Celebrating Equal Pay Day – Cheers or Tears?
International Equal Pay Day is being celebrated worldwide for the first time this September 18th. Some may think that it is about time to highlight this issue, others may wonder why a special day is needed. Well, the truth is that, in 2020, women worldwide make 0.77 USD when men earn 1 USD for the same work. This is a 23% pay gap on average. Of course, this gap is not as big everywhere in the world, and with an average 15% gap in EU countries, women today are still better off than 30 years ago, reflecting an overall progress towards gender equality.
15% may not look like a big gap and could probably even be seen as acceptable to some extent. But those are not just numbers. What does a 15% pay gap really mean? It means that a woman, who worked the same as her male colleagues since the beginning of her career, at the age of 65 or retirement, would see that her fellow male colleagues would have accumulated about 30% more investable assets than her, for doing the same work. Literally, it means that when a man would be able to accumulate USD 1 million of savings at the end of his working life, a woman would have accumulated USD 700,000. And that would be in the very best-case scenario. For that to happen, one would have to assume that this woman was not, on top of that, negatively impacted by factors such as career discontinuity and flexible work, in which case, she would have accumulated on average USD 200,000 at the end of her working life. It’s no surprise, then, that in 2020 men hold 70% of the global wealth.
But there’s something else. Because of a lifetime of income inequality, not only will a woman have to be significantly less wealthy than a man, but because of inequalities in life expectancy, she will have to live longer with less. Accepting or closing eyes on unequal pay between men and women is accepting a society where our mothers, sisters and daughters will end their lives being poorer than men. It is accepting that because the joys and responsibilities of parenthood are not shared equally and as the care for aging parents tends to fall to daughters, women are held back in the workplace and financially sanctioned after spending a lifetime taking care of others (often called the “motherhood and daughterhood pay gap”). It is also accepting that because of this inequality, most women will remain, all their lives, financially dependent on men whom will also pay the negative effects of this imbalance, being denied the opportunity to care for and enjoy time with their children or parents, or penalized if they choose to reduce or leave their work for caregiving.
Although some progress has been made over the past years around gender equity, the latest figures show that the economic gender gap has actually widened. This is true in most countries, including in Switzerland, where a persistent gender pay gap keeps women earning roughly 20% less than men on average (31% at the level of a company’s top management). This is better than in the 1990’s when it was about 30% less, but worse than in 2000 according to government data. This means that from October 20th this year, women in Switzerland will effectively be working for free for the rest of the year. Or that women stop being paid every day from 3:24pm.
In 2020, at the current rate of change, it will take another 257 years for women to achieve equal pay at work. Unless we find a way to live until the year 2277, none of us will witness gender parity in our lifetimes (and most likely, neither will our children and grandchildren). This is actually 55 years more compared to last year’ status1.
So, is closing the gender pay gap a lost cause?
Well, there may be hope. In fact, we cannot talk about gender pay gap without talking about equal opportunities. Today, the share of women that are part of senior management teams and boards is still very small. For women to have access to equal opportunities, we would need to see proportionately more women than men being promoted. But we don’t, at least not at the scale needed to close the gap and change the picture significantly.
COVID-19 has widened the gender economic gap. While it is easier for companies to make gender balance a priority in a growing sector or strong economic environment, for companies that are under cost pressure, promotion opportunities tend to be restricted. Where there is not enough room for promotion, it becomes even harder to maintain or improve the gender balance. The glass ceiling tends to become thicker, almost impossible for women to break it, and opportunities for women to realize their full potential are further reduced. However, an increasing number of studies show that companies committed to gender diversity on executive teams are 21% more likely to outperform on profitability and 27% more likely to have superior value creation. The more diverse companies are, the better they are able to attract top talents, improve customer orientation and decision making.2
As a responsible, impact-oriented investor, how are we at responsAbility working on this issue? First, our management made the active decision to take it seriously, so we have begun engaging in structural work to promote diversity and inclusion. At the corporate level, the company recently created an independent Gender and Diversity Advisory Group with the mandate to analyze and create policies and initiatives to improve gender and diversity across the company. At the level of the funds we manage, responsAbility has also engaged with various stakeholders, from investors to donors to our portfolio companies in order to promote gender-lens investing and give women in developing markets improved access to leadership opportunities, quality employment, finance, enterprise support and products & services, in line with the 2X Challenge.
The Covid-19 crisis raises critical choices for our societies. But an economic recovery that does not put gender equality and diversity at the center would mean a sluggish recovery at best. Let us not miss this opportunity to empower and inspire younger generations of women to become leaders and to create a new paradigm where gender equality can be viewed as it should be – essential for the happiness and economic health of both men and women.
1 In 2019, according to the world economic forum, the gender gap was to be closed in 202 years.
Marie Anna Bénard is a Technical Assistance Officer at responsAbility. She structures and manages Technical Assistance programs in developing and emerging countries to facilitate investments and to create positive impact for various funds managed by responsAbility. Marie Anna joined responsAbility in 2016 and has 10 years of experience in project management and technical assistance in financial inclusion, climate finance and sustainable agriculture.
Marie Anna is the Chair of responsAbility’s Gender and Diversity Advisory Group.