Closing Gender Pay Gaps Is More Important Than Ever

Gender equity has become a trending topic around the world; many organizations agree that closing the gender gap between men and women is an essential pillar to build a peaceful, prosperous and sustainable world, according to the UN Sustainable Development Goals. However, reality dictates that few companies are aware of the true impact and benefits of an inclusive culture in organizational development.

Increasing the participation of women is fundamental for the growth of global economies. In our country, only 45% of Mexican women of working age are part of the labor force, a level that is below the average for the Organization for Economic Cooperation and Development (OECD) and Latin America.

Investing in female leadership brings great benefits. Several studies suggest that when there are women in senior positions it translates into higher productivity and better decision-making, which generates employee retention and satisfaction.

From an economic perspective, reducing the gender gap significantly increases global GDP. Data from the International Labor Organization (ILO) indicate that if we manage to reduce gender disparity in the workplace by 25%, by 2025, we would have tax revenues of up to US$1.5 trillion; meanwhile, Latin America could increase its Gross Domestic Product by 4%.

Recently, the Mexican Institute for Competitiveness (IMCO) measured the magnitude of the income gap between women and men in different sectors in Mexico and other countries in order to analyze the possibilities for women to enter, remain and grow in the labor market.

The study revealed that, in 2022, for every MX$100 (US$5.30) that an employed man received in labor income, a woman received MX$86, which implies a gap of 14%. In other words, if a woman wanted to have the same average annual income as a man, she would have to work 51 more days to obtain it.

This is a reflection of how labor dynamics impact income distribution, since, having less time available to offer in the labor market due to excessive presence in unpaid work and household care, women tend to generate lower earnings compared to men.

Likewise, while 7 out of every 10 Mexican women workers who receive income earn less than two minimum wages, 6 out of every 10 men are in that range. The difference is accentuated in the proportion of male and female workers with higher incomes, where 11% of employed women have an income between two and five minimum wages, as opposed to 16.8% of employed men at the same income level.

Similarly, the study points out that there are five sectors with a higher proportion of women, and in which there are even more female workers: (1) health, (2) education, (3) lodging and food preparation, (4) retail trade, and (5) other nongovernmental services. However, the average income gap in those sectors is 21% in favor of men, which is above the overall income gap in the country.

This panorama shows us that in terms of gender equality, we still have a long way to go to put an end to the inequalities that afflict us as a society. Moving toward a transformation of the work culture is not an easy task, but by working together with the private sector, government and civil society, we can simplify the process of implementing strategic plans for inclusion and growth that will lead to good practices and successful results.

In this sense, IMCO proposes five main axes to advance in closing the gender income gap:

1. Break with gender occupational segregation: In order for more women to participate in traditionally male sectors that have better remuneration, it is necessary to promote continuing education, extend social security to cover female workers with flexible employment, and improve the quality of jobs in the most precarious sectors.

2. Perform a self-diagnosis of the income gap between men and women in the workplace: Having information on the characteristics of the positions held as well as the remuneration associated with them will help companies to measure the income gap in their workforce and generate an analysis that can be used for self-diagnosis and to be able to address it when necessary.

3. Move toward wage transparency in the workplace. There is evidence to show that making salaries transparent by job position helps to close the gender income gap between 20% and 40% by having established criteria for remuneration in each job position, as well as for salary increases.

4. Eliminate practices that may perpetuate income inequality within the labor market.: These practices asking for salary history, considering marital status, age, children or details of personal life as a determinant for a position, and advertising vacancies with gender bias because they are traditionally considered jobs for men, among others.

5. Implement policies that promote work-life balance among male and female employees to improve the quality of employment: Implementing work-life integration policies, such as flexible working hours, telecommuting and extended parental leave, will help women to have more time available and to offer it in the labor market, and, on the other hand, will encourage men to dedicate more time to unpaid work.

Let us move forward with vision. Investing in our women will help us create a more equitable, just and inclusive future. Let's generate actions and not intentions to change our reality and get closer to gender equality.