Driving Forces of Wage Gap and its impact on Female Participation on Economic Growth: Evidence from in Egypt, Malaysia and Pakistan-Juniper Publishers
Abstract
This research paper tackles the determinants of wage
differentials and wage inequality in Egypt and Malaysia, as well as
their impacts on the economy. However, women tend to be so discriminated
up until now, despite the enormous development we have been through,
they still get paid less than men. Therefore, this paper aims to know
the role of women and how they influence economic growth. Moreover, the
study is carried upon the period 1990-2017. The paper concludes that
education and human capital have a great role in determining wages and
acquiring women an opportunity of getting higher earnings. Closing the
wage gap is somehow hard for Egypt as it is a low-income country. While,
Malaysia showed a downward trend in the female participation rate in
the labor market in 2006 than in 1992 for different cultural
perspectives and obstacles facing women in the Malaysian labor market.
Furthermore, women turned to have a positive impact on economic growth
according to the Feminization U’ Model. Also, we used Belgium and
Pakistan as a case study to reflect how they overcame gender
discrimination in wage pay due to different policies they implemented
and trade unions they joined.
JEL Classification: J7, J4, J31, B54
Keywords: Gender Discrimination; Wage Differentials; Labor Market; Feminism
Introduction
Wage inequality has always been a topic that is
interesting for debating and has grabbed most of economists and people’s
attention. The wage gap between males and females is a significant
issue as it affects the lives of almost everyone. This implies, that it
also has a great impact on females, their children and the next
generation as well. Thus, the determinants of this wage gap should be
figured out so that we can implement policies that eliminate this income
disparities.
In recent years, the wage inequality has been studied
in most of the developing and developed countries, including Egypt and
Malaysia, the countries we are carrying on our study in this research
paper. This difference was associated with the existence of gender
discrimination against women in labor market. Moreover, this
discrimination was highlighted to have a major consequence economically,
politically and socially- calling for some corrective actions.
This research paper focuses on studying the
determinants of the wage gap found in Egypt and Malaysia. Researches
were made to shed light on the main cause of this difference and so we
can implement policies that overcome the problem as there
is a research gap regarding this topic that we are trying to fill and
recommend a solution for the problem. Moreover, we are going to explore
the impact of the increase in female participation in the labor market
on economic growth using the Feminization U’ Model and the three stages
the economy passes through.
The plan of this paper goes as follows: in the
literature review section we will identify the determinants of wage gap
in both countries, Egypt and Malaysia. Then, the following section we
will analyze and make a comparative study based on the different factors
we get for each country, supported with numerical and real data
obtained from the world bank, etc. Afterwards, we will provide a case
study on Pakistan to show what policies and regulations they use in
order to overcome discrimination and do better than Egypt and Malaysia.
Later, we will discuss the positive impact of female participation in
the labor market. Finally, we will reach a conclusion that shows mostly
discrimination against women is the main reason behind the wage gap in
both countries. We can also conclude that, women participation will
boost economic growth as it increases labor supply and lowers the wage
rates, as well as contributes to higher income for households.
Literature Review
Adam Smith (1776) was the first to introduce the equalization/
compensating wage differentials model to explain the equilibrium
in the demand and supply of the labor. According to Smith (1776),
the whole pros and cons of the job was what is equated across
jobs in a competitive market and not the wages. He introduced five
main factors of wages, including:
a) the willingness or unwillingness of the employees
themselves.
b) how easy and cheap it is to learn the tasks, or how hard
and expensive it is.
c) the constancy and inconstancy of employment in them.
d) how much they trust those who train them.
e) the probability of their success.
While, Becker model highlights that the higher the competition
for final goods in the market, the lower the discrimination should
be against the groups of minorities in the labor market. This clear
conclusion results from the existence of economic rents required
by the labor market’s discrimination. When there are economic
rents paid, the employers prefer to pay the employees a smaller
value, below their marginal productivity’s level [1].
Also, Becker (1957) argues that differential’s percentage is not
always related to resource allocation. However, it is more relevant
when attempting to explain the differences in the relative demand
for skilled and unskilled workers. Likewise, it is also significant
when it comes to determining the variations in resources devoted
to human capital, such as education and training as devoted to
other uses. This is because every dollar returned on human capital
invested is represented by the skills differentials.
Economics always explore the recognized gender segregation
in the labor market over some different conditions and around
two important axes. However, to be more specific, the economists
target the determinants of the women participation in labor
market and the side of supply, while, the investigations examine
the different treatment of females in the labor market which is
regularly mirrored in somehow much less incomes and unequal
chances in occupations for some women Domingo (1989). Human
capital theory is based on the decisions made by female and male
students, workers and employers and on the hypothesis that
everyone has accumulated a stock of human capital according to
his investment in education and formation. The theory of human
capital in 1962 [2] mainly showed the gender discrimination in
firms’ wages. Generally, the differences on wages must be only
based on differences in knowledge, abilities or skills owned by the
worker or employee. Another difference on wages can happen due
to professional and educational differences between the workers
since the professional or educational experiences help increase
productivity and the performance of employees.
