Mind the Pay Gap: Can Malaysia Achieve Gender Pay Equity?
Introduction
The gender pay gap refers to the difference in earnings between men and women for the same work or work of equal value. Globally, women earn approximately 77 cents for every dollar earned by men. In Malaysia, the gender pay gap is even more pronounced, with women earning only RM66.67 for every RM100 earned by men. Addressing this gap is crucial for economic development and social equity. Reducing the gender pay gap can significantly enhance economic output and improve social welfare, benefiting both developed and developing nations. In this article, we will find out how Malaysia can turn this challenge into an opportunity for inclusive growth.
What are the Factors?
Several factors contribute to the gender pay gap, including discrimination, differences in human capital, and occupational segregation. Discrimination can manifest in hiring practices and pay decisions, while human capital differences often arise from disparities in education and work experience. Occupational segregation refers to the concentration of women in lower-paying jobs and industries.
According to the Department of Statistics Malaysia in 2022, the median monthly salaries & wages for both male and female employees remained in an increasing trend. Male employees showed an increase of 7.7 per cent to record RM2,493 (2021: RM2,315) while median monthly salaries & wages females rose by 7.3 per cent to RM2,301 (2021: RM2,145). Comparing the monthly salaries & wages by sex, it was observed that male employees earned about 8.3 per cent (RM192) higher median monthly salaries & wages than females (Figure 1).
Figure 1
Sources: Department of Statistics Malaysia, 2022
This issue is also faced by the United State (US) in 2022. Figure 2 illustrates the difference in median earnings between male and female workers across various academic disciplines, based on data from the U.S. Census Bureau (2022 American Community Survey).
As we can see at figure above, men consistently earn more than women across all fields. For instance, in Electrical Engineering, men earn a median of $123,800, while women earn $105,200.
The Economic Impacts of the Gender Pay Gap
Human Capital Development
The gender pay gap results in a significant loss of talent and skills, as women are less likely to invest in their education and career development. This loss of human capital negatively impacts overall economic productivity.
Labor Productivity
Inefficient resource utilization due to the gender pay gap leads to lower labor productivity. When women are underpaid, their potential contributions to the economy are not fully realized.
Income Inequality and Economic Inequality
The gender pay gap exacerbates income inequality and broader economic inequality. Women earning less than men contributes to higher levels of poverty and economic disparity.
Macroeconomic Consequences
The gender pay gap reduces GDP and diminishes economic growth potential. Closing the gap could significantly boost economic output and growth.
Source: Youtube, 2023
Why is there a need to narrow the gender gap?
Economic Output and Productivity
Closing the gender pay gap would lead to a substantial increase in economic output and productivity. More equitable pay would encourage greater participation of women in the workforce, enhancing overall productivity.
Social Welfare and Living Standards
Reducing the gender pay gap would improve social welfare and living standards. Higher earnings for women would lead to increased household income and consumption, benefiting the economy.
Gender Equality and Social Cohesion
Promoting gender equality through pay equity fosters social cohesion and reduces social tensions. It also supports the broader goal of achieving gender equality.
Long-Term Demographic Benefits
Closing the gender pay gap has long-term demographic benefits, including better education, health, and well-being for future generations.
Successful Strategies and Policies
Example: Iceland
Iceland is one of the country that successfully narrowing their pay gap. They has implemented gender pay transparency laws and mandatory reporting, significantly reducing its gender pay gap.
Equal Pay Legislation: Iceland was the first country to make it illegal to pay men and women different wages for the same work. The Equal Pay Act requires companies to prove they are paying employees equally.
Pay Transparency: Iceland mandates that companies with 25 or more employees must obtain certification to ensure pay equality. This transparency helps identify and address wage disparities.
Affordable Childcare: Iceland offers generous parental leave policies, with both parents entitled to 12 months of leave, which can be shared or divided as they choose. This supports work-life balance and encourages both parents to participate in childcare.
These initiatives have helped Iceland achieve significant progress in closing the gender pay gap and promoting gender equality in the workplace. Malaysia should take Iceland as example for policy-making emphasizing to close the pay gap between genders.
Source: Youtube, 2024
What can the government do?
One of the recommendations that can help close the pay gap is improvised the Transparent Pay Scales: Ensuring pay transparency helps address wage disparities. Implementing transparent pay scales involves making salary ranges and pay decisions public within an organization. This transparency helps reduce wage disparities by promoting objective, data-driven compensation practices. When employees understand how their pay is determined, it fosters trust in management and engagement with their work. Pay transparency can also help identify and address gender and racial wage disparities, promoting equality in the workplace.
The Malaysian government has taken several steps to promote pay transparency and address wage disparities, but still could not cater this matter.
Gender Equality Act: Malaysia is working towards implementing a Gender Equality Act, which aims to ensure equal pay for equal work and address gender-based wage disparities.
Figure 3
“We are currently enacting a Gender Equality Act. We have been doing a lot of engagement to solidify our aim to draft the Act,”- Datuk Rohani Abdul Karim, Minister of Women, Family and Community Development (Figure 3).
Malaysian Gender Gap Index (MGGI): The Department of Statistics Malaysia (DOSM) publishes the Malaysian Gender Gap Index, which provides detailed statistics on gender disparities in various sectors, including wages. This transparency helps identify areas where wage gaps exist and informs policy decisions.
Public Sector Initiatives: The Malaysian government has introduced initiatives to promote gender equality in the public sector, including pay transparency measures. For example, the Public Service Department has implemented policies to ensure fair and equitable pay practices.
Conclusion
Malaysia can achieve gender pay equity, but it requires more than just good intentions. While current statistics show a clear gap, they also highlight the urgency for action. By addressing issues such as pay transparency, occupational segregation, and outdated workplace norms while learning from successful examples like Iceland, Malaysia can make real progress. Ongoing efforts such as the Gender Equality Act and the Malaysian Gender Gap Index are steps in the right direction, but lasting change depends on awareness, accountability, and collective will. Achieving pay equity is not just about fairness; it is about building a more inclusive and economically stronger Malaysia.
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by: Nurul Syaqinah binti Awang Basah (23003701)