Gender Pay Gap Report 2021 - National Business Initiative

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GENDER PAY GAP PILOTREPORT 2021

TABLE OF CONTENTS1. Executive Summary1-22. Introduction32.1. What is the Gender Pay Gap?43. Data Overview74. Key Findings135. Call to Action146. Our Team157. SCIS Team16 National Business Initiative 2021. All rights reserved. Reproduction is not permitted without priorpermission from the National Business Initiative.

1. EXECUTIVE SUMMARYThe National Business Initiative’s (NBI’s) strategy of drivingThere is no doubt that COVID-19 and the attendant lockdownsThe study results reveal several salient points detailed inThis issue, amongst others, informs and underpins the NBI’ssocial and economic transformation aims to address thehave worsened women’s plight both economically and inChapter 4 Key Findings. There are also insights worthrobust endeavour in steering the agenda to close the genderstructural barriers to create an equitable and just society. Givensociety. The latest unemployment data reflects this. The figureshighlighting.pay gap. The information garnered from this study, as well asour history and our current context of continued discriminationindicate that women are disproportionally bearing the bruntand exclusion, we recognise that fundamentally addressingof job losses. They are also faced with the scourge of risingThe gender pay gap across firms ranges from 9 to 35%,tool that companies can use to address gender inequality ingender inequality is a critical lever for change.gender-based violence.which results in a quantifiable amount of R72.44 to everytheir workplaces. There is little doubt that taking proactiveR100.00 earned by men according to the data generatedand corrective action will have meaningful socio-economicbenefits.In 2019, the NBI published a report, Gender Equity in theThis Gender Pay Gap Pilot study intends to contribute to thefrom the study. For companies to understand and plan inWorkplace, in which we unpacked complex societal andgrowing work on pay disparity. It does so by using availablethe short to medium term, knowing the financial aspects ofeconomic inequity, as well as explored how these dualemployee data and testing methodologies to present a fact-closing the gender pay gap is important.dynamics affected women. Both challenges result in, andbased analysis of the pay gap. We have partnered with thecontribute to, entrenched pay disparity and income inequality.Southern Centre for Inequality Studies (SCIS) at the UniversityThat is one aspect of driving the impetus of transformation,the gender pay gay by engendering pay equity and contributeIn the report, we noted that 42.6% of households are headedof the Witwatersrand (Wits) to ensure a rigorous process,which entails focused effort and is a long-term project.towards closing the gender pay gap.by women. These households have a higher dependencyutilising relevant econometric models for the analysis. Theratio. In simple terms, that means women shoulder greaterNBI, along with four of our member companies, was pleasedWhen male characteristics are applied to female employees,On behalf of the NBI, I would like to thank: our partner,responsibility for children and other dependents.to participate in the pilot.men’s earnings remain elevated above those of women.SCIS; our member companies for participating; the SouthThere is another dimension: overall, white men are theAfrican Rewards Association for the support; and the SocialAs such, it is concerning that, in 2015, 57.2% of female-headedhighest earners, the study finds. This not only points to theTransformation team.households were poor. Equally worrying is that women aregendered nature of work and pay in South Africa’s privateexperiencing higher levels of unemployment, while those whosector, but also its racialised reality.are employed are paid 19% to 37% less than men.1others before it in the NBI’s series on the topic, is a pragmaticTherefore, we call on companies to commit to transformationthat will disrupt the patterns which reinforce and perpetuateJOANNE YAWITCHCEOGender Pay Gap Pilot ReportGender Pay Gap Pilot Report2