It is believed that the difference in socialization between
men and women even before entering the labor market creates
differences in skills and abilities between males and female
workers since women don’t spend in human capital as much as
men do. So, according to the theory, women aren’t discriminated
against in the labor market or rewarded less due to segregation
causes but because the women own less human capital and
less productivity then men in the labor market as well (Becker,
Investment in Human Capital: A Theoretical Analysis, 1962) [2].
This section reviews the main factors that contribute to the
wage gap between men and women. The gender wage gap is
the difference of the women’s wage as a percentage of the men’s
wages. According to Polachek [3], he highlighted that it is also a
statistic summary of a person’s education, training and expected
future participation. We could think that discussing such an issue
is insignificant in the 21st century. However, it is sad that we face a
huge inequality problems and women still get paid less than men
up until now, despite the major developments and flourishment
we have been through.
Hence, what are the main factors that contribute to such
disparities? In 2011, the United States Accountability Office report
found out that women are highly productive and more educated
than ever before, but their pay hasn’t yet caught up with them.
More than race, social-economic status or education, the gender
is still the main reason behind this wage gap. They also found
that women get affected by this gap at all their income levels and
occupations and widens as they grow older.
Taking care of the children is another factor that majorly
afflicts women from having a good paying job wage. Statistically,
women are more likely to be childcare providers than men, that
is something that has been known throughout the time and that
the society established. Saul (2003) also asserted that high paid
and most secured jobs have requirements that contradict with
a childcare provider and are difficult to be met. Moreover, the
traditional female image influences the women’s perception of
their abilities and make them underestimate their potential.
Therefore, the selection procedure for those who can meet the
difficult job requirements will result that far more men find
suitable jobs with benefits and good pay than women Paul (2003).
Likewise, another factor for the disparity in wage gap is
the gender segregation in work sector. Women tend to work
in administrative positions, public sector, retail, part-time and
flexible work. They join such jobs in order to balance between
their work and responsibilities, which are mainly their home and
children. On the other hand, men are most likely to be found in
jobs such as construction and manufacturing which pay more
compared to female-dominated jobs with comparable skill levels.
Thus, females predominate in lower paid jobs such as nursing and
teaching. While, males predominate in jobs such as architecture
and computer occupations. GAO mentioned that women must
tolerate subtle bases to acts of gender discrimination relating to
pay raises, pregnancy and others of women’s responsibilities [4].
According to Ali (2015), Glass Ceiling problem is one of the
numerous problems raised due to forcing gender inequality in the workplace and the idea of who is the foremost influencer of
the work. This issue could be also defined as the Glass Pyramid
which shows the hierarchy of employees, and gender pay gap that
could be realized easily through the diversification of wages paid
[5]. In other words, the Glass Ceiling can be defined as an invisible
barrier that keeps women, minorities, and people of color from
rising to the upper rungs of the corporate ladder. Regardless of
their qualifications or achievements they cannot break through the
glass ceiling to the upper level of management. According to the
UN, 2013, gender equality is necessary whether in workplace or
any other sector, for having a peaceful life and a sustainable world.
Gender equality does not mean that women and men are the same.
Instead it could be defined as that the rights, opportunities and
responsibilities have nothing to do with the gender. It does not
depend on whether this person in a male or a female.
Feminization of the workplace links to the Marxist approach
where everyone has the gift to vend their labor power, to gain the
means of production. It is not a secret that generally women are
paid less than men in almost all professions all over the world.
The Marxist theory mainly focused of the impact of the capitalist
system on labor force segregation. This theory argued that women
are considered reserve army of labor; this means that women
could only be employed in case there is scarceness in the labor
market. According to Ali, 2015, the Marxist theorists demonstrated
that the reason for labor inequality is because of the disagreement
between labor and capital [6].
They were harshly criticized by radical feminists and by many
scholars because of neglecting both the role of women in the
society and the role of childcare by women. The Marxist theorists’
point of view seemed to be unrealistic that’s why they were always
severely criticized. Another classical theory is the Radical feminist
theory that started by believing that the main reason behind the
gender inequality is belief that men have more power than women.
Generally Radical feminists had a dissimilar point of view than the
Marxists theorists and that was a cause for the disapproval Ali
(2015). Until a dual system theory raise, that realized that neither
the Marxist theorists nor the Radical feminists could work solely.
The action of fusion of both theories led to the rise of a totally new
one named the Socialist Feminist Theory of Capitalist Patriarchy.
