France addresses pay gap

France addresses pay gap
France may soon pass a bill fining companies that do not ensure equal pay to female employees, according to Prime Minister Edouard Philippe. The gender gap in economic..

France may soon pass a bill fining companies that do not ensure equal pay to female employees, according to Prime Minister Edouard Philippe. The gender gap in economic opportunity is a growing concern for nations across the world. In 2017, the WEF released a report indicating that efforts to reduce gender disparity may be falling short.

Background

According to the World Economic Forum’s Global Gender Gap Report, the gap between the achievements and well-being of men and women widened in 2017. This is the first time it has happened in the 11 years since the report has been published. The report ranks countries according to calculated gender gap between women and men in four key areas: health, education, economy and politics.

The report stated, “A decade of slow but steady progress on improving parity between the sexes came to a halt in 2017, with the global gender gap widening for the first time since the WEF’s Global Gender Gap Report was first published in 2006.” The workplace gender divide will now take approximately 217 years to be bridged, according to the report. This workplace divide has been linked to widespread income inequality across the world. A WEF study published in 2015 states that this stems from three primary causes.

First, the study states that “gender wage gaps directly contribute to income inequality”. This includes gendered differences in labour force participation rates. The study notes that women are more likely to work in the informal sector, and in lower-paying jobs. Women also face the “glass ceiling” in the workplace- where they are less likely to be promoted into positions of authority than their male counterparts. The divided labour market and the “glass ceiling” further widen the gap.

Finally, a number of other inequalities linked to gender - such as less access to education, health, and other opportunities, exacerbate income disparity. Women are also held back by social or familial obligations and norms. The WEF associates “greater gender equity and increasing female economic participation” with “higher growth, more favourable development outcomes, and lower income inequality”.

“Competitiveness on a national and on a business level will be decided more than ever before, by the innovative capacity of a country or a company. Those will succeed best who understand to integrate women as an important force into their talent pool,” said Klaus Schwab, founder and Executive Chairman of the WEF.

Analysis

French Prime Minister Edouard Philippe has announced that the country may soon impose fines against companies with “unjustified” gender pay gaps. This measure is part of a social reform bill that will be presented to Philippe’s cabinet in April. The government made the announcement on Wednesday.

“The crazy thing is that it all exists in law, but equality is missing in practice,” Philippe said. “Our aim is to pass from fine words to true, genuine equality.” Men are paid approximately 9% more than women in France, a number lower than the European average of 11.5%.  "These unjustified wage gaps are pure discrimination and, despite a legislative arsenal on the issues, things are not moving forward," the Ministry of Labour said.

If the bill is passed by parliament, software will be used to monitor the payrolls of all corporations with over 50 employees. Larger companies will be held accountable starting next year, and smaller companies from 2020. “The software is not a magic wand, but it will reveal certain differences in pay between men and woman,” Philippe said. Corporations will also have to publish this data online.

The current French President, Emmanuel Macron, has been vocal on issues of gender, stating that gender equality is the “grande cause nationale” of his presidency, notably helping increase the number of female MPs to 40% during his term.

Olga Tronstiansky, head of Laboratoire de l’Égalité, a think tank that reportedly made recommendations on the issue of equal pay to the government, said that in France, “seriously tackling equality in the work environment is something new.”

“You won’t see big protests in the streets because of the 25% pay gap,” she told the Financial Times, pointing out that unions are largely male-dominated. She added, “Improving the gender balance [in hiring] is as crucial as reaching equal pay.”

Assessment

Our assessment is that addressing systemic economic disadvantages faced by women across the world will help lower income disparity. As stated previously, we believe that women face exclusion in most diverse spheres of private and public life due to cultural and societal factors. In developing countries such as India, initiatives towards equal pay can also be supplemented by programs for childcare and women’s education. 

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