Equal Pay Day — April 2nd — Not About the Base
One month after International Women’s Day, we will observe Equal Pay Day on April 2nd. In the US, as the wage gap varies by demographics and ethnicity, there are many days recognizing equal pay.
Symbolically the April date represents the requisite time into the year women need to work to earn the same amount of money as men did the previous year. Pay data in the US shows that women earn 20% less than men, a figure which hasn’t budged in a decade. In 2009, women earned 22.9%. Not much of a change.
In Asia, progress in gender parity varies significantly across countries. The World Economic Forum’s Gender Gap research 2018 showed that out of 149 countries, the Philippines ranks in the top 10 across all categories. Looking deeper into one specific category on, “wage equality for similar work” Singapore ranks 2, followed by Malaysia 17, Thailand 20, Indonesia 32, Japan 45, Sri Lanka 68, India 72, China 74, and Korea 121 below the global average.
To address the issue of pay, on April 6th, 2017, the UK government announced mandatory reporting on the gender pay gap for employers with 250 employees or more. That same year, the BBC published the salaries of their highest-paid presenters. Some people were shocked at the compensation levels, while others were dismayed by the lack of women on the list. Addressing the outrage, BBC vowed to reach equality by 2020.
2017 also saw the US’ Office of Management and Budget (OMB) suspend their planned EEO-1 compensation data reporting indicating the need to review the process. The Office of Regulatory Affairs and Advisory Service alluded to voluminous data and arduous processing placing an undue burden on businesses. Nevertheless, enforcement continues through the Equal Employment Opportunity Commission (EEOC) and Department of Labor, investigating instances of gender-based compensation disparities.
In Hong Kong, in 2018 there was talk that the government and Hong Kong Exchanges and Clearing should follow the UK’s template to disclose the gender pay gap for large firms and listed companies. However, The Labour and Welfare Bureau, overseeing the Women’s Commission, stated the “bureau doesn’t have a designated team to focus on gender-pay equality issues.”
In Singapore, according to Watson Wyatt “[there is] not actually any legislation that mandates equal pay for equal work; the closest piece of legislation in Singapore is the guarantee of equality in the Singaporean Constitution.” However, the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) designed fair employment practices and principles to safeguard gender equality through voluntary reporting. Responsibility remains with the employer, which might be a better way to ensure equality.
Whether mandatory or not, government-regulated or voluntary, the gap remains. The US based Institute for Women’s Policy Research estimates the gender wage gap won’t close until 2059. The World Economic Forum projects a bleaker picture, stating that it will take 170 years to eliminate broad opportunity gaps between men and women.
Some employers are now ready to talk about pay, which is complicated, and can’t easily be distilled to reviewing a base salary. Stocks and bonuses must be included. Last year, Bloomberg’s Rebecca Greenfiled and Ellen Huet reported a Silicon Valley study which said that women ‘’hold only 47 cents for every dollar of equity men do”. While base pay for software engineers remained equal, stock options didn’t. In tech start- ups, stock can double or triple pay. No doubt many start ups will fail but it’s the principle and the long term financial implications.
Unequal pay has a ripple effect on women throughout their lives. Consider retirement and pensions. According to WEF, the gender pension gap hovers between 30–40% globally. By 2050 this gap is predicted to be a staggering US$400 trillion, roughly five times the size of today’s global economy. Given longevity trends, women will spend more years in retirement and this longevity needs funding. Japan holds the record for centenarians with 69,785 over 100 and nearly 90% are women. Think about it, how do we fund a 100 year life?
In Asia-Pacific, some economies are aging faster than others, the demographic shifts impact not only the working population, but substantially affect savings rates and social security systems. That is, social security programs defined as funding schemes, social insurance, provident funds and public assistance. Besides Japan, a declining birthrate and increase in aging populations in China, South Korea, Thailand, and Singapore are not far behind. Some countries have now relaxed mandatory retirement age which makes sense, as a 100 year life will be the norm. Japan, adjusted the retirement age twice, Taiwan, China, Thailand and Singapore have also announced changes in mandatory retirement. China separates retirement for men and women; retirement for women increased from 50 to 55 and men increased 60 to 65.
The economic case is abundantly clear. No matter what Equal Pay Day you celebrate, there needs to now be global focus and action. McKinsey research points to the economic drivers underpinning the need for change in Asia Pacific, which remains a powerful engine of growth and gender equality with the potential to add US$4.5 trillion to the collective GDP by 2025.
So, what can employers do? Most organizations want to do something. Last month, I offered five data driven steps to fix the wage gap. I’ve since reviewed the research on inclusive pay practices in many industries to now address three additional practices:
1) Leadership Commitment to Inclusion and Diversity, specifically demonstrating ‘’equity would be at the forefront” of any discussion. Such leaders know the pay gap isn’t merely compensation but also ensuring equal opportunity for senior positions, mitigating the unconscious bias that hinders promotions.
2) Continuing Pay Audits with internal and external experts; Some firms use EDGE certifications, (a global assessment methodology and business certification standard for gender equality) while others work with legal firms. Internally, gather a team of compensation and benefits experts, to assess and rectify gaps, knowing that pay audits may increase before and after an M&A. As one example, SAP and Google did pay audits and found that some women were paid more than men for the same roles-resulting in the men receiving raises as a result. Prior to any US legislation, Starbucks equalized compensation packages. Ikea embedded pay equality into the firm’s purpose, creating a better life for everyone: “Where every co-worker can express themselves and is treated equally, regardless of gender identity, age, ethnicity, beliefs, or any other aspect of their identity.”
3) Transparency about salary range, focus on the role, not the person. Establish the salary range for the position, and don’t discuss previous salaries, as that mitigates setting the pay based from previous employers. GoDaddy “pledged to become far more transparent — not just about how many women it employs but also about how they are paid relative to male counterparts.” Nike shaped compensation changes around corporate culture “in which employees feel included and empowered.”
If you really want to find a #balanceforbetter in 2019 — let these steps be your call to action.
#nowitsclear #careerpurpose
This article was originally published on Linkedin.com/in/JaneHoran.
