The future of the gender pay gap – Perspectives from academia and employers

Dr Jelena Angelis, Stockholm School of Economics

On the UN’s International Equal Pay Day on September 18, 2023, the Stockholm School of Economics (SSE) hosted an evening event bringing together SSE students, alumni and corporate partners around the highly relevant and important topic of equal pay. The event was funded through the SSE Gender Equality Fund established in 2022 as an action of the SSE Gender Equality Plan (GEP).

One could only wonder why such a topic would be important in Sweden, a country that is one of the leaders in many international economic indicators and is well advanced when it comes to gender equality and inclusiveness. As noted by the event’s moderator Karol Vieker, SSE’s Diversity, Equity and Inclusion Manager, despite all of the above achievements Sweden ranks only 45^th out of 146 countries on wage equality for similar work as reported in the World Economic Forum’s Global Gender Gap Report 2022.

Three esteemed panelists set the topic into context and shared their reflections from research and practice.

Dr Karin Hederos, a nationally recognised expert on gender economics and inequality at the Swedish Institute for Social Research at Stockholm University, started the discussion by spotlighting key facts around the average gender wage gap. The 2022 report from the Swedish National Mediation Office reveals a 9.9% gender pay gap, with women earning an average monthly wage of SEK 36,200 (c. EUR 3,620) and men SEK 40,200 (c. EUR 4,020). Despite a 40% reduction in the gender wage gap over a century, progress has stalled in the last five years. Occupation is the primary factor, with the smallest gap (1.5%) in municipalities and the largest (17.2%) in regional employees. White-collar workers in the private sector exhibit a 15.3% gap.

Figure 1. Proportion of women in 2014 and 2022 for each occupation and the number of employees in the occupation in 2022 broken down by gender composition

Source: Swedish National Mediation Office and Statistics Sweden
Note: Only occupation with more than 3 000 employees are included

Proportions of women in various occupations show changes from 2014 to 2022 and occupational gender segregation has decreased, though it’s been driven by women entering male-dominated fields and not vice versa. Educational gender segregation is also decreasing. Accounting for occupation, sector and education, the conditional gender wage gap in 2022 was 5%, still highlighting room for improvement. This underscores the importance of addressing the issue in university education, where candidates are prepared for the job market.

As a leading business school in the Nordics preparing the leaders of the future, it is critical for SSE to make their students aware of the gender pay gap and be prepared when the time comes to look for employment. Here such decisions as which companies to apply for and how to sell one’s skills and competencies are critical. Richard Wahlund, The Bonnier Family Professor in Business Administration at SSE, continued the discussion by presenting the most recent results of the SSE Employer Image Barometer, which has been running since 1990. Since 2004, SSE students have been repeatedly asked questions around the monthly salary they expect to get after graduation, will ask for during the interview, and would get from the employers most attractive to them. In 2022, in general and on average, male students (both on BSc and MSc degree levels) intend to both ask for and get a higher salary than female students. Unfortunately, female students overall will accept a lower salary, and also rank themselves as having lower competencies and considerably lower ability to negotiate relative to the best candidate.

Figure 2: Shares of female and male Bachelor and Master students at SSE, respectively, that expect to get a lower, the same, or higher salary than they intended to ask for.

Source: SSE Employer Image Barometer 2021

To build on the topic, Ebba Schwalbe Ekström, Compensation and Benefits Manager at SEB (one of the leading Swedish banks), brought a company’s perspective and also shared some personal reflections. SEB’s pay philosophy reads: “We believe in a consistent, fair and transparent approach to pay, attract, retain and motivate our people.” This looks similar to what other companies set in their policies. The important part is how to make it happen and what measures will help to deliver on the set policy. For example, SEB defines jobs and transparently shares a reference pay range for a set job. In conclusion, Ebba Schwalbe Ekström shared her personal reflections:

1. To help address a structural problem causing gender pay differences, we should all strive for an equal distribution both at home and in the workplace.
2. To reduce and hopefully get rid of an unconscious gender bias, we need to be curious and ask our future employers for facts and figures on their work to secure equal opportunities.
3. To ensure that transparency really drives the equal pay debate, we should strive for making informed choices around both career and pay progression, and ask for transparency if it is not offered.

This event intended to shed light on the pay inequality that persists in today’s labour market, and to inspire future leaders and workers alike to help balance the scales for a fairer future. There is still work to be done in making the topic well understood by all. The event also highlighted this issue: out of 85 participants registered to attend, nearly 60 were women. Participants were asked to state their reasons for attending this event highlighting a huge range of nuances around the equal pay topic. Some commented that as female professionals they have faced issues of unequal pay and would like for others to avoid this. Another participant shared: “To achieve gender equality many aspects have to come together. Equality before law, removal of direct and indirect barriers to women’s equality with men, quality childcare and equal distribution of parental leave, as well as career choice based on similar criteria, just to name a few. Women’s equality is crucial to change!” Others were keen to learn about how to negotiate better in preparing for a Swedish job market, or to simply understand why “the gender pay gap is still a thing”.

The event was a good example of how academia and employers can join forces to both raise awareness and collaborate on research to better understand the gender pay gay and how it can be addressed. Hopefully the day will soon come when it is no longer “a thing”.

To learn more on the topic, please read:

– The Stockholm School of Economics Employer Image Barometer 2021
– The promise (and peril) in approaching gender parity: Preregistered survey experiments addressing gender inequality in negotiations
– Gender pay gap 2022, a report by the Swedish National Mediation Office