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The Emergence of Pay Gap and the Influence of Compulsory Pay Gap Reporting


The reasons for persistent pay discrimination appear to be connected to the legislation’s low effectiveness and, more specifically, to businesses’ inability to comply with it. They are hesitant to comply with this legislation due to the resulting salary hikes and expected detrimental impacts on their competitive position. Additionally, businesses worry that compliance with the legislation may result in significant changes to the workplace, such as modifications to the current occupational pay scales or categorization system, resulting in internal conflict and compromising societal harmony (Rabovsky & Lee, 2018).

Pay disparities are a result of occupational segregation (with more male in higher-paying industry sectors and women in lower-paying industry sectors), vertical division (with few women in senior, and thus higher-paying, positions), inept equal pay regulatory frameworks, women’s overarching paid working hours, and barriers of entry. Wage equality for equal labor, or pay equality, is a basic right enshrined in the Equal Remuneration Convention of 1951, which has been accepted by a substantial majority of countries. However, it remains generally unachieved. The ILO’s 2003a publication, Time for Equality at Work, stresses the persistence of wage discrimination between employment of comparable value, outlines its harmful consequences, and reiterates the critical need to take the required actions to remove it. The European Commission laments the fact that the gender wage gap continues to be unacceptably large and shows no indications of abatement in a recent study (Graf et al., 2018). These outcomes are also of interest to social partners and governments in a number of nations globally

Employers’ unwillingness to take the efforts necessary to discover and remove wage discrimination is explained by such concerns. Meanwhile, innumerable research examining the influence of other anti-discrimination indicators, such as affirmative action measures aimed at changing the taskforce composition, and measures that target reconciling life and work demonstrate that the success of such policies is highly dependent on the business’s commitment. Where this is lacking, equity initiatives frequently have a limited impact due to top management’s unwillingness to follow their recommendations. As a result, the next logical step is to discover techniques that motivate companies to commit to pursuing the eradication of workplace prejudice. One potentially beneficial technique is a business case, which advocates for non-discrimination and equality policies on the basis of the firm ’s net economic advantages. Although this strategy has been used in the context of managing diversity policy, its potential for improving pay fairness has not been properly studied. Therefore, this paper evaluates why pay gap emerge, i.e., gender, and how mandatory reporting of pay gap can aid in reducing this disparity.

Gender Pay Gap

The average gender wage gap is a commonly used metric for determining the level of female’s disadvantage in the labor market. This disparity is measured as the ratio of female to male average wages in a certain labor market. This proportion varies by nation, time period investigated, group aspects, and the nature of the wage’s variable utilized. Recent research confirms that this divide exists in emerging economies, transition, and advanced economies (Maldonado, 2021). At both the national and international levels, policymakers realize the need of gaining a better understanding of the factors that contribute to the gender pay gap and taking the necessary steps to close it. The rising body of research on the issue demonstrates a growing interest in the reasons and persistence of this disparity. Since gender wage disparity is the mean difference in compensation between employed women and men, women are often paid less than males, and prone to major pay gap measures namely; adjusted and unadjusted pay gaps (Bennedsen et al., 2019). The gender pay disparity is one of the most visible manifestations of contemporary inequality. See figure below:

Gender pay disparity between the US and UK

Figure 1: Gender pay disparity between the US and UK (Blau & Kahn, 2016).

The figure above shows gender pay disparity in most developed economies i.e., in the United States and United Kingdom. The figure shows that since mid-2000s in the United States and 2010 in the United Kingdom, the rate of decline has slowed. Despite gains made throughout the twentieth century, it would take another 82 years for the gap between full-time and part-time employees in the United States to shrink completely. Another frequently reported figure is that women in the United States would need to work an additional 39 days per year to obtain the same yearly wage as males (Hu & Couser, 2021).

The gender wage gap has remained a constant feature on the news agenda. And many businesses strive to contextualize their information when they post it. They may even attempt to explain away the disparity, implying that it is not so much an issue as a part of life. Though the gender wage disparity most likely stretches all the way back to the dawn of civilization, it became a political problem in the US in 1860s under the clarion call “Equal Pay for Equal Work.” Among the movement’s most ardent supporters were women’s rights campaigners Susan and Stanton, who argued for pay equality in their journal, the Reform, and in speeches. Women gained the right to vote in the U. S. in 1920, when the 19th Constitutional amendment was ratified. Despite this, the pay disparity continued. Despite legal advances over the last century, the gender pay disparity has remained stubbornly wide. According to the United States Census Bureau, women who worked full-time in 1960 received approximately 60 cents for every dollar a man earned (Maldonado, 2021).

Reasons of Gender Pay Disparity

Emergence of gender wage disparity is influenced by a number of reasons. Pay disparities may widen as a result of a series of decisions individuals make during their working life. For instance, the number of men occupying senior organizational positions are many relative to women. It is also undoubtedly true that more senior males than women exist in the workplace overall, and because senior individuals are often paid more than younger people, this has a detrimental influence on the gender pay gap. At its core is a notion that top positions ‘naturally’ need constant availability and lengthy hours, thus cannot be performed flexibly. This is primarily owing to the 1950s trend of men going to jobs and women staying at home to sustain them, which enabled males to focus exclusively on work (Graf et al., 2018). And in many areas, it has been worsened by globalization and always-on technologies, which have increased the working day to ten or twelve hours. Indeed, firms with a culture of extended hours for high positions are probably the greatest violators. Excessive shifts have been demonstrated to be fundamentally gendered and to aggravate the wage difference between men and women. And data indicates that the gender wage gap has not narrowed at all for the highly educated women (those most likely to hold top positions) during the previous 25 years (Hu & Couser, 2021).

