By Sarah Donoghue
Across Europe, the gender pay gap is falling. In recent years, both the EU and Ireland have introduced laws to combat pay discrimination and introduce mandatory reporting of pay inequalities. Despite the efforts of the governments, it seems likely that the change in working conditions is actually what’s causing the gap to decrease so drastically.
According to Eurostat, in Ireland between 2016 to 2022 gender pay discrimination fell by 4.9 percentage points. In 2016, the pay gap was 14.2%, calculated as a percentage of men’s income. And by 2022, it had fallen to 9.3%. In that time the EU average fell by 2.4 percentage points, from 15.1% in 2016 to 12.7% in 2022.
This fall is in comparison to the previous 6 year period from 2010 to 2016. These years saw a drastically different change in pay discrimination, one that was not always positive. During this period, gender pay discrimination rose by 0.3 percentage points in Ireland. It went from 13.9% in 2010 to 14.2% in 2016. During those 6 years the pay gap fluctuated, it reached a low of 12.2% in 2012 but went on to steadily increase for the next 4 years.
The EU average did decrease during this period, but only by 0.7 percentage points. It went from 15.8% in 2010 to 15.1% in 2016. The gap also fluctuated for the EU average. It began to rise in 2010, reaching a peak of 16.4% in 2012 but then began steadily decreasing from 2013 on.
But why is the gap narrowing at a rate so much faster than it used to? It may seem like it’s due to government initiatives. In 2021, Ireland introduced the Gender Pay Gap Information Act which made it mandatory for certain employers to report on their remuneration figures throughout the year. The EU has followed suit with the Pay Transparency Directive in 2023, which introduced similar measure when it comes to gender discrimination. However, Ireland has until 2026 to fully implement the directive so we are yet to see the impacts of it.
Despite the continuing efforts of governing bodies, many economists would argue this decrease in the gender pay gap is because of the changing workplace environment and move towards hybrid working and working from home.
Claudia Goldin, labour economist and Noble Prize winner for Economic Sciences, has spent her career explaining that the majority of the gender pay gap is not due to direct discrimination from an employer but rather due to the uneven division of labour in the household. A 2023 report by The National Women’s Council of Ireland and ActionAid found that women in Ireland do twice as much unpaid care work and housework as men. Due to the amount of unpaid work that falls on women, their careers often suffer leading to the wage differences between genders.
Because of this, the gender pay gap increases with age. As many women grow older, they may start a family or begin caring for older relatives, the wage gap between them and their male counterparts widens. A study by the Pew Research Centre followed the pay difference between a group of men and women over the course of 12 years. The group was made up of workers in the USA aged between 25-34 in 2010. In 2010, the median hourly salary of the women was 92% of the men’s. By 2022, the group was aged between 37-46 and the women’s median hourly salary was 84% of the men’s. The gap was at its widest in 2018-2019 when women’s median salary was 80% of men’s.
According to Claudia Goldin in 2016, women look for jobs with more flexible working hours and conditions such has hybrid working from home to accommodate the unpaid household labour they undertake. These jobs usually paid less and came with less opportunities for promotions due to a perceived lack of dedication. However, in recent years that’s all been changing.
In the 2016 census, the CSO reported that 18.5% of workers in Ireland used a hybrid or working from home model. By the 2022 census, that figure had risen by 173 percent to 32%. Simultaneously, we are seeing working from home increasing and the gender pay gap falling.
You can also see this trend across different industries. The Irish Independent analysed the 2023 gender pay gap reports for the Gender Pay Gap Information Act for 600 companies across Ireland. They broke down the wage gaps based on industry. They found that the wage gap in the Public Sector was 2.6%. Notably, because of the National Remote Working Strategy, all public departments must allow their staff to work remotely at least 20% of the time. The only sector with mandatory flexibility when it comes to remote work is one with the second lowest gender wage gap and a gap significantly lower than the national average.
As it’s only been 4 years since the widespread introduction of hybrid work, we will continue to see the true scale of how it will impact gender pay differences. But for now, we know whatever is causing the decrease – it’s working.