Will Compulsory Reporting Help Shatter the Gender Pay Gap?

Is government legislation calling corporations and companies to account enough to close instances of wage inequality by gender definitively?

Perhaps not; a new study of three decades of wages between 1980 and 2010 conducted by the National Bureau of Economic Research has suggested that the gender pay gap’s biggest problem lies in the paucity of women working in certain jobs and industries; jobs in the STEM fields, for instance, or in the technology industry.

You can tentatively link this problem to the culture one finds in companies in these sectors. But, the study also reiterates the common cultural concern that, at the highest levels of business, women will be more harshly penalized for any time spent away from the workplace. “Specifically the penalties for time out of the office are high among those with MBAs and JDs,” runs an ominous line from the Atlantic.

Fujitsu’s chief executive in the UK and Ireland, Regina Moran, also emphasized the cultural dynamics at play in a BBC report: “Differences in pay are often part of a wider context, as businesses fail to create environments that support women in the long term.”

Finance is another industry which has continually drawn accusations of a climate that disfavors women. Many expect that those who are forced to report details of wage inequality will underline this perception. Indeed, the fact that details of bonuses paid will also be required of UK employers will inevitably draw attention to firms in the City.   

One finance company already looking to enact a change in their wage policy is Swiss bank, UBS. This week it announced a pay freeze across its investment bank while a review of any wage inequality in male and female employee earnings is carried out, inequality that it then aims to address. Of course, pay freezes are not often welcomed even if their stated aim comes with the best of intentions. HSBC, for example, has just canceled its own global pay freeze a mere two weeks after announcing its intention to cut costs, in the face of staff unrest.

Still, an effective system of transparency over salary could influence where both male and female executives choose to work – something which, in turn, could positively influence company policy.

In seven countries in North America and Europe, a Glassdoor survey has revealed that three in every five people would not apply to a company if they knew wage inequality was in evidence there. Among female respondents the highest disregard came from the US, where 81% said they would not want to work for a company with wage inequality between genders. The equivalent proportions among men were found to be highest in Canada, the Netherlands and the UK, albeit at the substantially lower level of around 60%.

Troublingly, the same survey also revealed that a majority of people already think that the gender pay gap is a thing of the past – 70% said they believed men and women were paid equally for equal work at their place of business. In reality, narrowing wage inequality worldwide between men and women has stalled. Released at the end of last year, the World Economic Forum’s Global Gender Gap Report 2015 says that the gap has closed only by 3% over the past decade.