2. INTRODUCTION2.1. WHAT IS THE GENDER PAY GAP?2.1.2. GLOBAL GENDER PAY GAPREPORTINGIn this study, we define the gender pay gap as theThis paper proposes a simple, standardised methodologyPrior to 1994, the South African economy was characterisedParties to the 2018 Jobs Summit proposed a pilot projectdifference between the average hourly median earnings ofthat is applied to a selection of firms to calculate theby gender imbalances manifesting in skewed access todevised to comprehend contributing factors and how toa company’s male and female employees. We distinguishgender wage gap. To complete this benchmarkingopportunities and resources (Posel, 2000). Furthermore,address the gender pay gap. Such a pilot project wouldbetween two types of gender pay gaps. In the first, menexercise for South Africa, we now review the experience ofthese structural distortions correlated with women’s lowerhave three objectives:and women who have similar characteristics, exceptother countries – Australia, Germany, Iceland, Ireland, Newparticipation in formal economic activity and employmentgender, earn different wages. Where a firm, for instance,Zealand, Switzerland and the United Kingdom (UK) – thatrates compared to men. Indeed, where employed, womencalculates a 10% gender pay gap, this translates intohave implemented gender pay gap reporting.were often overrepresented in low-skill jobs, whose wageswomen earning R90 for every R100 paid to men. For suchwere measly. This saw women-headed households facingan organisation, a negative gender pay gap would implyGrowing literature on gender pay gaps has gained2that men earned less than women to the magnitude of themomentum across the globe, with different determinantcalculated difference.factors noted. In Switzerland, occupational segregation1higher poverty rates (Bhorat & Van der Westhuizen, 2010).Despite evidence showing that both male- and femaleheaded households have experienced a decline in povertylevels as measured by the headcount index, women remainthe most likely candidates of economic strife. Althoughadvances have been made in the post-apartheid context,is mentioned as one of the main reasons for the genderFirst, develop a simpleand standardisedmethodology firms, largeand small, can applyacross sectors.there remains a yawning gap in women’s participation in the8The second type of gender pay gap is defined as verticalpay gap, according to Schmid (2016). Female and malewage inequality. It arises when men and women earnindividuals working in female-dominated occupationsdifferent wages. In this scenario, women earn less thanhave lower wages than those who work in male-dominatedmen because the former are clustered in low-paying jobs,and integrated occupations. The noted existence of awhich demand lower skills relative to men (Espi et al.,positive, and persistent, gender pay gap in international5formal economy. Hence, the National Development Plan2019). Although there are variable justifications for theseliterature has necessitated the establishment of dedicated(NDP) deliberately seeks to promote gender equality, anddifferences, gender is often the common denominator.institutional offices, tasked with reporting on the genderthe development and provision of greater opportunitiespay gap. This phenomenon is found in a growing number offor women in rural and urban areas.32.1.1. CONTRIBUTING FACTORS TOTHE GENDER PAY GAPIt is against this backdrop that the 2018 Presidential JobsSummit was convened. The objective of the Summit wasto unearth solutions, opportunities and challenges facedby social partners with reference to job creation and skillsSecond, apply themethodology to a selectionof firms to calculate genderwage gaps.which tend to have a high prevalence of union activity,male workers are often unionised. This partly explains the6gender wage gap, Mosomi suggests. Moreover, differences4composition (Presidency, 2018). Emerging from this Summitin sectors of employment and occupations are referencedwas the business-led proposal to address the gender wageas supplementary factors that contribute to the pay gap. Itgap, which was identified as an impediment in achievingis commonplace for women to be employed in low-wageinclusion and equity at firm level and the broader economy.positions and sectors. The opposite tends to be true forCurrent Employment Equity reporting structures requiretrends over time and among firms.respective institutions reporting on the gender pay gap.gap. In male-dominated sectors such as mining and utilities,profile resembled the country’s gender, racial and spatialmeasurement and calculation make it difficult to comparein-country reporting requirements and identifies theVarious reasons are cited for this persistent gender wageretention to ensure South Africa’s skillset and employmentfirms to report salary information, but inconsistencies instates, including the ones cited above. Table 1 summarises7men. This segregation is most pronounced among BlackLast, based onemerging results,determine solutions toimprove and correctidentified wage gaps.and Coloured female workers, who swell the ranks of mostlow-paying occupations.Previous work in the area of gender wage gaps has reliedalmost exclusively on administrative data – not firm-leveldata. It is the latter which we utilise for our analysis. Theadvantage of firm-level data is that wage information ismore reliable because it is prepared, and verified, by a thirdparty. Additional payments, such as bonuses and otherremuneration, may be omitted from survey instruments.This would have the effect of understating the gender paygap. The omission can be corrected through the use ofactual payments made to employees.51 Posel,D. (2000). ‘Gender Inequality’ in May, J. (Ed.). Poverty and Inequality in South Africa: Meeting the Challenge. Zed Books.2 Bhorat, H. & Van der Westhuizen, C. (2010). Poverty, Inequality and the Nature of Economic Growth in South Africa.Development Policy Research Unit: University of Cape Town.3 National Planning Commission. (2012). National Development Plan 2030.4 Presidency. (2018). Presidential Jobs Summit Framework Agreement.367Gender Pay Gap Pilot ReportEspi, G., Francis, D. & Valodia, I. (2019). Gender Inequality in the South African Labour Market: Insights from theEmployment Equity Act Data. Agenda, 33(4), 44-61.Mosomi, J. (2019). Distributional Changes in the Gender Wage Gap in the Post-Apartheid South African LabourMarket. World Institute for Development Economics Research.Casale, D. & Posel, D. (2005). Women and the Economy: How far have we come? Agenda, 19(64), 21-29.Gender Pay Gap Pilot Report4

