and am therefore earning less than I should."

Also, if women leave office on time, it is seen unfavourably. A CEO of a digital media agency says she has learnt from office grapevine that she is referred to as the "part-time CEO" because she leaves office early whenever possible. "Work from home, flexi-time isnt a favour anymore. It is about giving employee the space to finish work as and when he or she wants."

A senior reporter in media shares how she had to work from different locations due to her husband's transfer every 10 months. She wasn't given a promotion for those two years. "It wasn't that I was working any less. But the company felt it was doing me a favour." Even otherwise, studies show that women change jobs less frequently than men. "It is a vicious cycle: women start with less, get low increments and it gets worse over time," says Khanduja.

And it's worse for married women. WageIndicator and Paycheck India noted in a study for years 2006 to 2013 that while the gender pay gap for single women was 26.5 per cent, for married and divorced women, it was over 35 per cent across ages. It springs from the inherent perception that women with families cannot focus primarily on their work. "An HR executive frankly told me that if he had a choice between a married woman and a man, both equally qualified and experienced, he would promote the latter, as married women are likely to take more leave," says a senior executive at a consulting firm who didn't want to be named. As for women with young children whose husbands are away, even a job can be elusive. "During final interview rounds, as soon as prospective employers learnt I was living alone with an eight-month-old daughter, their attitude towards me changed," says Rohini Prajapati, a former HR professional. She just could not convince them that she had a strong enough support system at home to take up a job, and after being turned down 12 times, turned to content writing and blogging.

XAVIER ESTUPINAN, ILO WAGE SPECIALIST

No employer will ever openly admit to paying women less than men. "It's never said aloud but bias creeps in when candidates are being assessed for employment or promotion," says Bhattacharyya of BD Foundation. "Many excuses are offered to explain the pay gap, especially the claim that women being paid less agreed to the salaries they are drawing." But the fact remains that the male-female ratio is far better at the entry level and gets skewed towards middle age as more women drop out of work, showing the problems in the ecosystem that don't let women stay even if they want to.

In 2017, a Facebook employee anonymously released data showing that, over a five-year time span, the rejection rate of code written by female engineers was 35 per cent higher than that of code written by males. The former also elicited 8.2 per cent more comments and questions - showing that women are often held up to higher standards than men at work. If they fall short, it shows in their increments. Some, however, feel that the women themselves are also partly to blame. "Many women hold themselves to higher standards and in the process underestimate their work," says Rituparna Chakraborty, co-founder of staffing firm TeamLease. "They consider their work unequal or unworthy. Unless they stop doing so, they have lost the battle at the start." Unlike men, who are more aggressive in asking for bigger roles, women take the conservative route. They are more cautious when taking new assignments because they like to do everything too well and worry if they can manage the extra work, says Ameera Shah, Managing Director of Metropolis Healthcare; this then plays out in their increment.

The liberalisation of the economy since 1991 has had many salutary effects but it may not have been the best thing for pay parity. In the public sector, rules regarding compensation and promotions are clearly defined, with gender differentiation strictly prohibited, and in the years when it offered the majority of jobs, women benefitted. "The increments may have been small, the promotions few, but there was complete pay parity," says Vishakha of IndiaFirst Life Insurance. With expansion of the private sector came concepts like linking of pay to performance and even potential - assessment of which can be highly subjective, leading to an increase in the gender wage gap. In the last five years, for instance, overall compensation of male executives - including CEOs and Executive Directors - has increased 70 per cent, while that of female ones has grown only 48 per cent.

Fixing the Problem

Remedies are not difficult. "Pay parity is easier to achieve than gender sensitisation or changing the culture of the workplace," says Pallavi Jha, Chairperson and Managing Director of leadership training company Dale Carnegie Training India. There could be laws, for instance, mandating that every company, public or private, employing more than a certain number, publish the average salary it pays men and women for different jobs. The UK mandates this for companies with more than 250 employees, and it has led to considerable corrective action.

Again, Germany, earlier this year, passed a law by which employees can access information about their peers' income if they feel disadvantaged - this example too is worth emulating. Iceland, which figures at the top of the WEF's ranking of countries on gender equality, imposes fines on companies with more than 25 employees which are found to have deviated from a strict equal pay policy.

While legislation is awaited, companies could also start benchmarking salaries for different roles and sticking to them. "It is not fair for compensation to be determined by an individual's negotiating skills," says Nirmala Menon, Founder and CEO of HR consulting firm Interweave Consulting.

Some companies are doing so - for instance, Adobe India announced in January this year that it has achieved gender pay parity across the company. It started reviewing internal job structures as well as compensation practices, making necessary adjustments to break existing biases against women. To ensure pay parity in the long run, the company discontinued the widespread practice of using a job applicant's prior remuneration as a benchmark to determine the salary it will offer. "This will help us overcome the gender wage gap women may have experienced in previous jobs," says Abdul Jaleel, Vice President, Employee Experience, Adobe India. To address the unconscious biases, the company has started actively driving trainings and fine-tuned internal processes, including the use of gender-neutral language in job descriptions.

In the struggle for pay parity, however, what is also important is to have a large enough critical mass of women employees at every level so that their voice is heard loud enough. This will happen when there are solutions to address the issue of caring for the elderly and the children. "Many women cannot participate in the labour market because of this. The way forward to ensure gender equality in the world of work is to recognise and value women's work as well as distribute the care work," says Aya Matsuura, ILO Gender Specialist. According to an ILO report, unpaid care work is one of the main obstacles to women moving into better quality jobs. It affects the number of hours spent by women at work, impacting their earnings.

Unless the issue of distribution of work at home is addressed, there will never be enough women at work. Inclusion studies have shown that the tipping point for any form of diversity to flourish is having about 30 per cent representation. This can be done by abolishing gender restrictions. "To bring more women into the workforce, it is important to do away with policies that perpetuate gender stereotypes," says Chakraborty of TeamLease. "Child care leave, for instance, should be allowed for both men and women. Providing it only to women suggests only mothers are responsible for child care." Any factory-related laws that prevent women from working at certain hours or in certain roles should go. The armed forces too have rules restricting women taking up combat roles - but these are lately being reconsidered.

Above all, what is important is equal opportunity. HUL is taking conscious efforts to stem the drop off of women after maternity. The company claims it was able to retain 97 per cent of women who went on a maternity break in 2017. If offers on-site day care facilities, flexible working, job shares/splits and remote working arrangements. Then there is a career break policy, for both genders, where employees can take a sabbatical of six months to five years. Another is Career by Choice which helps women transition to full-time work post a break. "The representation of women has gone up dramatically," says B.P. Biddappa, Executive Director, HR at Hindustan Unilever.

At legal firm Samvad Partners, nine out of 14 partners are women, as also 70 per cent of its 80-odd lawyers, but this was not the result of any special effort. "We never had a female-friendly recruitment policy and never will," says Harish Narasappa, Founding Partner, Samvad. "We treated women applicants no differently from men, judging them solely on the basis of qualifications and skills." So, too, was the case at ICICI Bank in the mid to late 80s when the bank recruited a range of talented women who went on to become top bankers. "The institution did not talk of diversity but of equal opportunity for all," says K. Sudarshan, Managing Partner at executive search firm EMA Partners. "Diversity is not an overnight exercise. It arises from 20 years of consistent effort."

(With inputs from Ajita Shashidhar)

@sonalkhetarpal7

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