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Pay gap — the case of Pakistan
Pakistan is one of the worst countries in the world regarding gender parity, ranking 142 out of 146 countries as per the Global Gender Gap Index 2023, released by the World Economic Forum.
The ranking is a function of education, health, economic opportunity, and political empowerment. It covers a wide range of economic and social indicators, including a dismal literacy rate, a high school dropout rate, and a general aversion to imparting education to women.
Despite being ranked one of the worst in terms of gender parity, Pakistan is ranked fairly in the middle of the pack at 71 out of 146 countries for wage equality for similar work. This is effectively the highest score the country got in any indicator related to gender parity.
As per the Labour Force Survey 2020–21, the labour force participation for women is 15.5 per cent. The same in rural areas is around 19.9pc, while in urban areas it is significantly lower at 7.5pc. This may largely be due to greater participation in agriculture in rural areas, which skews labour force participation upwards.
Closing the gender wage gap necessitates providing equal educational attainment and economic opportunities for women
The survey further suggests that the average wage for women is 82pc of their male counterparts. In essence, for every Rs100 that a man earns, a woman earns Rs82 doing the same work. These are broad averages, and a deeper dive into the data exhibits further disparity.
It is important to note here that almost 80pc of women in the labour force are not even able to earn the government-mandated minimum wage on a monthly basis.
About one-fifth of women in the labour force are employed in agriculture and allied sectors, earning an average monthly wage of Rs9,419. Similarly, another one-fourth are employed in the manufacturing sector, earning approximately Rs14,238 per month.
Finally, almost one-third of women are employed in the education segment, earning an average wage of Rs29,131 per month. (It is to be noted that all wages mentioned here are from 2020-21, and would have significantly changed after taking into consideration price inflation and subsequent wage inflation.)
The wage gap in rural areas further deteriorates, with women earning 75pc of their male counterparts. In rural areas, almost half of the labour force is employed in the agriculture and allied sectors, largely a consequence of the inability to acquire education or a trade skill that may push wages higher.
For every Rs100 that a man earns, a woman earns Rs82 doing the same work
On the flip side, the wage gap is lowest at 89pc if a woman belongs to the occupational group of “manager”, suggesting that for every Rs100 earned by a manager who is male, a woman earns Rs89. Similarly, the gap is at 85pc for service and sales activities.
On an aggregate level—in an urban context — the wage gap improves to 91pc as the disproportioned representation of women in agriculture decreases, and they are able to transition towards opportunities that pay a higher wage.
More granular-level data is required to pinpoint the underlying reasons for such a significant gap on an aggregate basis and to understand the variance between urban and rural areas. Lack of education attainment and associated opportunities plays a critical role in keeping women restricted to industries that are low-value and hence pay lower wages.
Moreover, a significantly lower labour force participation rate in urban areas also suggests that social and cultural factors may also have to play an instrumental role in keeping participation low. Even though the wage gap has contracted over the last few years, the labour force participation rate remains low.
The wage gap exists. It is a reality, even though a significant number of people opine that it does not exist — statistics paints a different picture.
Between 2017-18 and 2021-22, there has been a significant contraction in the wage gap, rising from 60pc to 82pc respectively. It is difficult to ascertain, without the availability of more granular data, what led to such a change in the wage gap, and would require further investigation to further validate the improvement.
There is still tremendous room for growth in terms of wages for both genders, as income remains suppressed due to dismal real growth rates in the economy. However, for average wages for women to increase, it is critical that education attainment levels be increased, leading to better outcomes through the acquisition of higher value-added skills.
The writer is an independent macroeconomist and energy analyst
Published in Dawn, The Business and Finance Weekly, March 11th, 2024
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