TABLE 1:SUMMARY OF BENCHMARK COUNTRIES’ GENDERPAY GAP REPORTING REQUIREMENTSCountry & InstitutionReporting on GenderPay GapsAustraliaWorkplace GenderEquality AgencyGermanyThe Federal StatisticalOfficeIcelandCentre for GenderEquality Share of women in the organisation. Workforce participation rate among thoseaged between 15-64 years. Full-time weekly ordinary earnings. Full-time annualised basic salary.Formed in 1953, its purpose is to providequalitative statistical information in an objectiveand independent manner to the public(Statistisches Bundesamt, 2020). Gross wages paid to full-time employees covered by social security insurance.The proportion of women in each industry.The calculated gender pay gap for salaried employees.The median hourly gross wage.5The gender pay gap is the difference in the average (mean/median) hourly gross wage of all men and women in a workplace(Maier, 2007).Formed in September 2000, its purpose is tohandle administration in the field of genderequality in accordance with Icelandic legislation(Jafnrettisstofa, 2000). The mean gross hourly wage.The proportion of women in an organisation.The differences in educational attainment between women and men.The mean number of years of work experience.25The gender pay gap is calculated as the difference in the meangross hourly wage between male and female workers (Plantenga,Remery, 2006). The mean gross hourly wage.The proportion of women in an organisation.The differences in educational attainment between women and men.The mean number of years of work experience.50The gender pay gap is calculated as the difference in themean gross hourly wage of all men and women in a workplace(Plantenga, Remery, 2006).Formed in 1984, with the purpose of advising thegovernment on issues and policies that directlyaffect women (Ministry for Women, 2020). The mean log hourly wages.The differences in educational attainment between men and women.The proportion of women in each industry.The proportion of females acting as the sole parent.100Statistics New Zealand calculates the pay gap as the differencebetween the mean hourly earnings of men and women in bothfull-time and part-time work (Pacheco et al., 2017).Legislation was introduced effective 1 July 2020with the purpose of addressing the gender paygap (FOGE, 2020). The log gross hourly wage.The proportion of women in an organisation.Workforce participation rate among those aged between 20-62 years.The mean number of years of work experience.The proportion of women in managerial positions.100The gender pay gap is the difference in the logarithm grosshourly wage, which includes the 13th and 14th month salary,bonuses and gratifications of all men and women (Bonjour,Gerfin, 2000). The mean gender pay gap.The median gender pay gap.The mean bonus gender pay gap.The median bonus gender pay gap.The proportion of men in the organisation receiving a bonus payment.The proportion of women in the organisation receiving a bonus payment.The proportion of men and women in each quartile pay band.250The gender pay gap is the difference in the average (mean/median) hourly wage of all men and women.Gender Equality,Diversity andInclusion Task ForceMinistry for WomenSwitzerlandFederal Office forGender EqualityUKGovernment EqualitiesOffice5 Full-time average hourly ordinary time cash earnings for non-managerialwomen against non-managerial men. The median undergraduate starting salaries. The median superannuation balances at retirement. Paid parental leave provided to male and female workers. Share of women in leadership positions.Description of the Gender Pay GapArising from the Workplace Gender Equality Act2012, its purpose is to promote and improvegender equality in employment and workplacesacross Australia (WGEA, 2018).IrelandNew ZealandMinimum FirmSize to ReportReported VariablesInstitutional MandateGender Pay Gap Pilot Report100The female average earnings are subtracted from the maleaverage then expressed as a percentage which forms the paygap (Kee, 2006).Gender Pay Gap Pilot Report6

