Ethiopian Business Review

Navigating The Wage Gap Between Women, Men

 All over the world, the wage gap between men and women has become a point of debate. In many countries, men and women are not compensated equally for working in the same positions, to varying degrees in different areas. In Ethiopia, women make around 63 cents for every birr earned by men. There are also issues with being able to access equal employment opportunities, as EBR’s Ashenafi Endale found.

Almost in all vacancy announcements, it is common to notice a statement saying ‘applications from qualified women are encouraged’. Often companies do this to find, encourage and attract more female candidates that are capable, as well as create gender diverse organizations. Yet, it also serves other purposes, as Elsa Wossen, an accountant by profession learned recently.

On February 14, 2019, Elsa learned that she was chosen from among many other finalists shortlisted for a finance manager position by a manufacturing company operating in Addis Ababa. “Initially, I asked for a monthly gross salary of ETB15,000. But after negotiating with the company I settled on ETB13,000,” she tells EBR.

What she did not know at the time was that the same company offered to pay a monthly salary of ETB15,000 to a male candidate who initially requested to be paid ETB19,000. However, the male candidate, who had similar qualifications and experience to Elsa, turned down the offer. As a result, the second best candidate managed to secure a job although the intent of encouraging more female candidates, which was displayed on the vacancy announcement in bold, forced her to question the company’s intent.  

Elsa is among the many female workers in Ethiopia who receive less pay than their male counterparts, even though they have the same qualifications and experience. However, this is not limited to developing countries like Ethiopia. Rather, the issue is becoming more visible in developed countries as well.
Mesenbet Shenkute, the first female president of Addis Ababa Chamber and Sectoral Associations, who managed to climb to the top of the ladder in the banking industry, has seen her fair share of injustice.  “Personally, I have seen many companies where women are paid less for equal work,” she recalls.
For Mesenbet, the problem mainly emanates from a lack of enforcing the law and proper follow-up. “The law says people should be compensated equally for the same output regardless of gender. However, the authorities don’t enforce the law and penalize offenders.”

Experts stress that there are factors that lead to unequal pay. “Women are preferred because they are less aggressive, demand lower salaries, are loyal, and present less of a threat to the company,” argues Amin Abdela (PhD), head of the Trade and Industry Development Department at Ethiopian Economists Association, who conducted a study on equal wealth distribution.

Melkam Aschalew, who runs MA General Business, a recruitment and HR consulting company agrees with Amin. “The number of women hired by companies as well as public institutions is increasing now. This is mainly because they ask for lower salaries than men,” Melkam explains. “For instance, many companies in the construction sector hire women for lower salaries than they pay men.”

Of course, studies conducted on the subject reveal that often women settle for lower salaries because they prefer better working environments over better payment. Since women mostly prefer occupations that allow them maternity leave and provide an environment specific to their needs, they are willing to give up better salaries.”

However, Mathewos Asele, CEO of Kaliti Metal Factory says that it is unfair to generalize. “Any person who is fit for a position at our company gets the correct salary. Even though the company is affected when female employees take maternity leave, we do not do cost benefit analysis. We cover that vacant space with other alternatives.” Kaliti Metal Factory assembles trucks, and manufacture construction and agricultural materials. Out of 450 permanent workers, 60 are women.

A senior manager who talked to EBR on the condition of anonymity argues that the stereotype towards women can be solved with natural solutions than further feminist distortion. “Women might be less paid, because they do not negotiate like men, but that is their advantage and competitive edge against men. Women should do what best fits their nature, time and potential.”

Equal pay is not just an issue in developing countries like Ethiopia. Rather, the principle of equal pay for equal work without discrimination has not materialized even in many developed countries, regardless of the fact that it has been adopted by the United Nations as part of the Universal Declaration of Human Rights in 1948.

Even countries like the United States have failed to eliminate compensation related discrimination towards women in the workplace entirely, although the country passed the Equal Pay Act in 1963, which necessitates men and women to be paid equally for equal work.
In fact, inequality in salaries between men and women endures across the globe and in all sectors.  Worldwide, women only make 77 cents for every dollar earned by men, according to UN Women, an organization dedicated to gender equality. As a result, a lifetime of income inequality exists between men and women. However, it is important to distinguish between equal pay and the gender pay gap. Equal pay is where women and men are paid equally for performing similar or equivalent work that has equal value.

On the other hand, the gender pay gap is the payment difference between women and men who have different roles and produce outputs which have unequal values. Most commonly, the gender pay gap, which is used to describe a general wage disparity between women and men in the economy as a whole on an hourly or monthly basis, relates to the full range of payments and benefits, such as basic salary, non-salary payments, bonuses and allowances.

Those close to the issue stress that in Ethiopia there is less of a problem when it comes to equal pay. “Unequal pay is relatively rare because salary scales are usually fixed. Especially at higher levels, there are uniform salaries regardless of gender,” argues Heran Girma, a senior human resource specialist at LonAdd, a company that offers a wide range of services, including recruitment, outsourcing, and training as well as human resource consultancy.

