The Biggest Elephant in the Room: India’s Gender Pay Gap

In June 2024, the World Economic Forum released the Global Gender Gap Index data by analysing the pay scale of men and women in 146 countries. Did you know that India was at 129^th position in the rank and is termed as one of the economies with the lowest level of economic parity? The report also explains that the country would need an additional 6.2 percentage points to match its 2012 score of 46%. It means that the gender pay gap has widened in the last decade.

At present, according to statistics, Indian women earn only Rs 40 for every Rs 100 earned by men. According to the World Economic Forum (WEF), an average salaried Indian man-made Rs 20,666 per month between July 2022 and June 2023. On the other hand, a woman made Rs 15,722.25. Isn’t it bothersome? Let’s understand what the gender pay gap is, its causes and its consequences in detail.

Understanding the Gender Pay Gap

The gender pay gap is the average difference in remuneration between women and men employees. Multiple organisations and governments have been taking efforts to close the pay gap for several decades. Yet, the gender pay gap continues to exist even though it has inched a bit closer. While some countries have shown visible results in reducing the gap, others have made little to no change. But even today, women are paid less than men in almost all the sectors.

The International Labour Organization (ILO) finds out that women on average are paid about 20% less than men across the globe. The pay gap is as high as more than 45% in certain countries. The World Economic Forum suggests that it will take about 202 years to close the global gender pay gap. The prediction was made based on the past 12 years’ trends.

According to the Economic Policy Institute (EPI), the gender pay gap is calculated simply by dividing women’s wages by men’s wages and this ratio is expressed as a percent. It is measured for year-round, full-time workers and compares the annual wages of a man with those of a woman.

It is seen as a sign of gender-based discrimination at workplaces. ILO sees it as an indicator to measure the existing inequality between men and women workforces.

Causes of the Gender Pay Gap

There are numerous factors that widen or close the gender pay gap in the Indian marketplace. Let’s discuss some of the important factors below.

1. Under-representation in leadership: Despite the huge improvements in female representation in the workforce, women are still underrepresented in leadership roles, especially at higher levels like board members, senior management and CEOs. This is mainly because leadership is often associated with masculine traits like decisiveness and assertiveness, while women are traditionally seen as nurturing and emotional. This stereotype defines perceptions of women’s leadership abilities. In addition, barriers like gender discrimination and lack of proper mentorship hinder the movement of a woman while climbing up their career ladder. This in turn stalls their career development and they are stuck at entry-level or mid-level positions. This vertical segregation leads to a lack of women in high-paying leadership positions and contributes to the pay disparity. But when women take up senior positions, they will concentrate management support functions like financial administration and human resources in better strategic ways. This in turn will bring down the difference in the pay gap between women and men.
2. Occupational segregation: It is one of the main reasons for the widening pay gap between genders. For it leads to an unequal distribution of men and women employees across sectors. It creates a situation where men are likely to hold higher-paying roles, leaving lower-paying jobs for women. It is mainly due to the gender stereotypes and societal norms. Several cultures have been dictating which careers are appropriate for men and women. For instance, women are expected to work in caregiving roles like teaching and nursing, where empathy and nurturing qualities are valued. On the other hand, men are expected to take up technical, managerial and leadership positions that are often associated with a higher pay scale. Many women prefer to do home-based employment to manage their household chores. These ingrained stereotypes that have been shaping career choices influence the type of education women pursue and limit their access to high-paying sectors.
3. Gender norms and stereotypes: Roles and responsibilities that are considered appropriate for men and women are deeply ingrained in society. These norms in turn determine the opportunities and remuneration men and women have. In addition to occupational segregation, these stereotypes lead to the undervaluation of work done by women. Because the women-oriented roles are believed to be easy jobs, even though they are extremely important and require high levels of training, expertise and responsibility. This in turn leads to lower wages in these sectors and contributes directly to the gender pay gap. In India, people strongly believe men to be the primary breadwinners and women’s earnings are always considered supplementary. This belief reduces the perceived value of women’s labor in the workplace. As a result, women are subjected to discriminatory hiring practices and unequal and unjustifiable pay.

Consequences of the Gender Pay Gap

The widening gender pay gap has far-reaching and significant consequences for both individuals and society at large. It means nothing but unjustifiable gender inequality in the society, and it has serious economic, political and social consequences. Some of them are discussed below.

1. A wider gender pay gap means women are earning significantly less than their male counterparts. This in turn will drastically decrease women’s economic power, financial independence, and ability to purchase assets and save for the future. This will also impact their ability to provide for their families, leading to continued cycles of poverty, particularly in low-income households.
2. When women are underpaid, it sends a clear note to everyone that women employees are undervalued. This in turn will discourage them from participating in the workforce and it means that the country cannot maximise its potential workforce. This will eventually affect the economic growth and GDP of the country.
3. Also, when women move out of the workforce due to underpayment, there will be a huge underrepresentation of women in senior positions and leadership in businesses and government sectors. When a country has no women in leadership, their economic decision-making and policy development will be impacted. Also, young women employees will lack motivation and role models to look up to.
4. Underpaid women often feel frustration and mental stress. This economic insecurity coupled with demotivation will lead to anxiety, burnout and depression because they keep juggling between work and household chores. They also struggle to afford adequate healthcare, nutrition and preventive services for themselves and their families.
5. Financial independence of women is closely linked with their empowerment. The gender pay gap limits women’s ability to gain the autonomy and decision-making power that are required to improve their social, political and economic status. Without equal pay, women have fewer resources to challenge patriarchal structures and achieve broader equality.

Ways to Close the Gender Pay Gap

Joint secretary of the Ministry of Women and Child Development, Preetam B Yashwant, in the recent UN ministerial conference, said that the country is now working on bridging gender pay gaps at all levels. One of the important steps that a country needs to take while trying to bridge the gender pay gap is to take stock of gender inequalities and recognise the benefits of improved gender diversity in all aspects. Some of the ILO’s recommendations for closing the pay gap for businesses and policymakers are listed below.

1. Promoting a gender-inclusive work culture
2. Following a holistic strategy to provide equal remuneration for men and women for doing work of equal quality and value.
3. Offering pay based on the position rather than considering previous pay of employees.
4. Providing equitable salary offers to all genders.
5. Conducting a gender pay review to assess and close the existing gaps.
6. Creating jobs that are more flexible so that more women can access higher-level jobs.
7. Applying a job evaluation methodology to assess the skills and responsibilities of the various jobs with a view to adjusting job titles, contents and corresponding pay over time.

Addressing the gender pay gap is one of the foremost and most significant steps that need to be taken to address gender discrimination and inequality in the country. Closing the gender pay gap is the path to women’s empowerment and sustainable economic development. So, it is high time the Indian government prioritises the issues, makes policy changes and takes effective steps to close the widening gender pay gap in the country.