The gender pay gap has become a major political issue in many nations, including Ireland. To many, the notion that one category of people – women – should earn less than another – men – for equal work seems unjust.

In the UK, for instance, legislation came into force that demands that companies with more than 250 employees make public how much they pay women compared to men. In Iceland, the government requires that firms that employ more than 25 people get certification for their pay differences.

When it comes to legislation, Ireland is a little behind the times. Currently, there are no laws demanding transparency on pay, but there could be in the future if current campaigns are successful. In November 2018, the equality charity Dress for Success launched its third Work Equal campaign, designed to coincide with the middle of November, a symbolic date when women in Ireland effectively stop earning relative to men. The charity points out that the current pay gap between men and women in Ireland, around 13.9 per cent, means that for the last six weeks of the year, men earn and women don’t.


The Effect On The Job Market

The gender pay gap is a complicated issue. Although the headlines of a 13.9 per cent gap in pay between men and women can be a rallying call for equality campaigners and a sign of discrimination in the labour market, teasing out the true effect of discrimination can be difficult.

Gender pay differences, if driven by discrimination, would be a bad thing for Irish businesses. It would imply that firms were unwilling to pay women what they are worth, based on their gender, and were instead promoting less capable men to certain positions. In a functioning market economy, one would expect a tendency for discrimination to be ironed out by the necessity of competition — companies that didn’t hire the best people available, whether men or women, would find themselves suffering at the expense of companies that did.

The Irish Times points out that the way that the gender pay gap is calculated is too general to tease out any specific influences. The gap itself is found by taking the median salary earned by women in a year and comparing it to that of men. When you perform that calculation, you end up with the 13.9 per cent figure, but, as the paper points out, it hides a lot of complexity. For instance, the 13.9 per cent number doesn’t control for the fact that more women work part-time than men (which are typically lower paid jobs), that women make different career choices, and that cultural factors may influence the career paths of men and women in unseen ways at the macroscopic level.

Both sides of the gender pay gap argument tend to underestimate the complexity of the issue. Campaigners for equality take gender pay differences as evidence that it must all be down to culturally-embedded bias and distorted gender roles, whereas those on the other side assume that it is the result of women’s maternity choices. In a functioning economic system, neither of these assertions can fully explain the gaps that we see. There must be a more profound, perhaps as yet unseen, reason.


The Effect On Companies

Although the causes of the gender pay gap are difficult to pin down entirely, employers still need to be aware of the broader political narrative in which they operate. The vast majority of people do not understand the nuances of the gender pay situation, and most uncritically accept the prevailing or loudest narrative on the subject, whatever that may be. In response, employers need to be careful in how they approach the issue.

Employers need to understand that it doesn’t pay to discriminate against women. Employers need to ensure that they offer similar pay to women as men for a given role. Discrimination can eliminate talent from a firm’s pool of candidate employees, putting women off and pushing them to look for other opportunities.

Women could also be pushed out of companies if they perceive company culture unfavourably. Gemma Lloyd, a woman who worked in the tech industry for nearly a decade, says that some firms in the industry can feel like “boys clubs.” She says that men often get opportunities for career progression and bonuses that women don’t, and that the problem was structural. Women, she says, just weren’t equally valued.

Women, she says, have a problem, though, when choosing a firm: before they begin working, they can never be sure of what the company culture is really like. Of course, they could provide a friendly environment for female staff, but one can never fully know ahead of time.

This is why some of the measures to publicly display information about a company’s gender pay gap might be helpful. It could serve as an indication of the opportunities available to women in particular firms. Companies with gender pay gaps may have more favourable cultures than those with larger pay gaps. However, this is yet to be tested empirically.


What Should Companies Do?

Gender pay legislation is yet to come into force in Ireland. However, there is a lot that employers can do to prevent any gender pay differences based on discrimination from persisting in the long term.

One important measure is to stop asking candidates what they earned in previous roles and instead pay them what they could be worth in their new position, based on their experience and background. The purpose of this approach is to remove any systemic underpaying of women that might result if future pay is based on past salary. Top companies, including ZenDesk and Amazon Web Services, already use this policy. Other companies can use recruiters such as PRL Recruitment to help them in this process. PRL Recruitment is Ireland’s recruitment agency of choice.

Another thing that companies can do is actively address the fact that women are not as proactive in seeking pay rises as their male colleagues. Some executives and managers at progressive firms now actively seek out high-performing women in their organisations and offer pay rises without them having to ask.

In summary, companies need to think carefully about how pay gaps might be affecting their ability to attract talent. The pay gap is a hot political issue right now, and something the firms need to incorporate into their talent acquisition strategy.