Rather, it is the huge gender pay gap, supplemented by few job opportunities for women, that is widely observed in Ethiopia. “The gender wage gap is the result of women’s segregation into lower-level roles across all sectors,” says Heran.

The gender pay gap between men and women is one of the most researched subjects. On one hand, there are those who argue that the gap stems from prejudices against women.  Although gender pay differences on a company level are not illegal, those who support this school of thought stress it is the result of the widespread discrimination against women.

On the other side, there are scholars who maintain that the wage differences reflect different traits and preferences in the labour market. For instance, experts like Luca Micheletto, professor of Political Economy at the University of Milan, Italy, stresses that one of the factors that contribute to gender gaps in the labour market is parenthood. Since women traditionally take the lion’s share of household responsibilities, including taking care of children, they tend to have less job experience, greater career discontinuity and shorter work hours. This, in turn, forces high-skilled mothers to compromise for part-time low-level jobs, rather than pursuing a specialized and demanding job.

Although discrimination in all forms has been a ceaseless battle, whether it is race, gender or religion, the origins of the gender pay gap are more intricate especially when it comes to developing countries like Ethiopia. Yet, the majority of the wage gap can be explained by various characteristics of the labour market.

Hadas Fuchs, researcher at Taub Center for Social Policy, a non-partisan socioeconomic research institute, believes that the stubborn inequality in the average wages between men and women persists in all countries and across all sectors because there are fewer job opportunities for women. In Ethiopia, close to 65Pct of the economically active women population is employed in the agriculture sector at the national level while 30Pct are engaged in service. The rest are employed in the industry sector, according to the labour survey conducted by the Central Statistical Agency (CSA) in 2016. Yet, women’s participation in agricultural activities can be seen as marginal. In fact, in the agrarian society, women can be considered more as consumers than producers.

To paint a clear picture, it is necessary to look at the labour market in urban areas where major economic activities take place. Out of the total 13.4 million economically active urban population (7.2 million are women and 6.2 million are men) seven million are employed. Out of this working population, four million are male, while three million are women, according to the latest urban employment survey conducted by CSA. This makes the population to employment ratio 43.6Pct for women while for men it is 63.7Pct, which clearly indicates the low level participation of women in the labour market compared to men.
On top of this, Gelila Kirkos, operations manager at LonAdd, stresses that women remain in a limited number of jobs. “Women are more employed in elementary occupations, while they are rare in more professional areas.”

For instance, the data obtained from CSA reveals that 119,462 men work in managerial positions in urban areas. Only 36,166 women hold the same kinds of positions. On the other hand, while there are 1.2 million women workers in service and sales positions, only 912,282 are men.

The fact that women are more concentrated in elementary positions also means they are getting lower salaries compared to men. According to CSA, the average payment per month for women in urban areas is ETB1,450.6, while it 62Pct higher (ETB 2,354.1) for men. The same payment differences can also be observed when looking at the different sectors of the economy. In the agriculture sector, men receive ETB1,900 monthly average salary, which is 80Pct higher than what women are paid. Similarly, the average monthly salary for women and men in the manufacturing sector is ETB 1,184.6 and 1,696.1, respectively. Men also earn 28Pct higher than women in wholesale and retail trade.

In addition, experts argue that the so-called ‘motherhood penalty’ pushes women into the informal economy. “This forces women to take on vulnerable occupations that fail to protect their basic labour rights,” stress Gelila.

Indeed, out of the total three million female paid employees in urban areas, 56.7Pct million are engaged in the informal sector, according to CSA. On the contrary, 47.5Pct of the four million employed men in urban areas work in the informal sector.

At the global level, Ethiopia’s performance in the gender pay gap is minimal. According to the Gender Gap Report published by the World Economic Forum in 2018, Ethiopia ranks 99th place out of 148 countries in terms of wage equality for similar work while it holds 80th place with regard to the gender pay gap.
However, Measho Berihun, foreign and public relations department head at the Confederation of Ethiopian Trade Unions (CETU), argues that the problem in Ethiopia is not equal pay or the gender pay gap. Rather, it is the absence of minimum wage. “Both men and women in industrial parks are paid USD30 per month on average. This does not allow women to buy sanitary items, let alone rent a house or raise a child. This is mainly because there is no minimum wage in Ethiopia.”

Currently, CETU has 570,000 members, of which 48Oct are women, according to Measho. “Minimum wage has been a source of dispute between CETU and the government, for at least the last 20 years. But the draft proclamation that will allow for the introduction of minimum wage across industries has been submitted to the Council of Ministers recently.”  

Globally, legal frameworks aimed at minimum wage proved to be instrumental because women are more likely than men to be concentrated in elementary occupations with the least salaries. Minimum wage policies also enabled workers especially women to be lifted out of poverty. However, this should be accompanied by policies that improve the status and abilities of women as well as eliminating gender related discrimination.  EBR


8th Year • Mar.16 - Apr.15 2019 • No. 72


 

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