The term wage discrimination can be explained as a difference in the wage levels offered to male workers and female workers for the same level of work they do. It occurs when an individual in a labor market suffers from a decreased wage level for the same job and performance.
Gender wage differences seem to exist in many countries to some extent. Studies on wage differences shows that female/male earnings ratios are usually less than one, indicating that women usually earn less than men do. Depending upon the characteristics of their labor markets, factors producing wage differentials in those studies varied from race, gender, education, job status occupation, type of sector (public vs. private) to type of industry, among the others.
Two major trends in the world have worked to widen the gender gap: increases in the pay premium associated with higher “skills” (i.e., higher levels of education and labor market experience) and increased pay differences across industries and occupations. This has served to widen the gender gap because female workers continue to have less labor market experience, on average, than male workers, and are, on average, in lower-paying occupations. The rising wage inequality and increasing economic returns to skills slowed women’s progress and alone would have increased the gender pay gap.
All of these factors interact in complex ways. Hence it is difficult to determine precisely how much of the difference in female/male pay is due to discrimination and how much is due to differential choices and preferences by female workers i.e., if women have less experience than men, they may choose occupations where extensive experience is less necessary. If women consistently choose different occupations than men, stereotypes about women’s abilities may be reinforced and discriminatory behaviour by employers may be perpetuated. If employers make it difficult for women to enter certain occupations, women’s incentives to invest in training for those occupations may be reduced.
The male-female difference in wages is also visible in fringe benefits. Much of the female-male gap in pension coverage can be accounted for by differences in their labour market histories and is much smaller among younger workers. In addition, among those who have pensions, the gender gap in benefit levels is largely explained by gender differences in income. Therefore, lower wages, and hence, lower lifetime earnings, result in lower pension benefits upon retirement.
Causes of Wage Discrimination
There have been numerous theories which have tried to figure out the causes of wage discrimination, the common economic theories concerning the reasons for the pay gap are explained below:
Human capital theory attributes income differences to variations in education, experience and commitment to the labor force. Female workers has always been underestimated when it comes to education and experience and they always has been treated as an inferior in terms of experience and education as compared to male workers. Wage discrimination occurs because male workers are more experienced as compared to female workers and based on their education and experience they are earning more than the opposite sex. Jobs which involve more specialization and experience are valued very high and offers a lot of earnings but such jobs are always kept for men because it is believed that men would performance better than females and jobs with low value and low specialization are kept for females workers. Companies always give first priority to men while recruiting.
Dual labour market theory suggests that the workforce is divided into primary and secondary sectors, the first consisting of skilled, unionized, well-compensated, stable jobs, and the second consisting of temporary, low-paying jobs with little upward mobility, and few benefits. When we talk about the skills possessed by the work force, male workers are always given priority because it is believed that men are equipped with better skills than women. While working in an organization wages are given on the level of skills an individual has, wage gap exists between male and females because male workers are believed to be more skilled than female workers thus they earn more. In the business world job which is dominated by women are not valued in the same manner as jobs dominated by men.
One of the factors is the marital status of an individual, married women tend to earn lesser amount of money because their working hours are comparatively less to men. This is due to the responsibilities of women at home like taking care of children, household management etc. However, married men have higher average earnings as compared to all the other groups; married, unmarried, and separated women, be it young or old.
Wage discrimination can also be due to the disruption of careers that is the break which an individual takes while doing a job. Female workers take leaves from their jobs more as compared to male workers such leaves may include the maternity leaves or a leave which incorporates the reason associated with spouse or children. Therefore, the seriousness and dedication of working women is in question resulting in lower wages.
Another factor is the unexplained portion that is the general perception of people towards women, as women in many societies have been given specific roles and are perceived as individuals who need male dominance for their own good. Thus, there are some societies who do not like the concept of women as a part of the working population, as a result, this general perception adds to the discrimination in its own self. There have been a lot of increase in the number of women workers in last decade but still it does not lead to any major change towards general perception towards women.
Over the years, the Governments has begun to pay more attention towards this social issue as percentages of working women are increasing in the total work force. However, present laws lack the ability to eliminate this discrimination from the society and need to be moderated so that the organizations are forced to develop their wage structures without any discrimination and biasness towards any gender.