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  • Human Rights Research Center

Closing the Gender Wage Gap: Recommendations and Strategies for Equitable Economic Growth

June 26, 2024



Introduction


Despite progress in reducing economic disparities between men and women, significant gaps persist, with women generally earning lower incomes, working part-time or unpaid jobs, and bearing the majority of household responsibilities. Measuring the gender income gap accurately is challenging due to data limitations, particularly the assumption that household income is equally shared among members, which lacks empirical support. The Organisation for Economic Co-operation and Development (OECD), with its six decades of experience and 38 member countries, promotes policies aimed at enhancing prosperity, equality, opportunity, and well-being. The OECD collaborates with governments and citizens to develop evidence-based standards and address social, economic, and environmental challenges, emphasizing that gender equality is crucial for both social justice and economic efficiency.


Gender inequality violates the United Nations' goals of achieving gender equality and promoting decent work and economic growth. Persistent disparities in employment opportunities and wages between genders are a breach of fundamental rights. Wage discrimination, where women are often paid less than men for equivalent work, contravenes the principle of equal pay for equal work outlined in international frameworks like the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW). To address the gender wage gap effectively, the OECD recommends comprehensive pay transparency policies, regular gender wage reporting, equal pay audits, and broader strategies encompassing education, anti-discrimination laws, family support policies, and efforts to balance unpaid work and enhance women's leadership roles. Implementing these measures can significantly advance gender equality in the labor market and ensure fairer economic growth.


Gender wages gap in earning


The graphic below shows the wage gap in earnings between men and women. The gender gap between men and women has decreased over the years, peaking at 16% in 2005 and reaching its lowest point of approximately 11% in 2020.


Gender gap at median between 2005 and 2022. [Source: Organisation of Economic Co-operation and Development, employment database 2022.]

The graph below displays the gender wage gap across 7 of the 38 OECD countries, representing four different continents, for the period from 2006 to 2022.



The gender wage gap appears to be decreasing in some countries over the analyzed years, while in others, the numbers have remained relatively stable. Sweden and New Zealand have the smallest gaps, both at less than 12%. Japan has the largest gap, over 20%, but also shows the most significant reduction from the beginning to the end of the period. Other countries showing a reduction in the gender gap include Germany, Sweden, and the United Kingdom. In contrast, countries like Mexico, New Zealand, and the United States seem to have stagnated in addressing this issue.


Strategies and policies to address the gender wage gap


Despite various public policies and societal changes, the global gender wage gap remains significant. On average, the median earnings of full-time working women are 12% lower than those of men across OECD countries. To address this, many OECD governments are implementing pay transparency policies, 18 OECD countries require private sector firms to regularly report gender wage gaps, and nine of these countries have adopted comprehensive equal pay auditing processes.

The OECD recommends several measures for effective pay transparency. These include allowing employees to request pay information on comparable roles, promoting gender-neutral job classification systems, and increasing awareness and support from stakeholders to improve compliance and reporting quality. They also suggest identifying key wage gap statistics with clear guidelines for employers, ensuring reporting is followed by actionable and enforceable plans, and designating a government actor to oversee compliance. Additionally, resources should be allocated for thorough evaluations of wage outcomes and policy processes, discussions on equal pay should be mandated during collective bargaining, and pay transparency should be integrated into a broader strategy for gender equality, encompassing education access, family support policies, anti-discrimination laws, and efforts to balance unpaid work and increase women's leadership roles.

Members should adopt the OECD’s recommendations to reduce the gender wage gap because doing so enhances economic efficiency and growth by maximizing talent, productivity, and economic development. Pay transparency policies foster accountability and help address wage disparities, improving workplace morale and retention. Additionally, closing the gender wage gap reduces poverty rates among women, enhances family well-being, and promotes social cohesion, setting a positive example for future generations and leading to sustainable, long-term social change.


Conclusion


Addressing the gender wage gap remains a critical issue despite notable progress. Women continue to earn less, often work part-time or unpaid jobs, and bear the majority of household responsibilities. The OECD highlights the importance of gender equality for both social justice and economic efficiency, recommending comprehensive pay transparency policies, regular gender wage reporting, and equal pay audits. Additionally, broader strategies involving education, anti-discrimination laws, family support policies, and efforts to balance unpaid work are essential. Adopting these measures can significantly advance gender equality in the labor market, promote fair economic growth, and ensure sustainable, long-term social change.


 

Glossary


  • CEDAW: UN treaty promoting gender equality and eliminating discrimination.

  • Equal Pay Auditing: Reviewing wages to ensure gender pay compliance.

  • Gender wage gap: The difference between the median full-time earnings of men and women, relative to the median full-time earnings of men.

  • OECD: International organization promoting global economic and social policies.

  • Part-Time Work: Employment with fewer hours than full-time.

  • Pay Transparency: Reporting wage information to address gender disparities.

  • Unpaid Work: Labor without compensation, often domestic or caregiving.


 

Sources


  1. Lorber, J. (2001). Gender inequality. Los Angeles, CA: Roxbury.

  2. Blau, F. D. (2012). Gender, inequality, and wages. Oxford University Press.

  3. Bennedsen, M., Simintzi, E., Tsoutsoura, M., & Wolfenzon, D. (2022). Do firms respond to gender pay gap transparency?. The Journal of Finance, 77(4), 2051-2091.

  4. OECD (2021). Gender equality and work. Available in: https://www.oecd.org/stories/gender/gender-equality-and-work

  5. OECD (2023). Reporting Gender Pay Gaps in OECD Countries: Guidance for Pay Transparency Implementation, Monitoring and Reform. OCDEiLibrary.

  6. OECD Employment database. Available in: https://www.oecd.org/employment/emp/onlineoecdemploymentdatabase.htm#earndisp (accessed on 5 June 2024).

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