From Iceland — The Paradox of Gender Pay Gap

The Paradox of Gender Pay Gap

Perhaps you could begin by telling us a little bit about your research?
I am an economist and I received my university education in the US and the UK. In my research, I have mainly focused on the different economic positions of men and women, not just here in Iceland, but also within the EU. During the past 10 years, I have worked as an Icelandic expert for the European Commission on issues such as employment, social cohesion and gender equality. From 2003 to 2005, I was the coordinator of EU funded research project on gender equality in the knowledge based society – the first Icelandic social scientist to coordinate EU funded research project. In the project, I headed a group of experts from eight institutions in seven countries and one of the main conclusions of our research, and the one that surprised us the most, was that the progress towards a knowledge based society was much more rapid than the progress towards gender equality. We measured this through two indices consisting of different indicators that should capture the development of the knowledge based society and of gender equality as defined by the EU. The index on knowledge based society involved indicators on educational attainment, spread and use of ICTs and on the share of high-tech and medium high-tech industries. The gender equality index consisted of indictors on the gender gaps in educational attainment, spread and use of ICTs, employment and in pay as well as on gender segregation in the labour market. Through these indices, we measured the changes from 1997 – 2002 across the 15 EU member states, Iceland and Hungary. The conclusion was that the progress towards gender equality was less intense and general than the development towards a knowledge based society.
So the move towards a knowledge based society does little or nothing to improve gender inequality?
Yes, and then the question becomes why? When we move towards a knowledge based society, the progress is both positive and negative, so it levels out and there is little or no sign of change. Women’s employment has increased a lot in Iceland and in Europe, but at the same time that means women have been entering low-wage jobs, and the gender pay gap increases. When women first began to enter the labour market in the ‘60s, they were often well educated, while women who have entered the labour market in recent decades are not, and they take unskilled low-wage jobs. So when the number of low skilled women increases in the labour market, the gender pay gap increases.
As women’s average salary goes down?
Exactly, the average goes down. The gender pay gap in the other four Nordic Countries was around 17% in 2004 while it was only 7% in Italy where the share of low skilled women in the labour market was lower.
This comes somewhat as a surprise. Most people like to think of the Nordic Countries as more egalitarian than Southern Europe.
Well, that may very well be in most other aspects apart from the gender pay gap. Women’s labour force participation is much higher in the Nordic Countries; there are on average more women in Parliament in the Nordic Countries. The gender pay gap has been the main gender problem in the Nordic countries, and recently there is evidence of a widening gender pay gap among the highly educated. As Nordic women have become more educated, they have been moving in great numbers into highlevel jobs such as managers and legislators. The gender pay gap is largest for such highlevel occupations since these tend to have the widest earnings distribution and women are concentrated in lower paying jobs. So when the women move to management jobs, the gender pay gap increases.
But the situation in Icelandic universities today is such that women are an overwhelming majority of students.
That is why these conclusions surprised us so much. Young women in Europe are on average better educated than young men: that has given rise to claims that women will be the winners of the knowledge-based society. That is true for some areas of the knowledgebased society, but not all areas.
Do you believe the situation will correct itself, or is this a remnant of an old male society that keeps the status quo?
There are certain conceptions of women’s motivations for engaging in paid work. Such as that they are working to make extra money for the household and therefore they don’t need as high wages as men who are main breadwinners. A new study made by a group of researchers at Reykjavík University made public today [June 19], shows that a man and a woman, with identical educational and professional background, were offered different wages by a group of female and male professionals and students participating in the research. The woman was on average expected to accept 13-19% lower wage than the man. This study confirms claims made by different women who have experienced that they are being offered lower wages than men with comparable background.
So men, in general, have at least a 13% advantage when negotiating salaries?
According to this study, yes. I also remember a recent study from Norway that examined how people rated speeches by politicians. Men invariably rated male-politicians higher, whereas there was no marked difference how women rated male and female politicians. This suggests that men tend to look at the world from the viewpoint of gender while women are more gender neutral.
How does Iceland compare to other countries in your research?
