The gender pay gap can be defined as the disparity in median hourly earnings between men and women, calculated based on the salary directly received by the employee, before tax deduction. However, this is not just a number. This is an actual ongoing human-rights violation that has significant real-life consequences on half of society’s population.
Although it being a human rights issue should be enough to attract everybody’s attention, and this article does not mean to minimize the morally reprehensive and discriminatory nature of gender inequality in any way, it seeks to find other areas which are affected by it, that directly involve everybody. Thus, this article will explore how gender equality can benefit economy, concentrating specifically on the EU sphere.
According to a report published by Forbes US in 2024, women averagely earn 16% less than men, equating to just 84 cents for every dollar a man makes. These numbers aggravate with regards to Black and Hispanic women. Looking at overall numbers, a 20-year-old woman entering a full-time employment, is expected to lose $407,760 in a 40-yearlong career, compared to her male coworker. (Haan, 2024)
In the EU the numbers are just as concerning. In fact, the EU average gender pay gap was 12.7% in 2021, with numbers significantly varying from a Member State to the other, reaching from -0.2% in Luxembourg to 20.5% in Estonia. (EIGE website, n.d.)
However, one should not jump to conclusions, since the interpretation of these numbers is not as straightforward as it may seem. In fact, the detection of a lower number in a country does not automatically mean greater gender equality. (European Parliament website, 2023)
As a matter of fact, one must keep in mind that there are important factors which cannot be detected by statistics, given that, in many countries lower pay gaps simply derive from the fact that there are less women with paid jobs and are still relegated to housework and family responsibilities. Additionally to earning less than men per hour, women perform more unpaid work than men, value which is often disregarded, because invisible in measures such as the GDP (gross domestic product). These and other factors bring the difference in overall earnings between men and women to almost 37% in the EU (in 2018). Moreover, it is shown that women are much more likely than men to take career breaks for childcare reasons, with one third of employed women in the EU taking that kind of work interruption in 2018, compared to only 1.3% of men.
So, what kind of benefits could gender equality bring to economy?
As simple as it may seem, half of the world’s population consists of women, equating to half its potential. Gender inequality obstructs this potential and impedes societal advancement worldwide. Closing the gender pay gap would mean less poverty and a boosted economy, given that, as oversimplified as it might seem: women who make money spend money.
Thus, looking at the long-term effects, this would lead to an enlargement of the tax base and therefore benefit welfare. (European Parliament website, 2023)
In fact, data gathered by EIGE (European Institute for Gender Equality) shows that gender equality has a strong, positive impact both on the Gross Domestic Product (GDP) per capita and on employment.
Regarding the former, improving gender equality would lead to a growth in EU GDP per capita of 6.1% - 9.6% by 2050, equating to 1.95 – 3.15 trillion euros. In terms of employment, an improved gender equality is projected to result in additional 10.5 million jobs by 2050.
Thus, resulting in a win-win situation for both genders. (EIGE website, n.d.)
In the sphere of law, “equal pay for equal work” is one of the EU’s founding principles, clearly stated by Article 157 TFEU. The European Commission’s plan to reduce the gender pay gap is based on ‘pay transparency’, directed at detecting cases of ‘pay discrimination’. EU companies will be obligated to reveal information that facilitates the comparison of salaries of employees working for the same employer, which is meant to expose gender pay gaps. Moreover, if the report reveals a gender pay gap of at least 5%, employers will be obligated to carry out a pay evaluation with the representatives of the workers, followed by penalties (fines) inflicted upon employers that violate these rules. The proposed directive was published in the Official Journal on 17 May 2023 and must be transposed by EU Member States by 7 June 2026.
In conclusion, recognizing women’s rights as an investment issue is critical for finding solutions that enable women to enjoy the rights they are entitled to, break the cycle of poverty and enhance the long-term competitiveness of EU economy. Closing the gender pay gap benefits us all.
Bibliography
Haan, K. (2024, March 1). Gender Pay Gap Statistics In 2024. Retrieved from Forbes Advisor: https://www.forbes.com/advisor/business/gender-pay-gap-statistics/#sources_section
UN website. (2024, February ). Facts and figures: Economic empowerment . Retrieved from UN WOMEN: https://www.unwomen.org/en/what-we-do/economic-empowerment/facts-and-figures
UN website . (2024, February 23). Why investing in women is a human rights issue. Retrieved from UN WOMEN: https://www.unwomen.org/en/news-stories/explainer/2024/02/why-investing-in-women-is-a-human-rights-issue
EIGE website. (n.d.). Economic Benefits of Gender Equality in the European Union. Retrieved from eige.europa.eu: https://eige.europa.eu/newsroom/economic-benefits-gender-equality?language_content_entity=en#:~:text=rate%20by%202030-,Employment,80%25%20employment%20rate%20by%202050.
UN website . (n.d.). Goal 5: Achieve gender equality and empower all women and girls. Retrieved from UN website: https://www.un.org/sustainabledevelopment/gender-equality/
European Parliament website. (2023, April 4). Understanding the gender pay gap: definition and causes. Retrieved from European Parliament: https://www.europarl.europa.eu/topics/en/article/20200109STO69925/understanding-the-gender-pay-gap-definition-and-causes
UN website. (2024, February 28). How can gender equality reduce poverty? Retrieved from UN WOMEN: https://www.unwomen.org/en/news-stories/explainer/2024/02/how-can-gender-equality-reduce-poverty
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