Global Human Rights Defence

The Gender Wage Gap: An Exploration of The Wage Gap in China

The Gender Wage Gap: An Exploration of The Wage Gap in China
Gender wage disparities between men and women. Source: Ramage/Euronews, 2022.

Author: Jayantika Rao Tiruvaloor Viavoori

Department: Women’s Rights Team

Introduction

The gender wage gap can be defined as “the average wage ratio of females to males” (Wang & Cheng, 2021). Despite the tremendous achievements of women in terms of education, the wage differential is based on gender in most countries. According to Norris and Kochhar (2019), although many countries have tried to initiate policies to attract female workers, only 50 percent of the women participate in the labour workforce compared to 80 percent of men. Many researchers blame discriminatory policies, attitudes, and cultural norms for low female participation. Women, especially in developing countries, are subjected to discrimination. They are often hired in the informal sector (unincorporated enterprises or households that do not have formal contracts) and are vulnerable to discriminatory policies, job losses and lower wages. Economic inequality is still one of the most pressing challenges. Organisations and companies play a fundamental role in perpetuating inequality as they are responsible for allocating wages that determine most individuals’ economic and social status (Sitzmann & Campbell, 2021). While the wage gap between females and males has decreased over time, women are still paid less than their male counterparts, especially in the formal sector (employment in enterprises that have legal contracts). Women who work and have the same educational qualifications as men earn less than their male co-workers (Norris & Kochhar, 2019).

Furthermore, since women generally spend less time in the ‘paid’ labour market, they have lower pensions and face a higher risk of poverty in their old age. According to the human capital theory by Becker (1964) and Mincer (1974), individuals are willing to tolerate income inequality if it is based on personal capabilities or efforts (Iwaski & Ma, 2020). However, if income inequality is due to discrimination based on gender, then it can cause social dissatisfaction. While there has been tremendous improvement in encouraging female participation, there is little progress in removing gender disparities that cause the gender wage gap, which can discourage female participation. This article will focus on China’s gender wage gap research to shed light on the practice of closing the pay gap between women and men. 

 

China’s gender wage gap

Many researchers have investigated wage inequality through the lens of gender in China. China has become an exceptional case of economic inequality, as income inequality, including the wage gap, has increased despite the transition to a market economy (Iwasaki & Ma, 2020). The opening of the Chinese market by Deng Xiaoping in 1978 ushered in a new era of economic reforms (Li, Sato & Sicular, 2013). The Chinese government introduced many national economic policies that fostered an increase in the Gross Domestic Product (GDP), and exports also increased. However, the same policies are credited for China’s economic growth and also amplified the gender inequality in the country. Researchers often credit the country’s economic policies for the growing gap rather than looking at the issue holistically. While the Communist Party of China has made numerous efforts to promote gender equality rhetoric in society, the Confucian ideology that believes women are subordinate to men still governs Chinese society (Hughes & Maurer‐Fazio, 2002). The Chinese constitution formally guarantees women equal rights with men and assures them equal pay for equal work (Wang & Wong, 2021). However, in reality, women in China are discriminated against in the labour market, with many women earning less than their male counterparts. The unrelenting increase in gender inequality and, in many cases, the gender wage gap has raised concerns among researchers and policymakers. Despite the growing evidence of policies initiated by the government that benefit women in education, there is also evidence of female labour market disadvantages. 

