The gender pay gap, hard truths and actions needed

Asymmetries abound in India’s labour market and closing the gap is key to achieving social justice for working women

September 19, 2022 12:08 am | Updated 01:08 pm IST

‘Accelerated and bold action is needed to prevent a widening of the gender pay gap’

‘Accelerated and bold action is needed to prevent a widening of the gender pay gap’ | Photo Credit: Getty Images/iStockphoto

India is among the most important countries when it comes to the global economic growth and structural transformation story. A commensurate improvement in its labour market outcomes and a fair distribution of the fruits of economic progress will spur further economic growth and the benefits it brings. But, unsurprisingly, in a country the size and diversity of India, asymmetries still abound in the country’s labour market.

Impact of the pandemic

Yesterday was the Third International Equal Pay Day 2022 — the day falls on September 18 — and it is time to pause and reflect on the extent of progress made towards closing the gender pay gap and reaffirming our collective commitment to the effective and accelerated realisation of the principle ‘equal pay for work of equal value’. This ‘becomes all the more important in the present context’, given the disproportionate effect of the COVID-19 pandemic on women workers in terms of job and income losses. Full and productive economic growth requires a human-centred recovery from the pandemic, which will be made possible by improving women’s employment outcomes and reducing the gender pay gap.

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While the full impact of the pandemic is yet to be known, it is clear that its impact has been uneven, with women being among the worst affected in terms of their income security — partly due to their representation in sectors hard hit by COVID-19, combined with the gendered division of family responsibilities. Many women reverted to full-time care of children and the elderly during the pandemic, foregoing their livelihoods to do so.

A wider pay gap

This is attested by the International Labour Organization’s “Global Wage Report 2020–21” which suggests the crisis inflicted massive downward pressure on wages and disproportionately affected women’s total wages compared to men. This greater wage reduction for women means that the pre-existing gender pay gap has widened.

Despite notable progress in closing the gender pay gap over time in India, the gap remains high by international standards. Indian women earned, on an average, 48% less compared to their male counterparts in 1993-94. Since then, the gap declined to 28% in 2018-19 as in the labour force survey data of the National Sample Survey Office (NSSO). The pandemic reversed decades of progress as preliminary estimates from the Periodic Labour Force Survey (PLFS) 2020-21 show an increase in the gap by 7% between 2018-19 and 2020-21. The data further suggests that faster decline in female wages during the pandemic contributed to this decline, compared to a faster growth in male wages, which requires urgent policy attention.

Discrimination as factor

While individual characteristics such as education, skills or experience explain part of the gender pay gap, a large part of the gender pay gap can still be attributed purely to discrimination based on one’s gender or sex. Gender-based discriminatory practices include: lower wages paid to women for work of equal value; undervaluation of women’s work in highly feminised occupations and enterprises, and motherhood pay gap — lower wages for mothers compared to non-mothers.

At the international level, the United Nations has put the challenge of closing various forms of gender inequality at the heart of its actions. The ILO has enshrined ‘equal pay for work of equal value’ in its Constitution and the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) provides an international legal framework for realising gender equality and addressing the intersecting forms of discrimination and vulnerabilities among women and girls.

Steps taken by India

India has taken several steps in the legislative sphere to close the gender pay gap, especially at the low-end of the wage distribution. In this regard, it was one of the pioneering countries to enact the Minimum Wages Act in 1948 and followed by the adoption of the Equal Remuneration Act in 1976. In 2019, India carried out comprehensive reforms in both the legislation and enacted the Code on Wages.

Evidence shows that the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2005 benefited rural women workers and helped reduce the gender pay gap, both directly and indirectly. Directly, by raising the pay levels of women workers who participated in the programme, and indirectly, benefits accrued to women involved in agricultural occupations through higher earnings, as MGNREGA contributed to the rapid rise in overall rural and agricultural wages in the country.

In 2017, the Government amended the Maternity Benefit Act of 1961, which increased the ‘maternity leave with pay protection’ from 12 weeks to 26 weeks for all women working in establishments employing 10 or more workers. This is expected to reduce the motherhood pay gap among mothers in the median and high-end wage earners working in the formal economy.

Apart from enabling legislations, efforts are being made through the Skill India Mission to equip women with market-relevant skills to bridge the learning-to-livelihood gap and the gender pay gap.

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While the gender pay gap is slowly narrowing, at the current rate of progress it will take more than 70 years to close it completely. Accelerated and bold action is needed to prevent a widening of the gender pay gap and closing the existing gap.

One of the targets of the UN Sustainable Development Goal 8 is “achieving full and productive employment and decent work for all women and men, including for young people and persons with disabilities and equal pay for work of equal value” by 2030. In support of this Goal, the Equal Pay International Coalition (EPIC), was launched in 2017 as a multi-stakeholder initiative led by the ILO, UN Women and the Organisation for Economic Co-operation and Development (OECD) that seeks to achieve equal pay for women and men everywhere.

Equal pay for work of equal value is necessary to close the gender pay gap. Closing the gender pay gap is key to achieving social justice for working women, as well as economic growth for the nation as a whole.

Dagmar Walter is Director of the International Labour Organization Decent Work Technical Support Team for South Asia and Country Office for India. Susan Ferguson is the United Nations (UN) Women Representative in India; part of the UN in India Team

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