Gender pay differentials are a subject of debate in Finland. The catchphrase ‘A woman’s euro is 80 cents’ has become particularly well known. However, the underlying factors behind this 20% wage gap are not fully understood. One aspect that hampers the illustration of pay differentials is that remuneration is today made up of a diversity of components, which makes pay structures more fluid and the monitoring of gender pay differentials more difficult.
Wage systems
The latest Finnish Quality of Work Life Survey, dating from 2003 (FI0410SR01), included questions describing various pay systems so that the wage differential between the sexes could be studied from this perspective. In Finland, traditional factors like educational level and work experience do not explain the gender pay gap because, on average, women have more education than men and their work experience is almost equally as long. The survey questions sought to determine whether the pay system at the respondent’s workplace was based on an appraisal of the required level of work and, in addition to this, on an evaluation of personal work performance. Respondents were also asked if they had been paid performance-based bonuses in the course of the past year.
At the time of the survey in 2003, pay systems where the basic pay was determined by appraisals of the required level of work covered 38% of all wage and salary earners: 40% of men and 35% of women. Determination of pay according to an evaluation of personal work performance was also more widespread among men, 35% of whom reported that this applied to them, whereas the respective proportion among female employees was 23%.
The Quality of Work Life Survey asked a number of questions about the third pay component – a performance-based bonus. Of all employees surveyed, 32% responded that such a system was being used at their workplace and 29% reported that it covered them personally. A clear difference emerges between women and men in this regard: such systems were used at the workplaces of 42% of men, covering 38% of men personally, whereas the respective proportions at the workplaces of women were only 23% and 20%. This is obviously a key contributor to income differentials between women and men.
Performance-based bonuses widen pay gap
Payment of bonuses on the basis of results is naturally most widespread in the private sector, where this form of pay applied to 38% of the survey respondents in 2003. Nevertheless, in the public sector at national governmental level, the respective proportion was 25%. In the public sector at local governmental level, only a small proportion of respondents (7%) received results-based bonus payments. In the private sector, payment of bonuses by results was most prevalent among foreign-owned companies, in which 61% of employees received them. In Finnish-owned enterprises, the proportion was 32%.
The figure below shows the amounts received as performance-based bonuses, according to sex. Men are not only paid bonuses more often but the sums they are paid are also larger. Some 13% of male wage and salary earners had received at least €1,000 as a bonus for the previous year, whereas only 5% of women received such a bonus. A significant gender pay gap is also evident with respect to medium-sized bonuses of between €500 and €1,000.
Performance-based bonuses received during previous year, by sex (%)
Particularly among men, large bonuses tend to be more common among upper white-collar employees, in the private sector and in foreign-owned companies. For instance, 37% of the male employees of foreign-owned establishments received bonuses of at least €1,000 in 2003, while only 6% of female employees in Finnish enterprises did so.
Men not only receive more pay and diverse additional bonuses, but are also more likely to request a pay increase. Such requests had been made by 44% of men but by only 29% of women in the five years before the survey.
Commentary
Today’s changing working life is characterised by strong individualisation. In decisions concerning remuneration, this means an increasing localisation of negotiations, even to the level of individual employee and employer. Such individualisation encourages performance-based pay systems and appraisals of work performance. Thus far, at least, these pay systems have mostly benefited men because women’s typical occupational fields are not profit-making to the same extent. Likewise, evaluating personal work performance is generally more difficult in women’s work, which often involves caring, human contact and social relationships. In such tasks, it is not easy to measure productivity.
Anna-Maija Lehto, Statistics Finland
