India is among the most important countries when it comes to global economic growth and structural transformation story. But, unsurprisingly, in a country the size and diversity of India, asymmetries still abound in the country’s labour market. Women still earn less than men in many of the world’s largest and most developed economies, even when they’re doing the same job as their male counterparts in the same company. According to a report by the World Economic Forum[1], India ranks a low 108th out of 153 countries in terms of the gender pay gap, with women earning just 71% of what men earn. This disparity is not only unfair, but it also has a significant impact on the economic stability and growth of the country.
According to a report by the International Labour Organization (ILO), the gender pay gap in India stands at 27% as of 2023[2]. This means that, on average, women in India earn 73% of what men earn for doing the same job. This gap is even wider in certain industries, such as the technology sector, where women earn just 60% of what men earn.
Causes of Gender Wage Discrimination
The gender wage gap is the difference between the average earnings of men and women in the workforce. Specifically, the gender wage gap measures how much fewer earnings women make in comparison to men. Various social and economic factors contribute to the gender wage gap, including gender discrimination, women’s unpaid responsibilities (like childcare), and women’s over-representation in lower-paying positions.
Some of the causes of gender wage discrimination are -
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Differences in industries/jobs worked - so-called “women’s jobs,” such as health aides and childcare workers, typically offer lower pay and fewer benefits than male-dominated jobs (e.g. construction). These distinctions are true across all industries and professional levels, from frontline workers to senior-level executives.
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Differences in years of experience - women tend to have less professional experience than men due to unpaid obligations such as childcare, which leads to a career gap.
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Discrimination - gender-based wage discrimination is particularly prominent in work environments that discourage open discussions about wages or that make employees fear retaliation. Other than discriminating solely based on gender, employers may also decide to pay women less due to their previous wage history or compensation benefits. As a result, these wage decisions may end up following women from one job to another.
According to the annual bulletin of the Periodic Labor Force Survey (PLFS) 2019-20 data[3], female labor force participation in India is way below that of males. In FY 2020, while the male participation rate stood at 56.8 percent, this ratio was 22.2 per cent for females. The latest quarterly PLFS surveys suggest a further decline. In the January-March 2021 quarter, this stood at 16.9%, with states like Himachal Pradesh (29.6), Andhra Pradesh (23.1), Tamil Nadu (24.2), Kerala (19.5), and West Bengal (19.5) being some of the top performers. The state of Bihar remained the worst performer with a 4.4% participation rate, following Delhi at 8.8% and Uttar Pradesh at 9.7%
Societal Explanations for Wage Discrimination
The common beliefs justifying the lower wages for women include the inability of women to work in heavy industries and their natural choice being light industries, women seeking employment in the unorganized sector, women being physically weaker and unable to work for a long duration, inability to devote much time to job training as they have to care for family and devote time for childcare, unlike men who can undergo long job training making them earn more than women workers. Even unmarried women are expected to get married and leave their job and potential mothers are expected to take breaks in the future. These beliefs and reasons deprive women of equality in remuneration.
Another explanation for the differentials in wages is some employers are said to have a taste for discrimination against women workers. Employers are only willing to employ women if they accept lower remuneration. The wage differential is seen as compensation for the additional psychic costs imposed on the employer for employing women. This concept also applies to occupational segregation which leads to women being barred from ‘male jobs’ and overcrowding in ‘female jobs’.
This societal standard has furthered educational and occupational inequalities. Investment in education is geared more toward men because women are labeled as future homemakers. Women are viewed as potential mothers who do not have time for the job and thus receive unfair pay. Accompanying the role of child caretaker, women in India generally hold a lower status than men. This leads to women being treated unfairly, one way being through smaller wages than men.
One example of the gender pay gap in India is the disparity in the technology sector. Despite the fact that women make up nearly 30% of the Indian technology workforce, they are often paid less than their male counterparts. A study by the National Association of Software and Services Companies (NASSCOM)[4] found that women in technology roles earn 29% less than men, with the gap being even wider at the senior management level. This disparity is not only unfair, but it also limits the potential for economic growth in the sector, as it discourages women from pursuing careers in technology.
One of the main reasons for the gender pay gap in India is the lack of women in leadership positions. According to a report by McKinsey[5], just 14% of senior-level positions in India are held by women. This lack of representation at the top levels of organizations leads to a lack of role models for women and a lack of policies and practices that support gender equality. The gender pay gap in India is not only an economic issue but also a societal one, as it is deeply rooted in cultural and societal biases.
The rising compensation difference in an organisation can also be because women are mostly hired for supportive roles instead of senior-level jobs that have more pay. There is no gender pay inequality at the beginning phases when organisations employ freshers, yet the equality issue begins as women advance in their professions and continue to increment with age and promotion.