We are both the best and worst when it comes to gender equality. Iceland has the highest female employment rate in Europe while the gender pay gap is the widest. In 2004, it was 28%, while it was about 15% on average in 25 EU member states. The reason is, among other things, that women’s labour force participation is high in Iceland, but a large portion of working women in Iceland are working in low-wage jobs, which drags down the average wage of women. Moreover, the gender pay gap is widest in occupations that are very gender segregated such as that of craft workers and technicians. This indicates a widespread undervaluation of female as compared with male dominated jobs.
So, how do we correct the situation?
In my opinion, the reasons why we are not progressing towards gender equality as we move towards a knowledge-based society are the employment changes associated with the transition and the measures implemented to tackle gender inequalities. The employment changes are the expansion of the service sector and the growth of skilled jobs that have created employment opportunities for women and enabled many educated women to enter high level jobs. This has not translated into more equal division of unpaid work across Europe. In addition, when women acquire more education, they move into the jobs with the widest wage distribution so that the gender pay gap widens. In that sense, the market creates opposing tendencies regarding gender inequalities. Unfortunately, the measures that have been implemented to tackle gender inequalities have so far been unsuccessful in this area. These measures are, on the one hand, especially focused on women’s disadvantages and, on the other hand, gender mainstreaming involving the integration of the gender perspective into all policy-making. The main emphasis is still on special measurements, although their foucus is too narrow to capture all the different aspects of gender inequalities. The problem with gender mainstreaming is that it has been implemented as a tool to improve traditional ways of making policies in Europe and not as an instrument to challenge market forces and power relations underlying gender inequalities. As a result, we are always circling around the gender problems and not tackling their roots like male-dominated power structures. Take for example, the glass ceiling that prevents highly skilled women from entering high paying managerial jobs. So far, few measures have been implemented to breakdown the power structures behind the glass ceiling. The EU’s proposals and member states measures have been weak when it comes to eliminating the gender pay gap. The main emphasis has been on how to measure the gender pay gap and not on active measures to reduce it. According to EU, a gender pay gap is justified if it can be attributed to productivity difference.
How is the difference in productivity explained then?
It is difficult to measure productivity, especially in knowledge based jobs, because their output is often in the form of service or knowledge that is often impossible to put into quantitative terms. I have never come across a study showing that jobs performed by women are on average less productive than that of men. However, I often heard employers use productivity differences to justify higher wages of jobs carried out by men as opposed to women. Young women are more educated than young men, so they should be more productive if they are using their skills at work. In recent years, the problem of skill mismatches has become more widespread across labour markets in Europe. Women especially do not seem to have the technical skills required for jobs associated with the knowledge based society. However, skill mismatches may arise from the fact that women’s skills are defined as wrong rather than that their education being wrong.
What do you mean by their education being wrong?
Women tend to choose social sciences and business education to a greater extent than men who tend to choose engineering to a greater extent than women. In the Icelandic banking industry, the trend has been to hire engineers rather then people with business education. Why is that? Is it because engineers have a better knowledge of business? Or is it because the engineers are men? These are questions that have been left unanswered.
From what you have said, it seems to me that a gender quota is a solution that needs to be seriously considered.
When I was young I didn’t even want to hear the words ‘gender quota’. I am now of the opinion that the progress towards gender equality has been way too slow and radical measures have to be implemented to put us on the fast track. I sense that women in Iceland are increasingly losing their patience with the slow progress and the pressure is mounting on the government to undertake much more radical measures to achieve gender equality. Jóhanna Sigurðardóttir [the Minister for Social Affairs] said in interview today [June 19] that she was ready to consider whether to enforce by law of gender quota on the share of women on company boards, as it decreased recently. For 20 years women have been told that we were not educated enough. Recently, we have been told that we don’t have the right education. Now, there are a lot of well-educated women, but then education does not matter as much as work experience. Women no longer accept to be blamed for the lack of progress towards gender equality.

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