Reflecting on Progress and the Continued Pursuit for Equal Salaries
134 Years to Pay Equality
On September 18th, 2024, we mark the fourth anniversary of the International Equal Pay Day. Despite decades of global advocacy, women around the world and across sectors still earn, on average, 20% less1 than their male counterparts, an inequity that remains an obstacle to gender equality. This day serves as a critical reminder that the gender pay gap remains an obstacle and we must intensify our efforts to empower women in the workforce.
According to the World Economic Forum's Global Gender Gap Report 2024, without a bold push forward, it will take 134 years2 to reach full parity. While this is a significant improvement compared to the 257 years3 projected in 2020, the gap remains dauntingly large. As we highlighted in a previous article on this matter, the challenge ahead remains immense.
Although the global gender gap is narrowing, the collective rate of progress has slowed down and disparities across certain groups — such as women of color, migrant women, and those with disabilities — are growing. This growing inequality highlights the need for an intersectional approach to addressing wage disparities.
A thickening glass ceiling
Beyond the pay gap, women face systemic barriers to leadership roles, often referred to as the “glass ceiling”, which remains stubbornly intact in many industries and regions.
Top-level positions remain nearly unattainable for women, globally speaking. LinkedIn research notes a correlation between worsening macro-economic conditions and a decrease in hiring women into senior leadership roles4. However, a higher representation of women in the workforce strengthens resilience to retrenchment during economic downturns5.
Once seen as a promising trend, hiring of women into leadership roles has started to decline, dropping from 37.5% to 36.9% in 2023, and further decreasing to 36.4% in early 2024 — falling below 2021 levels.
However, global studies have consistently highlighted a positive link between the presence of women in executive leadership roles and improved company performance. For instance, research published by the Harvard Business Review found that increasing female representation in corporate leadership — from none to 30% — correlates with a rise of one-percentage-point in net margin, equivalent to a 15% increase in profitability for a typical firm6.
In its latest diversity report7, McKinsey reveals that organizations with diversity in executive teams appear to show an increased likelihood of above-average profitability. Companies in the top quartile for board-gender diversity are 27% more likely to outperform financially than those in the bottom quartile.
Research by S&P Global shows that companies led by female CEOs experienced a 20% boost in stock price momentum within two years of their appointment8. Additionally, companies with more gender-diverse executive boards consistently outperformed those lacking such diversity.
Where diversity, equity, and inclusion (DEI) efforts are longer lasting, the returns follow: increased productivity, adaptability to change and stronger innovation outcomes. Gender parity is a competitive advantage in an increasingly tough macro-economic and business environment.
Paving the Path to Pay Equity: What’s Next?
The gender pay gap is a complex issue that requires a multifaceted approach, combining legislation, corporate accountability, and individual empowerment.
A critical player in the global push for equal pay is the Equal Pay International Coalition (EPIC), which aims to close the gender pay gap by 2030. EPIC is led by the International Labour Organization, UN Women, and OECD, and brings together governments, employers, workers' organizations, and civil society to accelerate progress on equal pay for work of equal value. Through its collaborative efforts, EPIC is working to develop and implement concrete strategies that address the root causes of the pay gap, ensuring that future generations of women and men enjoy truly equal opportunities in the workplace.
Going forward, it is crucial that we continue to push for stronger policies, encourage companies to adopt fair pay practices, and empower women with the tools they need to advocate for themselves. As governments implement robust equal pay legislation, businesses should adopt transparency and certification practices. Investors, in particular, can make a positive impact by choosing companies that prioritize gender equality, thereby ensuring their capital supports a sustainable and equitable future.
The Solutions on the Horizon
In response to the ongoing challenges, several new solutions and strategies have emerged over the past few years. These approaches aim to tackle the root causes of the pay gap and promote greater equity in the workplace.
Legislation continues to be a critical tool in the fight for equal pay. The Sustainable Finance Disclosure Regulation (SFDR), for example, although primarily focused on promoting sustainability in finance, also plays an indirect role in fostering gender equality. By requiring companies to disclose their sustainability practices, including gender-related issues, SFDR pushes for greater accountability and transparency.
One of the most promising developments in recent years is the growing emphasis on pay transparency. By requiring companies to publicly disclose salary ranges and pay gaps, transparency measures aim to reduce the secrecy around compensation that often perpetuates gender-based disparities. One notable example is Iceland, which introduced pay transparency laws in 2018. Companies are now required to prove the pay employees equally, a move that has contributed to Iceland’s consistent ranking as one of the most gender-equal countries in the world.
Free online pay calculators and other digital tools have empowered individuals to assess their compensation relative to industry standards. Tools from organizations like Glassdoor and Payscale provide valuable insights into pay equity, allowing women to understand their market value, better negotiate their salaries and identify instances of pay discrimination.
Equal pay certifications are becoming more common. Countries like Switzerland and organizations across Europe have introduced certification processes that evaluate whether companies are adhering to equal pay principles. Certified companies not only enhance their reputations but also serve as a benchmark for others in the industry.
Minimum wage policies that include equal pay clauses are vital for ensuring fair compensation for all workers, especially low-wage workers, who are disproportionately women. Embedding equal pay in minimum wage laws helps address pay disparities at a foundational level.
International Equal Pay Day is more than a symbolic date; it is a call to action. As we reflect on the last four years, let us celebrate the progress made and renew our commitment to achieving equal pay for all. The solutions are within reach, but it will take collective effort from governments, businesses, and individuals to turn the tide on pay inequality. Together, we can create a future where equal pay is not just an aspiration but a reality for everyone.
Sources: 1 ILO Global Wage Report 2018/19 - Link 2 World Economic Forum's Global Gender Gap Report 2024 - Link 3 World Economic Forum ’s Global Gender Gap Report 2020 - Link 4 Gender Gap: This is the state of work for women in 2024 - Link 5 Key Findings - World Economic Forum's Global Gender Gap Report 2024 - Link 6 Study: Firms with More Women in the C-Suite Are More Profitable - Link 7 Diversity matters even more | McKinsey - Link 8 When Women Lead, Firms Win | S&P Global - Link