3. DATA OVERVIEWTo calculate the gender pay gap, we requested, andQuantile Regression: A QR model depicts the relationshipobtained, anonymised data from five participating firms.between a set of independent variables and specific percentilesThe anonymised data is categorised according to gender;(quantiles) of the dependent variable. Consequently, itrace; age; education level; occupational level; number ofprovides a more comprehensive and robust estimation of thehours worked monthly; employment status, whether thewage differential. Particularly, it enables us to verify whether theindividual is employed full time or part time/permanent oradvantage that males have over females persists throughouton contract; wages paid monthly; and any contributionsthe conditional distribution of the wage distribution.made by the employer, as well as any other remunerationmade in that given year, for example, bonuses.Oaxaca-BlinderDecomposition: Following Oaxaca andBlinder’s work, it is proposed that the gender wage gap at themean can be decomposed into two, one part is due to differences3.1.1. METHODOLOGYin the means of variables entered into the earnings functionsand a part due to differences in the estimated coefficients onSo far, the gender gaps discussed provide a crude measurethose factors. The former term of this decomposition is referredof discrimination. This is so because there is no accountto as the ‘explained’ component (that is due to differences in theof the simultaneous effects of other influences on wagesaverage of the dependent variables) and the latter term is theearned. A second essential step is determining the‘unexplained’ component of the gender wage differential. Thisextent to which women and men who have similarproportion is often the share attributed to sex discrimination incharacteristics are remunerated differently. Hence, wefemale wages.apply various econometric techniques to calculate thegender wage gap further at firm level.Taken together, these three methods will enable us to answerthree questions:Comprehensive assessments of gender wage gaps shouldi. Given similar characteristics, how do average wagesbe based on the wage distribution among male and femalevary for male and female workers?workers, and not rely solely on differences in averageii. Analyse the evolution of the gender wage gap acrosswages. Such targeted studies are necessary to understandthe distribution for both male and female workers; andthe South African gender wage gap. It is for this reasoniii. Where wage gaps are observed, to what extent arewe propose the use of ordinary least squares (OLS),these differences explained by differences inquantile regression (QR) and the Oaxaca-Blinderobservable characteristics?decomposition methodology to investigate the genderdifferential in wages within and across firms.The benefit of this study is that it will be undertaken at firmlevel and allow for comparison using actual wages paid.Ordinary Least Squares: We estimate a linear wageequation for male and female workers where the dependentvariable is the hourly wage that is regressed on a vector of3.1.2. PILOT DATAobservable characteristics such as age, experience, sectorof employment, educational level and the occupationallevel. From this, we would determine coefficients thatThe dataset consists of five anonymised firms: Firm A, Firm B,would tell us the extent to which these variables listedFirm C, Firm D and Firm E. Two of the five firms are classifiedabove determine male and female wages. The results of thisas belonging to the secondary economic sector and the othercalculation will enable us to interpret the average changethree fall under the tertiary sector. The full dataset containsto male and female wages from a unit increase in any of28,646 observations, with participants 65 and older excludedthe dependent variable. While this is useful, we are awarefrom the study. The official retirement age in South Africa is 65.that women across the wage distribution possess differentWhile conventional labour studies include individuals aged 15characteristics and it would be important to determine howand above, these being formal sector firms, the minimum agethey interact with the various independent variables.of employment is 18. Our full sample includes individuals agedbetween 18-64. The firms’ descriptive statistics are summarisedin Table 2.7Gender Pay Gap Pilot ReportGender Pay Gap Pilot Report8

TABLE 2:SELECTED FIRM CHARACTERISTICS AND NATIONALDEMOGRAPHICS, (%)Firm AFirm BFirm CFirm DFirm ENationalAverageTotal2 64225 64081516-17-Median age 32804239Junior Management52451638029Middle Management211628194910Senior Management54281952Top al2 64225 3312521627-RaceAgeEmployment Equity (EE)Occupational levelsSector9Gender Pay Gap Pilot ReportGender Pay Gap Pilot Report10