Before the economic reforms in China in 1978, the gender wage gap was relatively low, as, in an egalitarian society, women were able to access the same opportunities as men (Wang & Cheng, 2021). However, after the economic reforms, gender earnings differentials bourgeoned due to the deregulation of wage setting, rising returns to human capital, and gender discrimination in the market (Wang & Cheng, 2021). After the economic reforms, the government decentralised the wage payment system. It allowed private employers to diverge from the national wage scale and choose what they wanted to pay their employees. Due to these factors, Chinese women’s wages deteriorated during the country’s fast economic development. Females’ average wage fell from approximately 85 percent in 1988 to approximately 72 percent in 2009 (Lee & Wie, 2017). Another study discovered that migrant male workers earned 26 percent more per hour than their female counterparts (Qin et al., 2016). One of the leading causes of the increased gender wage gap is the reduction of State sector workers. In 1991, more than 97 percent of the urban workers were employed in State-owned enterprises, but by 2008 to 2009, only 50 percent of the urban workers were employed by the State (Lee & Wie, 2017). Other workers in industries run by private individuals are not bound by legislation to receive the national standards for a wage compared to State employees. Therefore, while State employees enjoy wage premiums in China, non-State employees are subject to wage discrimination, further amplifying the gender wage gap. 

While economic policies like decentralising the wage system have impacted the gender wage gap, changes in the labour force can also stimulate the gap. However, by focusing on the gender gap that does not differentiate between educated women workers and less educated women, the wage gap can be both overestimated and underestimated simultaneously. Like many countries such as Bolivia and Japan, gender norms dictate specific job roles in China, reinforcing gender inequality. Less-educated women that rely on jobs based on skill rather than education are more likely to be discriminated against than educated women. Owing to the job segregation, many women in China are stuck in jobs that do not require physical strength, which are low paying and have little scope for advancement (Fang & Sakellariou, 2015). The increase in discrimination and the less favourable treatment of female workers than male workers might be industry-specific factors contributing to the gender wage gap. However, a wage gap in China      can be found across different skill groups, further implying that the deterioration of Chinese women’s wages is pervasive and should not be ignored (Lee & Wie, 2017). 

Furthermore, social and cultural norms that influence the gender wage gap are a salient structural factor that is seldom discussed. Often social policies meant to benefit women can backfire and intensify the divide between male and female workers. For example, in 2012, the Chinese government, under the banner of “The Special Rules on The Labor Protection of Female Employees”, increased (paid) maternity leave from 90 to 98 days (Wang & Wong, 2021). While policies like maternity leave are meant to benefit women and help them, especially during pregnancies or miscarriages, maternity leave policies have often been cited as an avenue for further discrimination. Employers believe that government initiated female policies like maternity leave burdens them with extra cost as they must pay for the female employee even though they are on ‘leave’. In fact, as many employers must hire extra personnel to cover the female employees work, employers tend to discriminate against women during the hiring process. Moreover, scholars argue that because of maternity-based policies, private employers’ have certain stereotypes regarding childbirth and family responsibilities and therefore consider female workers less productive and less committed to work (Wang & Wong, 2021). Chinese women’s weakening position in the labour market could result in lower demand and wage rates. 

Additionally, within this debate, many researchers have found that gender disparities in earnings in the labour market can directly affect a parent’s child’s education expenditure (Wang & Cheng, 2021). Parents may invest more in their male children if they expect more significant future flows of remittances and returns from their male offspring. Many researchers believe that a narrowing gender wage gap may enhance girls’ educational prospects by producing a higher level of human capital investment (Wang & Cheng, 2021).

 

Conclusion

Women’s labour-force participation has long been recognised as critical to overall development. Women’s earnings improve their position in society, decision-making, power, and education. Closing the gender wage gap has been an important priority for many national and international conventions. Nevertheless, the gender wage gap persists in many societies and is not only pervasive within countries that have low economic returns. By examining China, this article highlights that despite the liberalised economic policies that guided the fast economic growth, a sharp deterioration of women’s position in the labour market further contributed to the widening of gender wage inequality. The gender-specific gap is often attributed to a rise in discrimination based on unobservable qualifications of female workers, gender norms and stereotypes, and less favourable treatment than male workers due to their employment status, industry-specific factors, and social policies. In terms of policy recommendations, China and other countries must consider implementing policies that regulate the wage scale to ensure a decrease in wage scale discrimination based on gender. 

 

References:

Fang, Z., & Sakellariou, C. (2015). