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The gender wage gap is still a social reality in Belgium with women earning on average 25% less than men, although much of the gap can be explained by differences in jobs and careers between men and women. Further explanatory detail was realised in the three-year WAGEGAP project by differentiating between composition and remuneration effects. This approach resulted in novel insights, for example, that promotion has a bigger positive effect on wages for women than for men.
The main results of the WAGEGAP project were presented at a seminar on 30 May 2011 organised by two research centres associated with the University of Leuven – HIVA and the Faculty of Business and Economics. The event was supported by the Council for Equal Opportunities for Men and Women.
WAGEGAP was a three-year project commissioned by Belgian Science Policy Office. Details of the work can be found on the project website. The final report will be published on www.belspo.be.
The wage gap between men and women is still an important social reality. Whether it is calculated on an annual, monthly or hourly basis, whether one considers net or gross pay, looks at basic pay alone or includes variable components, there is simply no escaping it: women earn less than men. For every €100 a man receives in his bank account each month, a woman gets only €75 on average.
The gap actually becomes wider if other elements are included in the analysis alongside monthly pay. Men are more likely to receive virtually every employee benefit from medical insurance to laptops and cars. The various benefits that men receive widen the gap when it is measured on an annual basis rather than a monthly basis.
If pay were calculated across a whole career, there would be an even larger wage gap due to career-related decisions such as unequal numbers of career breaks.
However, the wage gap is not a ‘black box’. The majority of the difference in pay can be explained. Broadly speaking there is a 5%–10% unexplained pay difference remaining after using the most powerful explanatory model. In other words, correcting for a number of objective job-related differences between men and women causes the wage gap to shrink by approximately two thirds.
The largest proportion of the observed difference in pay is not due to a difference between the levels of wages paid to men and women, but among other things such as differences in working times between male and female employees, the number of hours they work, the jobs they do and the organisations for which they work.
Having said this, WAGEGAP took the research one step further. The research team sought to divide the elements in its explanatory model as far as possible into two separate effects: a composition effect and a remuneration effect. To do this they used so-called decomposition methods.
The composition effect refers to the extent to which differences in pay can be attributed to men and women who:
For example, managers earn more than management assistants and more men work as managers. As a result average pay is higher for men than for women.
The remuneration effect, nonetheless, quantifies the extent to which differences in pay arise when men and women with the same background facing the same change in their job, such as promotion to a managerial job, receive different remuneration.
The results offer some useful new insights into the wage gap between men and women. If we look at ways in which differences in educational background and household characteristics contribute towards the wage gap, we see that composition effects are quite neutral. In 2011 men and women have received a similar education to a similar level and are equally likely to have a partner and/or children.
The remuneration effect, however, is very divergent. Higher education results in higher pay for men and having children has a favourable effect on pay for men and an unfavourable effect for women.
An interesting finding is related to the composition and remuneration effect of job characteristics. It is no secret that administrative and support services in European economies are predominantly female, while men are highly over-represented in managerial and executive jobs. In this case the composition effect is clearly unfavourable to women, who are more frequently found in lower-paid jobs.
Some finer detail was added to this picture of the wage gap by some surprising findings on the remuneration effect. It turns out that the remuneration effect associated with the type of job is in fact favourable to women. So it is not true that men receive higher pay than their female colleagues when they are promoted. On the contrary, the researchers found that if a difference in pay does exist between men and women when they receive a promotion, then it is in favour of women. This result should offer some encouragement to ambitious women who need not fear being systematically punished by being paid less than their male colleagues when they are promoted.
Guy Van Gyes and Tom Vandenbrande, Higher Institute for Labour Studies (HIVA), Catholic University of Leuven (KUL)