TABLE 3:HOURLY MEDIAN WAGES ACROSS FIRMS (INRANDS)Firm AFirm BFirm CFirm DFirm 5466.83990.722 085.1072.65197.09498.41999.642 097.5057.6575.71182.58406.25684.591 340.1858.3166.96182.00428.55686.961 ge18-2425-3435-4445-5455-64YouthYouthNon YouthOccupational levelUnskilledSemi-skilledJunior ManagementMiddle ManagementSenior ManagementTop 0.55-303.70224.97-Highest Education levelMatricDegreePostgraduateProvinceGautengNon- Gauteng186.83159.57244.95238.41Union StatusYes UnionNo UnionMedianMedian GPG (%)Mean GPG 186.52144.54129.05116.28Gender Pay Gap Pilot 9100.3275.98Gender Pay Gap Pilot Report12

4. KEY FINDINGSThe data shows that, regardless of race, males constitute Wages rise as skills increase relative to semi-skilledthe majority of employees across all skills levels, except theworkers. Workers classified as top management earnunskilled worker category. Indian and white employees arethe most, followed by senior management and so theoverrepresented in the top four skills levels – junior, middle,trend continues. Although the findings in Firm D are notsenior and top management – while Black employees aresignificant, the coefficients increase with skills – following aclassified as mostly semi-skilled and unskilled. Althoughsimilar pattern observed in the other firms.the unskilled employees are predominantly Black andfemale, top management is mostly white and male.As a percentage of the total difference, the explainedcomponent is larger than the unexplained part, which is anFrom the data, we observe several findings; First, male employees earn more than females in FirmsA, C and D. Of interest is that females make up about25% of employees at Firm B, but they earn more thanindicator of the presence of discrimination at these firms.Therefore, even when we apply male characteristics tofemale employees, we observe that men still earn morethan female employees.their male counterparts. Second, Black employees, gender notwithstanding,earn the least among all the racial groups. Whiteworkers earn the most across all four firms, exceptFirm B, where Indian/Asian workers have the highestmedian hourly wage. We also observe the White-Blackearning gap is highest in Firm C, where white workersearn four times the Black median wage; and is lowest in5. CALL TO ACTIONFirm D, where white workers earn about 1.5 timesmore. Furthermore, in Firm B foreign female workersearn almost 4.6 times more than foreign male workers. Third, wages increase with age, a proxy for experience.The NBI will develop an online tool using the econometricFor most individuals, wages peak at between 45-54.methodologies from this pilot. The tool will assistcompanies to track and measure income disparities. Fourth, education levels and skills are significantdeterminants of earnings in South Africa. In Firm C,The secure platform will enable companies to submitwhich makes a distinction between an undergraduateemployee datasets, without limits on size or sector.and a postgraduate qualification, workers possessingThereafter, entities will receive a quantified measure ofthe latter earn the most. This is by a significant margintheir pay gaps. Companies’ commitment to participateof between five and nine times the earnings of femaleis crucial.and male holders of matric.The tool will also outline the social and economic A figure less than 100% indicates that males earn moreimportance of closing the gender pay gap, as well asthan females. This ranges from females earning R72.44underscore the social factors permitting this issue toto every R100.00 earned by males in Firm A to femalespersist. Companies not only have a responsibility toearning R84.77 in Firm C. Based on these unconditionaltransform as part of national and global developmentestimates, the best-paid workers are male, older, white orobjectives, but also to resolve income disparities inIndian/Black. In terms of skills, these high earners have aSouth Africa.degree or a postgraduate qualification. Viewed throughthe prism of experience, they are classified as aboveThe NBI will be embarking on a journey to engagemiddle management, ideally senior or top management.member companies about closing the gender pay gapby 2030, through dialogues and sharing knowledge onresearch supporting the social and economic benefits oferadicating the pay gap.13Gender Pay Gap Pilot ReportGender Pay Gap Pilot Report14

6. OUR TEAM7. SCIS TEAMGugu McLaren-Ushewokunze, Head: Social TransformationGugu McLaren-Ushewokunze leads the NBI’s Transformation and Social Cohesion programme. McLarenUshewokunze’s responsibilities include developing and implementing the NBI’s programme to engagebusiness in driving social transformation, with the aim of addressing inequality and inequity. The programmefocuses on companies’ internal transformation, creating diverse and inclusive organisations, and businesses’relationship with society.She has more than 14 years’ experience in social and sustainable development, having worked across sectorsand industries. She built most of her career in the corporate sector, where she steered the development andimplementation of sustainable development strategies. McLaren-Ushewokunze spent six years at Discovery,where she supported the company’s shared value business model and crafted innovative and award-winningannual reports.During the course of her career, McLaren-Ushewokunze has focused on strategy, research, projectmanagement and reporting in globally relevant organisations.McLaren-Ushewokunze successfully read for two qualifications from the University of Cape Town: a Masterof Social Science in Gender and Development and a Bachelor of Social Science (Honours) in Gender andTransformation. She has also obtained numerous sustainable development qualifications.Bridgette Mdangayi, Programme Manager: Social TransformationBridgette Mdangayi is the NBI’s Programme Manager in the Social Transformation Unit. Mdangayi isresponsible for driving the unit’s strategy and programme implementation, with a focus on the Transformationand Equity, and Social Cohesion programmes.Mdangayi has amassed 12 years’ experience in cross-sectoral project and programme management, havingworked in multiple segments. She is well-versed in project formulation/development, resource mobilisation,capacity building, contract and grants management – pre- and post-award grant processes – socialadvocacy and development communications, strategic planning, and stakeholder management. Mdangayihas expertise status in the listed areas.Bridgette is a PMP (Project Management Professional) candidate through the Project Management Institute(PMI). She recently completed studies towards a Strategic Leadership Accreditation at the Gordon Instituteof Business Science (GIBS). She holds an NDip in Sports Marketing and Management (Tshwane University ofTechnology), a BA Degree in Communication Science (University of South Africa) and an Advanced ProjectManagement Certification (Monash University (SA) – IIE MSA).Khanyisa Nomoyi, Project Manager: Social TransformationKhanyisa Nomoyi is the Social Transformation Project Manager at the NBI. Nomoyi obtained an HonoursDegree in Political and International Studies from Rhodes University. At the NBI, she is responsible forcontent development, research, analysis, project manager and stakeholder engagement on transformation.Current areas of focus include the gender pay gap, LGBTQIAP employees in the workplace, economicinclusion, small and medium enterprises and supplier development. Nomoyi provides support on thedevelopment of intergenerational leadership and gender-based violence pathways.Nomoyi has experience and is skilled in policy analysis, qualitative research on philanthropy and theSustainable Development Goals (SDGs) in Southern Africa. She also has capabilities in monitoring andanalysis of national government frameworks on access to healthcare, education, gender equity, anddevelopments in international affairs.Previously, she worked as Research Co-ordinator in philanthropy under SGS Consulting and has internedat the Centre for the Advancement of Community Advice Offices South Africa (CAOSA), MSF South Africaand SECTION27.Professor Imraan Valodia, Deputy Director:Southern Centre for Inequality StudiesProfessor Imraan Valodia an economist, is Dean of the Faculty of Commerce,Law and Management at Wits University. His research interests includeinequality, competition policy, employment, the informal economy, genderand economic policy, and industrial development. Imraan has led the initiativeat Wits to establish the Southern Centre for Inequality Studies - a multidisciplinary, cross-country initiative to promote research and policy changeto promote greater equality in the global South. In addition to his duties asDean, Imraan leads the SCIS. Imraan has led and participated in a numberof large national and international studies. He is recognised nationally andinternationally for his research expertise in economic development. Imraanis a part-time member of the Competition Tribunal in South Afri

gender-based violence. This Gender Pay Gap Pilot study intends to contribute to the growing work on pay disparity. It does so by using available employee data and testing methodologies to present a fact-based analysis of the pay gap. We have partnered with the Southern Centre for Inequality Studies (SCIS) at the University

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