Thursday 26 April 2018

Karl Deeter: Gender pay gap is more complicated than it seems

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Karl Deeter

Logically, if it was cheaper to hire women than men you would never hire men as the savings would be too great, unless a business values misogyny over capital. I say that not as an objective analyst, but as a business owner who values capital. Paying a person less for the same job based on their sex is wrong, unethical and should not be tolerated.

But the 'gap' is full of quirks.

A pay gap exists. But there are reasons for it which may not be as offensive as some headlines imply - we must look at the underlying information.

Pay is a factor of knowledge, experience, productivity and, perhaps most importantly, time. If two people are the same in all but one of these areas they can be paid vastly different amounts.

A highly-knowledgeable doctor who sees a lot of patients but who only works two days a week will earn less than another doing the same who works five days a week irrespective of their gender.

That's why in youth employment, where there are not high levels of experience, that gaps are so small.

One of the biggest studies on gender pay gaps by the US Labour department considered data and 50 peer-reviewed papers and concluded that the pay gap "may almost entirely be the result of individual choices being made by male and female workers". Cue outrage.

Is Ireland so bad? We fare better on gender pay gaps than all of the Nordic countries. We are statistically more egalitarian than Germany, France or the Netherlands. Romania, Slovenia, Croatia, Poland and Italy are all leaders in gender pay equality according to Eurostat.

Underemployment is part of the issue. More of our workforce is in part-time work than the EU average. The countries with more people working part time have higher pay gaps, but are all part time workers underemployed? Countries like the Netherlands, Germany and Nordic nations have higher pay gaps and higher part time workers. Countries like Bulgaria and Romania have very low part-time worker rates and lower pay gaps.

Hours worked is important.

CSO data shows that we have far more part-time employed women (260,000) than men (90,000).

So is it female underemployment?

In percentage terms it's only partial. Part-time women who want more work are 20pc of part-time workers (51,000). With men who are part-time it's 46pc (42,000). Wage gaps often don't account for hours, due to there being more full-time men (974,000) than women (629,000). Even if the men earned less per hour, they would be earning more in total and therefore show a 'gender pay gap'. Where they do adjust for hours worked you would have wage gaps in the same job where both are women because full-time contracts are often higher paid than part-time ones.

High childcare costs are also an issue. The politically correct will say that you can't pigeonhole women into child rearing. I agree, but if that's a person's choice then who are we to decry it?

Are women better with children?

In primary schools almost 90pc of teachers are women, and in creches, day care and au pairing there are virtually no men.

Some say it's because men wouldn't work in a creche due to low wages, but with higher rates of unemployment in men (7.2pc vs women at 5.4pc) you'd expect at least some men to be willing undertake the work.

Time out of work is also an issue. Having children forces this upon one gender disproportionately - paternity leave is only a recent phenomenon.

An uncomfortable reality is that to truly compare women and men in terms of pay you'd have to ensure gross hours worked are identical, and that means comparing men against women with no children. Were men required to do the same level of tasks and duties that women do they couldn't earn more, so perhaps the question should be 'why do women do more school runs, more childcare and other things that take away from career time'. I don't have the answer to that, I just know that it's a fact of life - and one that feeds into the pay gap.

Pay gaps are a statistical disaster.

Eurostat admit that there is 'no consensus or scientific evidence on how to adjust for national differences in pay'. That has two big implications, firstly is that higher pay gap nations may be because women are happy to work less or for less due to there being other supports.

The second is that by using gross hourly earnings you ensure that where women work more part time that there will always be a pay gap. The flexibility of part-time work often comes at the sacrifice of higher wages - that's why you rarely hear of a part-time CEO.

Whether it is fair or not, in a company of people working full-time it is less likely to see the part time workers promoted up through the ranks. This will probably change over time as career paths change, but pay gaps don't reflect this.

Productivity is also not factored in, nor are (on a European level) job types. In Ireland we have more women grouped as 'professionals' (206,000) than men (164,000) but only firms with 10 or more people go into the statistics.

So the majority of women and men in small companies aren't covered.

The statistics usually don't feature transfers that men don't receive (such as children's allowance), but they do include overtime, if men work more hours you'll see the pay gap grow and we know that men work more hours due to the Quarterly National Household survey (QNHS).

The QNHS gives us the hours per week, the 'over 40 hours per week' cohort is 552,000 men and 210,000 women.

This leads to all manner of pay gaps as does the higher level of sub-20 hours a week work where women (120,000) outnumber men (48,000). Full-time work often pays more. It's also why even in the heavily unionised public sector where wages are negotiated en masse that you see double-digit gender wage gaps in almost every country Eurostat cover except for Belgium, Italy and Poland (data is not available for Ireland). The public sector should have zero gender pay difference and yet it does everywhere.

Another issue is 'grouping'. The CSO put people into 'subgroups', this means CEO's of large companies are in the same group as retail managers. If there are gender differences by group, this gives a further gap.

Underneath statistics are real flesh and blood people. The statistical issues at play are not problems of those involved, but often the errors with which we interpret them. We do have issues of gender segregation by career type. We should also remember that reducing poverty and creating an inclusive society means somebody somewhere can't be working all the time. The benefits of a parent being around for a child are not measured in wages, they are measured in different outcomes entirely - is it worth it?

There is a somewhat shocking conclusion to consider, perhaps the world isn't as bad a place as we are being told it is? Remember this, discrimination comes at a real money cost.

The gap is either a lot of people willing to pay that price which would be a big problem, or perhaps people are making decisions which they can live with and the issue should be recategorized as a '21st century problem'.

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