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Blog | Friday March 8, 2024

Closing the Gender Gap: Addressing Wage Inequality

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The theme of International Women's Day 2024 is “Inspiring Inclusion.” A key component of inclusion is to ensure women receive equal pay to their male counterparts for equal work to create "a gender-equal world" and end discrimination. According to a recent report, there is no equality for working women in any country in the world, and women are at a greater risk of not being paid a living wage due to existing inequalities.

There has been minimal change in gender pay gaps in recent years. In 2022, women earned an average of 82 percent of men's earnings, which has only improved by 2 percent since 2002. The stagnation over the past two decades contrasts sharply with the progress witnessed in the 1980s and 1990s. At the current rate, it will take 257 years to close the gender pay gap.

Women often make up a significant portion of the labor force in many industries, particularly in textiles and agriculture. However, they frequently face discrimination, unequal pay, and limited access to resources and opportunities.

An approach to supporting women workers in these industries is to ensure that companies are advocating for a living wage across the supply chain. In today's landscape, there's a growing expectation for companies to uphold human rights standards across their global supply chains. One area that often goes unexamined is the disparity in wages between male and female workers. This discrepancy could serve as an indication of underlying discriminatory practices.

Where Does Gender Come into the Living Wage Conversation?

It is reported that it will take more than 300 years to achieve full gender equality. Research indicates that achieving gender equality can add US$12 trillion to the global economy.

Gender equality is closely intertwined with discussions about living wages in the following ways:

• Gender wage gap: Addressing living wages involves ensuring fair compensation for all workers, regardless of gender. The reality is that women account for 80 percent of the global labor force in the apparel sector, but the actual labor costs account for just 0.6 percent of the retail price.
• Unpaid care work: Women often bear a disproportionate burden of unpaid care work, such as childcare and household chores. This limits their ability to participate fully in the workforce and contributes to their vulnerability to low wages. Implementing living wages can help alleviate financial pressure on women and recognize the value of their unpaid care work. The WageIndicator Foundation, Anker Research Institute and Living Wage for US methodologies assume two working adults per family, with one of the two adults working based on the national labor participation rate to account for unpaid care work. 
• Childcare costs: Until recently, many living wage methodologies did not explicitly account for the cost of childcare, even though this is often a prerequisite for women to be able to work. The Organisation for Economic Co-operation and Development (OECD) estimated that "without any support measures, in EU countries on average, gross full-time childcare fees for two children aged two and three represent nearly 25 percent of the median full-time wage for women.” To address this issue, the Anker Methodology now includes a post-check on education costs, including preschool and nurseries for regions where these costs are commonly incurred, and the Living Wage for Us methodology includes the average cost of childcare per county in the US.   

Benefits of Closing the Wage Gap in Value Chains

In many value chains, women make up the majority of the workforce. There is disparity between men and women in work and pay due to gender stereotypes and social norms. This is despite increasing access to education and higher rates of participation of women and girls in the labor market.

Additionally, women farmers often have less access to resources such as land, credit, seeds, fertilizers, and agricultural training compared to men. This limited access can hinder their productivity.

If there was no gender gap in farm productivity and no wage gap in the agrifood system, it could increase gross domestic product (GDP) by 1 percent or nearly US$1 trillion dollars. As a result, this would reduce global food insecurity by 2 percent and reduce the number of food-insecure people by 45 million.

Many women are further discriminated because of intersecting identities such as age, class, ethnicity, caste, migration status, gender identity, faith, sexual orientation, and other factors. This may not be evident to companies as there is a lack of data, meaning women workers in value chains are "invisible."

Data is Key to Closing the Gender Gap

Most businesses are aware of the need to address pay fairness and introduce a living wage across all global operations, but there are a range of operational and strategic hurdles and cost implications. For example, living wage levels fluctuate depending on the location and the calculation method employed.

There is a lack of data across multiple regions on topics such as fair pay, gender, and ethnicity pay gaps. Using data to examine living wages will enable employers to analyze, comprehend, and narrow the gap.

Steps for Companies to Address the Gender Gap

1. Invest in data: Gathering data on all employees, gender, job categories and hours of work will help employers to understand and close gender pay gaps for all genders within company operations. For instance, companies can use data to look at gender distribution for various job categories and identify any disparities in wages.
2. Incorporate a gender lens into living wage analysis: Companies can select from multiple gender-sensitive approaches to calculate the living wage. One recent development is the concept of a single-earner living wage benchmark, which considers how many families do not have a two-parent household. 
3. Build internal management and capacity to incorporate gender-transformative approaches into living wage strategies: Involve both women and men in participatory and inclusive processes aimed at closing the gap in living wages and promoting gender equality. Offer training to address unconscious gender bias, stereotypes, and cultural norms that restrict women's job opportunities. Ensure that procurement, recruitment practices, and other aspects of the business model do not hinder the payment of living wages in core operations and value chains as part of capacity building efforts.
4. Develop a gender-inclusive strategy for living wages to close the gender gap: Some companies are starting to conduct their annual living wage analysis alongside their gender equity analysis to identify where these risks are overlapping.
5. Implement living wages in tandem with action on other issues such as gender equality and child labor. Living wage is the starting point, and not the end goal. Companies can consider assessing systemic barriers to achieving living wages and collaborate with partners to address them. Cross-sectoral action is essential for successful implementation. For instance, ACT is a global initiative driving systemic shifts on living wages and economic inequality.

Having worked with over 35 companies for 20 years on this matter, BSR understands that this is a complex and daunting task to undertake. For more information on BSR’s work on living wage, contact us.