This theory was considered mainly a criticism for Marxist and
Radical school by regarding the role of women in labor force.
According to Simmonds (2012) the Feminism Theory criticized
many other theories that stated that women’s role is only
concentrated on the child care and the housework. Feminism theory
stated that both things do not influence the women’s ability
to work. In addition to many other important theories such as the
Neo-classical Theory that stated that workers are rational, and
firms target minimizing cost as much as possible and maximizing
profit in return. Moreover, they argued that women have more
responsibilities than men which make them less skilled, and less
experienced and that’s unattractive to firms.
Gender pay gap is a response due to the gender discrimination,
and it means that men and women are not paid equally; there is
a huge gap between their wages. Commission (2013) this gap will
lead to a complete destroy in the economy because women will
start thinking that there is no incentive to be educated from the
beginning if they will not be paid well at the end. When women
start thinking that it is useless to go to schools and as a result a
whole new generation will be uneducated. When a lot of people
become uneducated, poverty will extend extremely and eventually
the whole economy will be destroyed.
Wage differentials in Egypt
Based on our studying country, Egypt, Said & Mona (2006)
indicated that women’s reward significantly improved by 2006
than in 1998. Governments started paying them more than any
elsewhere and the wage gap declined than in the past. However,
El Haddad & Amirah (2008) showed that the main reason of
women getting lower wages than men was mainly a result of
discrimination based on sex. They then carried another study in
2011 and conducted that men have an hourly wage which is 29%
higher than women as they are found in lower-paid occupations
and firms (CAPMAS,2015).
In addition, it was observed that large number of females
quit the labor force after marriage, decreasing their participation
rate. Also, Herrera & Badr (2011) mentioned that returns to
education and experience in Egypt increase proportionally with
the increase in firm size and are larger in formal sectors. However,
the female participation rate tends to be higher in informal sectors
than formal sectors, that is mainly why they get paid lower wage
than men. It is well-known that government has been equal in
its treatment of male and female job seekers workers, while the
private sector strongly discriminates against women in both
hiring and compensation [7].
Whether this gender discrimination is economically justifiable
or not, it results in highly encouraging women to go for government
employment rather than private businesses [8]. Such strong
preferences are also derived from the differences found in private
and public sectors related to their working conditions offered to
the job seekers. For instance, working hours, access to paid vacation,
sick and maternity leave, exposure to the risk of sexual harassment.
Many, if not most, private sector jobs in Egypt do not
meet women’s minimum acceptable threshold in terms of working
conditions, a phenomenon that has been referred to as “reservation
working conditions” [9].
These Unacceptable jobs could involve work alongside male
co-workers or bosses in a small workplace lacking other women,
work outside in exposed situations, potentially risky interactions
with customers of the opposite sex, long commutes to work that
expose women to the risk of harassment or attack, a need to reside
away from home for periods of time, or simply work in occupations
deemed not suitable for women [7]. The need to ensure acceptable
working conditions limits women’s employment to a narrow number of labor market segments in the private sector, leading
to over-crowding of women in these segments and downward
pressure on wages, making even the socially acceptable jobs less
desirable.
Wage differentials in Malaysia
In Malaysia, few studies have been carried out to identify the
factors of wage differentials and most of them concentrated on the
role of training and education. Chua (1984) used the Household
Income Survey in 1973 and Labor Force Survey of 1974 to
examine the wage disparities by sex. Moreover, he concluded that
about 36-74% are unexplained variables that contribute to wage
differentials (African Journal of Business Management,2015).
While, Chapman and Harding (1985) highlighted that most of
the differences found in the wages of men and women are mainly
because of the differences in occupational distribution, where
women are found in lower-paid jobs. In addition to this, it was
estimated that women earn about 71% of men’s wages (African
Journal of Management,2015) [10].
Latifah (1988) then came and used the data from the
Malaysian Family Survey 2 (MFLS2) in 1988 and found that most
of the earnings disparities in Malaysia attributed to unexplained
variables. While, the explained variables contribute to a very small
degree. This proves that the discrimination effect in the Malaysian
labor market is quite serious. On the other hand, Rahmah and
Zulridah (2005) found that explained variables have major
contribution to wage differentials while the unexplained variables
attribute to a very low percentage. The most important factors
include, human capital, job characteristics and demographic
factors. The neoclassical theory then focused on productivity and
wages by gender [11].
The workers are paid according to their productivity as the
employers seek to maximize profit. Even though men and women
are equally educated, women are said to be lower productive than
men and therefore, get lower pay. This is referred to as employer’s
discrimination [12]. There are many studies that have been made
to measure the women’s fertility rate and examines its effect
on female labor’s participation. For instance, Ismail & Sulaiman
[4] studies showed that the women’s labor supply was highly
influenced by the number of children they have according to the
field survey in Malaysia and the data collected in 2011. Also, Mason
and Palan (1981) asserted that there is an inverse relationship
between the female labor force participation’s rate and the fertility
rate, supported by the analysis of the 1974 Malaysian [13].
Women in Labor Market & The Wage Gap: Egypt, Malaysia And Pakistan
Egypt FLFP and Economic Growth in economic growth
In Egypt, women in the labor market are strongly discriminated
against with only 25% of them participating in the labor force
compared to men who represent 79% of the labor force (Economic
Research Forum, 2017) [14]. Although, the government doesn’t
make a clear policy protecting women against discrimination,
but the NGO’s and donors are in field of women’s empowerment.
Similarly, Egypt ranks the 134th country, recording a decline in
wage equality for similar work, data show increase in gender
parity in tertiary enrolment (Figure 1).
Furthermore, Egypt is a country with low income closed
only 67% of the labor market participation wage gap (Economic
Research Forum, 2017). Thus, we can see through the above (Figure
1) that the gender inequality’s rate is decreasing throughout the
years in Egypt. This is because of the 2014’s constitution which
provided several articles protecting women (Figure 2). Note:
31,149,152 people are participating in the Egyptian labor force
World Bank (2017).
However, the female participation rate in the labor force tends
to be so much lower than the male’s participation in the labor
force, where the minimum participation rate for men was 71.17
% in 1998 and reached the maximum of 75.88% in 2012 (World
Bank, 2017). While, the female’s participation rate hits a minimum
of 18.83% in 1998 and a maximum of 22.86% in 2009 (World
Bank, 2017). There is a quite major gap between both rates. This
means that the Egyptian women did not even reach one forth the
number of working men in the labor market (Figure 3).
Here in the diagram, we can see that the minimum unemployment
rate for men reaches 4.67% in 2009 and a maximum
of 9.53% in 2013. On the other hand, the average unemployment
rate for females was 23.27%, reaching a minimum rate of 19.16%
in 1999 and a maximum of 26.66% in 2003 (World Bank, 2017)
which is more than double of that of men. Thus, the women in
Egypt face unemployment problems almost 3 times the men. Also,
the decrease in men’s unemployment rate is double the decrease
from that in the women (Table 1).
Finally, according to the Human Development Index, Egypt
has been better in 2006 than 2017, which indicates that the wage
gap is increasing rather than declining. We are too far away from
closing the wage gap and overcoming gender discrimination
[15]. As well as that, according to the economic participation,
education, health and political empowerment we are doing far
worse than before and we dropped in ranking compared to
previous years [16]. This is because the percentage of literate
men turned out to be more than the women; therefore, employers
favor more men to participate in jobs than women. In addition to
political participation where far more men join political positions,
while very few women co-operate in such occupations, lowering
our human development’s rank and increasing the gap between
both genders. However, Egypt ranks the 115th country out of
189, scoring 0.696 in the Human Development Index (United
Nations Development Programme, 2018) (Figure 4). More than
half the men are literate compared to women, and therefore are
preferable at jobs and get paid higher wages (Figure 5). There is
a deficiency of women in political occupations in Egypt, due to
gender discrimination (Figure 6).
Malaysia FLFP and Economic Growth in Economic Growth
Malaysia continues to record small but steady progress on
closing its Political Empowerment gender gap and women’s share
of estimated earned income. Newly available data highlights the
fact that the country has fully closed its gender gaps in primary,
secondary and tertiary enrolment [17]. Furthermore, Malaysia
ranks the 104th out of 144 countries with gender inequality as
shown in the (Figure 6) above. We can see an increase in the
gender inequality in Malaysia as they do not have a specific law
prohibiting workplace discrimination, thus men are more favored
than women. Nevertheless, women aging from 25-34 tend to earn
more than men until they get married and stay at home or else,
as they age, they earn 4% less than men (New York Times and
Department of Statistics Report) (Figure 7).
Note: 15,441,000 people are participating in the labor force
(Department of Statistics, Malaysia’s Labor Force Participating
Survey, 2017). Here as we can see that the males dominate the
labor market than women in Malaysia. Their participation rate
hits a minimum of 76.14% in 2010 and a maximum of 78.91% in
1990 (World Bank, 2017). However, the women participation’s
rate in the labor market represents a minimum of 43.05% in 2008
and a maximum of 50.79 in 2017 (World Bank, 207), which still
represents large gap between both participations. However, the
females’ participation shows an increase in the Malaysian market
as it reached its maximum in 2017 [18].
Moreover, the initiatives made by the government and NGO’s,
facilitating the access to higher education boosted the number
of women participating in the labor market. Likewise, providing
safety, flexible times and compensation between the work and
family’s responsibilities aided women to enter the market in 2002
more than before (Ministry of Women, Family and Community
Development).
The data shows that the maximum unemployment rate for
men reached 2.27% and a maximum of 3.6% in 2009 (World
Bank, 2017). While, the female’s unemployment rate reached
a minimum of 2.77% in 1997 and a peak of 4.39% in 1991
(World Bank, 2017). This is not a quite big gap; however, the
unemployment rate for women started to increase again over
time in the Malaysian labor market (Figure 8). Finally, we can
see that Malaysia is facing a drop-in rank due to the slowing
down in performance economically, educationally and politically.
However, there is a development and improvement in the health
and survival sector. Furthermore, Malaysia ranks the 57th out of
189 countries with highest development index od 0.802 (United
Nations Development Programme, 2018). Historically, the time
that Pakistan was part of the India, due to the Muslim community
influence in the 19th century women was forced to wear the
“purdah”. The purdah was meant to isolate men and women social
contact (Table 2).
The first empowering women movement was brought about
by the reformer Syed Ahmad Khan. He argued that women should
have equal education opportunities as men and advocated for
female literacy. Muhammad Ali Jinnah, the founder of Pakistan
continued this vision. He brought his sister Fatima Jinnah to the
political front as a role model. Inspired by Fatima Jinnah many
women’s organizations and groups established, especially in
the urban areas of Pakistan Ejaz (2007). Later, in 1947, after the
independence of Pakistan, women were entitled the right to vote
under the Pakistan Ordinance [19].
They were reaffirmed and finally voted in the 1956 elections
under the interim constitution. In 1956 Pakistan had a reservation
of seats for women in the parliament. Nevertheless, Pakistan
due to strong cultural norms and religious beliefs still could not
completely remove all obstacles and gender inequality persists in
all areas Ejaz (2007). The inequalities such as the education and
employment gap and limited women’s properties compared to
men pointing to the fact that despite the efforts the gap persists.
The culture of Pakistan is still patriarchal and the percentage of
women participating to the paid work is extremely low (24%)
(World Bank, 2013).
FLFP and Economic Growth in Pakistan
Pakistan was chosen to be examined concerning the influence
of an increase in female participation in the labor force on
economic growth. Firstly, a general background about the female
labor force in Pakistan is needed in order to help in taking a wider
look on the situation. Staring from the 19th century, most of the
Pakistani women did not engage in paid jobs and the minority of
women who were employed in paid jobs mainly consisted of single
females with young ages who still do not have family obligations.
Consequently, at that time, marriage was considered a factor that
prevents women from working; the few married women who had
jobs were mostly in the sectors of either textiles or house maids
Ehsan (2015).
After then, the structure of female labor force started changing
starting from year 1930 when the Pakistani service sector started
nourishing following an increase in office work. As a result, the
Pakistani labor market demanded more female labor. Moreover,
modern technology started to take place at that time in Pakistan,
electricity in specific, which was considered satisfactory for
females because it helped in reducing the unpaid work that they
used to get engaged in and replacing it with paid work Ehsan
(2015).
Later in Pakistan, around the 1950s-1970s, women started
to get concentrated in educational sectors such as schools and
libraries in addition to some minor positions in health sectors
such as nurses. At that time, the Pakistani women started to have
a position in the society and their participation in the labor force
started increasing dramatically. One of the major causes behind
the significant growth of FLFP in Pakistan, reaching up to 75%
compared to 40% growth rate in the 1970s, is the enhancement
of the educational level of Pakistani females in the 1970s-1990s;
this reflects how high educational levels for females have a direct
effect on the female employment within countries Ehsan (2015).
At the time where the Pakistani female labor force experienced
a significant enhancement, especially in the 1990s. This
was followed by an improvement in the Pakistani GDP growth;
amounting 4.04% annually, according to statistical data extracted
from the World Bank between the period of 1990-2013. Additionally,
the highest GDP growth that Pakistan had experienced took
place in year 2017 and amounted 5.7% and the same year coincides
with the highest percentage of female participation in the
Pakistani labor force Ehsan (2015). The following (Figure 9) will
clarify this positive relationship more throughout different consecutive
years.
As (Figure 9) reflects the percentage of Pakistan’s female’s
participation in the labor force in addition to Pakistan’s GDP
growth starting from the 1990s till year 2017. It can be observed
from the above bar chart that there is a positive relationship
between the increase in female labor force participation in
Pakistan with the country’s GDP growth. The shorter bars
represent the annual percentage of Pakistan’s GDP growth while
the taller ones represent the female labor force; the positive
relationship between both variables is clear because the increase
in female’s participation % of the labor force is followed by an
increase in GDP growth and thus, economic growth especially in
the year 1990, reaching 13.7%, and years starting from 2011 until
2017 Ejaz (2007).
Moreover, years from 2000 until 2007, Pakistan have experienced
a comparatively improved growth in its economy, average
growth rate of 5.1%, and this also marked a period of an increased
participation of females in the Pakistani labor force. Nevertheless,
this does not neglect the fact that Pakistani females still suffer
from high illiteracy rates during recent years and the gender employment
discrimination is still persistent in the Pakistani market.
To be more specific, females’ illiteracy was concrete more in
Pakistan’s rural areas. Moreover, Pakistan still lags far behind in
comparison to other countries. A factor that needs to be considered
over here is that of Islam and religious belief of Muslims in
Pakistan that women should stay at home and observe “purdah”
and the gender gap in education. Female to male literacy rate was
58.7 Ejaz (2007).
Nonetheless, Pakistan did not really encounter significant
economic growth since in the period of the 90’s where the service
sector took placed and FLFP highly improved. The unemployment
level of Pakistan in 2012-2013 stood around 6.54% on average.
Female unemployment was higher than men unemployment
level, standing at 9.19% which could be another factor worth
considering why female labor force participation is low Ejaz
(2007). It can be observed from (Table 3) that there is a significant
Gender Wage Gap that takes place in Pakistan even after the Female
participation improved in the Pakistani labor force. Pakistan is
close to Egypt in this case, as the culture and social norms are the
major factors that arise the concept of gender wage discrimination
within the country.
Case Study: Belgium
Belgium is one of the top countries, beating gender wage gap
compared to other European countries including Sweden, the
Norway and Iceland. The recent data provided by the OECD shows
that the average monthly wage of a Belgian man is 3.3% of that of
the women. While the average wage gap in the European union is
19.2% (OECD, 2017).
The wage gap has not always been small. However, it decreased
throughout the years. As in 2000 it was 13.6%, decreasing to
11.5% and 7.5% in 2005 and 2010, respectively (OECD, 2017).
The wage differentials have always been a main concern towards
the government; moreover, what made it easier is joining trade
unions. In addition, approximately 55% of the Belgian workers
join the trade union and a 96% of the workers are bargaining
agreements they sign. This means that the workers do not
individually negotiate their salaries with their boss, but instead
it is paid based on an agreed framework based on what they do.
Therefore, there is no discrimination against women and hence,
the framework makes it impossible for women to get paid less
than men.
Likewise, the government did not stop here and took further
steps forward. They made a new law which makes it mandatory
to take into consideration the gender wage gap when the workers
negotiate their wages in the trade union. The law also requires the
Federal labor service (SPF) to check and sign off job classifications
based on their gender neutrality (Figure 10). Yes, there are more men than women in the labor force, however the difference
isn’t that large as the government is still working on it to make
it relatively equal (Figure 11). As we can see the unemployment
rate for women is too small, and more likely equal to that of men.
Hence, we can say that almost men and women are equal and
there is no discrimination.
Why Belgium is One of the Top Countries with Low Wage Differentials?
In 2001, the Belgian Presidency decided to approve which
factors affect the wage pay between men and women. In 2006,
was the first annual report published showing the wage pay gap
in Belgium. It was useful as it provided a measure of every year
changes in Belgium and allowed it to know the factors mostly
affecting the wage gap. The factors are as follows, gender pay
ratios for all employees, part-time work, age, level of education,
segregation in the labor market, personal features such as civil
status, household composition or nationality and finally, the
factors contributing to inequality as defined by the Oaxaca-
Blinder decomposition technique. The reports then highlight
the parameters that increase or decrease the wage differentials
between men and women. It then distinguishes between the
differences that result from discrimination and from how the
labor market works. In general, part-time work, age and horizontal
professional segregation remain the main factors contributing to
the gender pay gap [20]. Finally, the reports help decision and
policy makers to take global actions that can close the gender gap
as much as possible (Figure 12).
How to Close the Gender Wage Gap?
First, some of the laws must be reformed in order to protect
human rights and eliminate the gap as much as possible. For
example, laws such as the Family Medical Leave Act (FMLA), the
Pregnancy Discrimination Act (PDA) and Civil Rights Acts Simpson
(2013). When they are reformed, they make a huge difference on
how women perceive and how they are treated in their workplace.
Another additional legislation on taxes that can close the wage gap
can be made. Changing the child care tax incentives can influence
the number of women who can go back to the work force. Likewise,
setting a minimum wage can benefit those who are at the lowest spectrum of poverty, and are under poverty line Wong (2013).
Thus, adjusting to the new changes in society and demography
give a perfect opportunity to change and implement new policies
that protect the economies from further gender discrimination.
Organizing awareness campaigns, equality programs and
getting government support have a huge pay off on promoting
gender equality and higher pay for women. These social programs
aid acquiring women with the skills, education and/or benefits
to start working again in the labor force. None of the nations are
gender neutral, however, we can do the best in order to overcome
this discrimination as much as we can. The more programs set in
place to promote women, the more women can gain additional
equality in earnings.
Another thing is to encourage work-life balance Brummelhuis
van der Lippe (2010). Having a child must be no longer a penalty
for women. Work-life balance is a theory that encourages career
goals and lifestyle choices. Every employee wants to be exceptional
in their work and at their homes, having different lifestyles and
backgrounds. However, firms must put into considerations
those lifestyles and facilitate the needs of the worker. According
to Simpson (2013), he highlighted that some of the decisions
that support the work-life balance are job sharing and flex time.
Moreover, the objective is to allow people return to their work and
at the same time be able to meet their household requirements.
As a result, the wage gap can be closed further. Treiman and Roos
(1983) asserted that the main factor of women getting less pay
than men is the lack of training and education.
Women should be stood for that they are more educated and
involved in work force than ever, when one is educated the better
opportunity, he has for getting a high paid job. As viewed in the
above (Figure 13), it shows that the number of women holding
a college degree increased from 1970 to 2010 from 11% to 36%
(US. BLS,2011). Also, according to our countries being studied, the
data shows an increase in female’s literacy over time as shown in
(Figure 14) below.
Furthermore, Rose and Hartmann (2004) mentioned that
women focusing on male dominated occupations rather than
female dominated occupations help closing the gender gap to a
high extent. This is known as wage segregation. Treiman and
Roos (1983) explained that women prefer specific jobs than men,
and these jobs pay less. Ross and Mirowsky (1996) described
male dominated to involve hazardous conditions, including
temperature, noise, location, more physical labor and additional
human capital in education and experience. Economic theory
states that the higher the risk, the higher the return. Thus, the
more women are indulged in such male-oriented occupation, the
higher is their earning. Hence, well-paying jobs are suitable for
women if they are willing to go out of their comfort zones.
Female Participation and Economic Growth
Impact of Female Participation on Economic Growth
Economists nowadays agree that gender discrimination has a
great influence on economic growth. According to empirical and
theoretical studies made, they suggest that female’s participation
in the labor market undoubtedly promotes growth. The evolution
from exogenous to endogenous growth models, rose the
recognition of gender specific growth determinants. The models
endogenized the advancement in technology by integrating the
education with the labor market participation as growth factors.
Knowles et.al. (2002) model suggests that differences in
gender’s education negatively impact economic growth. Due to
the falling marginal returns of human capital, there is larger rates
of returns from education to women than to men. Consequently,
investing in women’s education, acquitting them with the skills
and experience, aid promoting economic growth and increasing
country’s capital stock. How women’s education affects the
nation? It affects its income in several ways, such as it increases
the female’s participation in the labor force and accordingly their
earnings as well, reducing women’s fertility. Galor and Weil (1996)
highlighted that a working woman and her participation in the
labor market provides households with additional income, which
as a result increases the savings amount. This increase in savings
will increase the capital stock per worker and therefore, increases
output.
Moreover, Klasen and Lamanna (2003) added, that high
gender discrimination rate present in the country causes artificial
restriction to the “talent pool” of the country’s labor force. This
is potentially because less qualified men force qualified women
out of the market. In conclusion, this artificial low available labor
force within the economy makes the country incapable of being
internationally competitive. A macroeconomic model made by
EU business analysts predicts that an expansion of 5% in female
work constrain cooperation in Southern Mediterranean nations
could result in a total 1.3% expansion in GDP in these nations
somewhere in the range of 2015 and 2030 Tsani (2012).
As indicated by the International Monetary Fund, raising the
female work constrain cooperation rate to male levels in Egypt
would result in a 34% expansion in GDP. In a World Bank paper
on work disparity, increments in ladies’ work compel investment
were related with enhanced welfare results and productivity on
a nation level Tzannotos (1999). Much advancement has been
accomplished in the previous couple of decades in narrowing the
sexual orientation hole in Malaysia. It tends to be appeared in the
improvements in ladies’ jobs, both in supreme and relative terms,
in the major financial perspectives of the nation’s advancement:
expanding rates of female work constrain support, gains in
profitable exercises of ladies and their reinforced monetary
standing and their expanded investment in instruction. Malaysia’s
noteworthy monetary development has been joined by the more
prominent support of ladies in the formal workforce and in a
scope of other exercises.
