Finance Update

India Inc: Why India Inc should disclose gender pay gap

It is pertinent for India, with its poor female participation of 24 per cent in the overall labour force.

Apr 11, 2019, 07.52 AM IST

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The added disclosure will reveal the gender aspect of wage disparity in India Inc.

ET Intelligence Group: Indian legislators may want to take a leaf out of what their British counterparts have mandated to improve

gender

representation in

companies

. The UK is the biggest and the latest country to make it mandatory for its businesses employing 250 or more workers to publicly disclose the average gap in the pay drawn by men and women in the previous year. This is the second year that businesses are making these disclosures.

Analysis of 10,455 filings by Bloomberg shows the overall figure was little changed in two years –with a mean pay gap of 14.23 per cent on April 5, 2018, compared with 14.21 per cent a year earlier, based on all types of organisations. The median difference stood at 9.6 per cent, compared with 9.2 per cent. Men in aggregate were paid more at 88 per cent of companies and public-sector bodies.

If the findings from the UK raise eyebrows, one can wonder about the kind of disparity in pay that will be revealed in case of Indian companies. The UK data reveals that pay gap is a manifestation of lower representation of women in workplaces – especially in higher positions. Though disclosing the gap will not bring immediate change, it will draw the attention of the management towards gaps that are unfair. Pay disparity is not a ‘concern’ for companies till it becomes mandatory for them to disclose.

It is pertinent for India, with its poor female participation of 24 per cent in the overall labour force, to have such a disclosure. It will create awareness about the extent of wage disparity in public as well as about the C-suite executives of companies, leading to more women being hired in formal economy and paid fairly. It is already compulsory for listed companies to disclose the difference between the top management remuneration and the median remuneration. The added disclosure will reveal the gender aspect of wage disparity in India Inc.

Countries such as Iceland, Germany, France, Austria, Belgium, Denmark and Australia already have laws in varied forms to encourage pay equity.

According to research by professors from universities in Denmark and the US published last November on a 2006 Denmark legislation that required firms to provide gender-wise wage statistics, mandatory pay transparency closes the gender gap and affects firm outcomes. It increases the number of women being hired and the number of female employees being promoted to senior level positions, along with decreasing the companies’ overall wage bill, largely by slowing down the growth of male wages.

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Source

Prakash Poojary
Business Analyst

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