Besides, with increase in age, the wage disparity between men and women widens. This is caused by more than just (choice of) schooling. Women are now generally as educated as males, which is a far cry from a decade or more ago. Wage disparities appear to be exacerbated by the fact that women generally work fewer hours and for longer periods of time than males, and that they frequently stop their employment. Men, on the other hand, typically work longer hours and eschew professional vacations. Such continuous job experience adds to increased earnings. The significant inequalities appear when males work longer hours and are promoted, but women work less hours and do not advance their careers. These disparities become even more pronounced when women opt to resign from their careers after their husbands retire as pensions. This should be no problem if the husband has a big pension. However, if the marriage divorces or the husband dies (prematurely), these financially dependent ladies may be relegated to subsistence level living or perhaps destitution (Blundell, 2021). Similarly, Women and men may be paid differentially in their initial employment. The systemic reasons include education, occupational choice, profession and sector. However, job scale and negotiation abilities also play a role. Whereas males negotiate positions and salaries more frequently, women bargain less frequently and with greater tenacity. Once a wage has been established, it may have long-term ramifications. Each prospective employer has the right to inquire about prior earnings. You are not obligated to respond, but often one offers such information, extending the gap that may already exist in the next level.

In addition, gender bias in societal setting also plays a hand in fostering gender wage gap through paying men more than their female counterparts for a similar done task. According to a 2020 meta-analysis of research including experimental models of work, “men were favored for male-dominated positions (i.e., gender-role congruity partiality), but neither gender shown a substantial preference for female-dominated or integrated jobs. Nevertheless, a meta-analysis of real-world correspondence experiments discovered that “men trying to apply for strongly woman jobs must submit between 2 and 3 times as many applications as female” and “ladies applying for male-dominated jobs face less discrimination than men applying for female-dominated jobs.” (Graf et al., 2018). Due to occupational gender stereotypes, certain jobs are mainly held by women, which results in “female jobs” being devalued for wage rate calculation purposes. This results in lower income for women overall as compared to males, as feminized jobs and industries pay less than male-dominated vocations and industries. Additionally, organizations with a majority of female employees often pay lower wages than those with a majority of male employees.

How compulsory pay gap reporting will reduce gender pay disparity?

Mandatory reporting of gender pay gaps is fundamental as it enables organizations to comprehend the magnitude and reasons of their pay discrepancies and to identify any issues that require attention. Having a wage disparity between men and women does not always imply that unlawful discrimination is occurring. For instance, if women are disproportionately represented in lower-paid positions within the organization, the employer may choose to design a positive action plan encouraging and supporting women to aspire for more senior positions, thus helping in reducing gender pay disparity. Besides, reporting wage disparities help advocate for gender pay equality. Over the last decade, an increasing number of studies have demonstrated that keeping a focus on equal pay makes sound financial sense, and that businesses that support gender equality have greater profitability (Bennedsen et al., 2019). With an eye on retaining high-performing workers over the long term, the significance of ethics and shared values, as well as employee engagement, will not diminish, and a commitment to gender pay equity is a critical component

Mandatory reporting of wage disparities will provide a foundation for the formulation of policies and reforms that will fight against pay gap in working women. Closing the wage gap benefits women and may also help businesses perform better, hence benefiting the global economy (Blundell, 2021). Women’s lower incomes contribute to the perpetuation of gender inequality by reducing their independence and negotiating power. However, the benefits of women earning the same as men for same job done include an increase in their purchasing power, which in turn helps stimulate consumer spending and the global economy at large. This is also the case with more contributions to pension schemes and spending of pension incomes. Therefore, for trade unions, organizations and legal bodies to recognize and advocate for policies that support equal pay among both gender (women and men), wage gap trends or patterned ought to be measured and analyzed; and data used id fetched from mandatory reports made by affected individuals.


It’s critical to remember that narrowing the pay gap does not always require an increase in female wages at the expense of male earnings. Besides, for businesses wishing to increase gender diversity, it is critical to assess gender inequities, including gender pay gaps, that may be embedded in their corporate culture. Businesses can take a variety of steps to assist narrow their institution’s gender pay gap. For instance, it is vital to recognize the commercial benefits of increased gender diversity at all stages, as well as top leadership commitment alongside building a gender-inclusive workplace culture while taking a comprehensive approach to equal pay for equal work performed by women and men.


Bennedsen, M., Simintzi, E., Tsoutsoura, M., & Wolfenzon, D. (2019). Do firms respond to gender pay gap transparency? (No. w25435). National Bureau of Economic Research.

Blau, F. D., & Kahn, L. M. (2016). The US gender pay gap in the 1990s: Slowing convergence. Ilr Review60(1), 45-66.

Blundell, J. (2021). UK gender pay gap reporting: a crude but effective policy? LSE Business Review.

Graf, N., Brown, A., & Patten, E. (2018). The narrowing, but persistent, gender gap in pay. Pew Research Center9.

Hu, Y., & Couser, D. (2021). Gender pay disparity in anesthesiology. Current Opinion in Anesthesiology34(2), 145-148.

Rabovsky, T., & Lee, H. (2018). Exploring the antecedents of the gender pay gap in US higher education. Public Administration Review78(3), 375-385.

Maldonado, L. J. (2021). Decomposing the gender pay gap in the formal sector in Venezuela: a microdata analysis 1985–2015. Applied Economics Letters28(14), 1145-1151.


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