Female labor force participation rate has kept pace with
population development and the number of female and male
specialists multiplied somewhere in the range of 1970 and 1995,
while the labor force participation rate remained generally
unaltered after 1980. The labor force rate expanded from the
upper thirties for ladies between 1970 also, 1980, and has stayed
somewhere in the range of 44 and 46 percent among 1990 and
1995. The quick retention of ladies into the work force has been
affected by a few variables. The rapid economic growth was due
largely to important growth in the manufacturing and services
sectors, where considerable also, relatively bigger increment
of female specialists has been enlisted. Among all parts of the
economy, the assembling area has recorded the most elevated
development rate amid the most recent decade.
The assembling part has made around 0.6 million new
employments somewhere in the range of 1990 and 1994. In
1994 the sector provided work to 1.9 million individuals. The
development of this sector has driven to the participation of
female and their engagement in business, with about 46.4 percent
(1990) and 43.4 percent (1995). The financial sector and the
government are the main employers of women and it represents
around 60 percent of the aggregate work force in these sectors.
Agriculture sector not the main employer of ladies anymore and
the number of women working in agriculture sector has declined
from 40 percent in 1970 to 30 percent in 1995. Ladies specialists
have been able to move into generally better paying open doors in
different sectors.
Impact of Economic Growth on Female’s Participation
Empirically, the Middle East shows an increase in the
female labor force participation till 2012, while East Asia shows
a decrease in female participation. On the other hand, the
economic growth shows an inverse impact on the female labor
force. Whenever the growth increases, the female participation
decreases then increases on the long-run. This is shown through
the Feminization U’ model in (Figure 15) below. In the first stages
of country’s development, the female participation in the market
decreases, then increases at the higher stages of development
Boserup (1970).
At stage 1, the country is a low-income nation and is almost
centralized in the agricultural sector. The female participation
tends to be too high in these developing countries, as most of the
women at that time work on farms in home workshop production.
They contribute to family workers or self-employed and at
meanwhile, they can still have children. At stage 2, the economic
growth starts to show up, the industrialization effect takes its
place, leading to some gender discrimination because of the
employment differences. Then, the decrease in the agricultural or
rural sector and the increase in demand for labor mobility make
it difficult for women to compromise between work and children.
As a result, family connections are weakened, and children
are now acting as barriers for women’s wages. Another thing,
due to the structural change and income effect arose from
industrialization and urbanization, the demand for high-skilled
and technical workers dramatically increased for the new mass
dependency on computers and machines. More men started to
work than women and they now can maintain the family on their
own [21].
Lastly, at stage 3, the female participation starts to increase all
over again. The exclusion of women from wage activities results
in a tight labor market, and the demand for women starts to
increase. Competitive countries want to optimize their talent pool
and acquire women with training and education. Women’s job
opportunities increase, and hence increases the opportunity cost
of staying at home. Therefore, female labor market participation
increases in the medium and long run, due to women’s time lagged
adaption to new qualification and requirement profiles of the
labor market and a dominating substitution effect (Figure 15).
Conclusion
In this paper, we have seen the different driving forces of
gender wage disparities. Some of the main obstacles that face
women are education, childcare, traditional reputation and
administrative jobs that limit their job opportunities than men.
Moreover, we examined the different driving forces that both
countries face, leading to gender discrimination in wage pay.
However, each country differs than the other in such disparities.
According to our research, we have known for instance that in
Egypt, the private and public sectors have major contribution to
paying different wages.
Private sectors dramatically neglect women’s rights in the labor
market such as, sick leave, working hours and sexual harassment,
etc. while, in the public sector, they are more responsible towards
women and pay higher wages for them than in private. As well as
in the informal sector, they highly discriminate against men and
women in wage pay and thus, women get paid so much lower than
men even in the compensations. Another driving force is marriage.
The female’s participation rate decreases when they get married,
and men are left with greater job opportunities. On the other hand,
in Malaysia the most important factors are the human capital, job
characteristics and education.
Despite the increase in Malaysian women’s literacy rate, their
productivity level is said to be lower than men and therefore are
getting paid by gender for profit maximization. In addition, the
fertility rate has a major impact as well, as the greater number of
children the woman has, the more she’s disrupted from seeking
good job opportunities. Men in Egypt dominate more than half
the labor market and are paid 29% higher than women. However,
the gender inequality rate has decreased due to the constitution
made in 2014 protecting women and the awareness campaigns
made. Adversely, Malaysian women get paid only 9% lower than
men and they earn 71% of their wages. While, gender inequality
increases due to the lack of laws protecting women.
In order to overcome wage gap problem, we must develop
laws such as pregnancy discrimination act and family medical care
leave act. Also, raising awareness for gender equality and programs
promoting life-balance techniques can have a major positive effect
on women’s lives and jobs. As well as, setting minimum wage rate
to protect those on the verge of facing poverty. Finally, we have
shed light on the main factors causing wage disparities between
men and women up until now in the 21st century and knew how
to close the gap as much as possible. Also, we proved the positive
impact women’s participation have on economic growth on the
long run.
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