Impact of Pandemic
India’s female Labour Force Participation Rate (LFPR), which refers to women who are either working or looking for a job, has not only stagnated at much below the global average of 47% for several years but has declined considerably in recent years. Despite experiencing structural improvements to their lives, such as a decline in fertility rates and expansion of women’s education, India’s female LFPR is on a downward track. As per World Bank estimates, the female labor participation rate in India fell to 20.3% before the pandemic – from more than 26% in 2005 and 31.9% in 1983. This is much lower, even when compared with 30.5% in neighboring Bangladesh and 33.7% in Sri Lanka[6].
This decline in female LFPR can be attributed to various factors like obligations towards the performance of domestic duties, conservative social norms, and the lack of flexible work models. It is also observed that household constraints trump financial needs and individual preferences for job choice among women.
This bleak scenario of women’s workforce participation having slid towards regression could, however, take a positive turn. The COVID-19 and post-pandemic hybrid work models could become game-changers for many women as they offered flexible and more innovative work options with increasingly empathetic work cultures.
Incentives took by the Indian Government
India has taken several steps in the legislative sphere to close the gender pay gap, especially at the low end of the wage distribution. In this regard, it was one of the pioneering countries to enact the Minimum Wages Act in 1948 and followed by the adoption of the Equal Remuneration Act in 1976. In 2019, India carried out comprehensive reforms in both the legislation and enacted the Code on Wages.
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2005 benefited rural women workers and helped reduce the gender pay gap, both directly and indirectly. Directly, by raising the pay levels of women workers who participated in the programme, and indirectly, benefits accrued to women involved in agricultural occupations through higher earnings, as MGNREGA contributed to the rapid rise in overall rural and agricultural wages in the country.
In 2017, the Government amended the Maternity Benefit Act of 1961, which increased the ‘maternity leave with pay protection’ from 12 weeks to 26 weeks for all women working in establishments employing 10 or more workers. This is expected to reduce the motherhood pay gap among mothers in the median and high-end wage earners working in the formal economy.
The World Economic Forum’s (WEF) Global Gender Gap Report 2022[7] said that India positions 135 out of 146 nations in the gender gap. Although the numbers have improved to 140th out of 156 in 2021.
With this, India has also improved in hiring more women for several work sectors. India has worked on its presentation in all the five sub-records of the health and education sectors. Female enrolment in education expanded from 92%in 2012 to 93.57% in 2022, as per WEF information. Their support for tertiary schooling, even though lower than male cooperation, went up from 15% in 2012 to 27.8% in 2022. A huge number of the ladies were educated in 2012; presently, that proportion is climbing towards 66%.
The political section has also likewise shown improvement, however, partiality still exists. There were 11% women in the Parliament in 2012, and in 2022, women filled 14.9%of the positions. In any case, the ratio of women enrolled for ministerial positions declined from 10% in 2012 to 9% in 2022.
Japan has the worst gender pay gap in the G7, standing at an estimated 22%. The country ranks 116th in the World Economic Forum’s Global Gender Gap rankings. Japanese law already states that men and women must be paid equally for the same work.
From June 2023, businesses must report their gender pay gap as a percentage, displaying it on the company website and providing valid reasons for any difference. The rules will apply to any company with more than 300 staff and will affect 18,000 firms. It’s all part of Prime Minister Fumio Kishida’s ‘new capitalism’ action plan, which aims to address Japan’s growing labor shortages and boost growth[8]. The World Economic Forum and the Government of Japan co-launched the Japan Gender Parity Accelerator?. It’s working with more than 300 companies to close the gender pay gap.
Experts believe that hiring more women in different sectors for different roles can help fill in the pay gap. Also, eliminating gender-based lawful limitations, making financial space for priority expenses like education, as well as carrying out gender-sensitive social advantages can help diminish gender pay inequality altogether. Equal pay for work of equal value is necessary to close the gender pay gap. Closing the gender pay gap is key to achieving social justice for working women, as well as economic growth for the nation as a whole.
[1]https://www3.weforum.org/docs/WEF_GGGR_2022.pdf
[2]https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_862569.pdf
[3]https://skillsip.nsdcindia.org/sites/default/files/kps-document/Insights%20from%20PLFS%202019-2020.pdf
[4] https://nasscom.in/
[5]https://www.mckinsey.com/~/media/mckinsey/featured%20insights/employment%20and%20growth/the%20power%20of%20parity%20advancing%20womens%20equality%20in%20india/mgi%20india%20parity_full%20report_november%202015.pdf
[6] https://www.ceicdata.com/en/indicator/india/labour-force-participation-rate
[7] https://www3.weforum.org/docs/WEF_GGGR_2022.pdf
[8]https://www.weforum.org/videos/japan-is-making-companies-publish-their-gender-pay-gap-f64994cc8e#:~:text=Japan%20has%20the%20worst%20gender,equally%20for%20the%20same%20work
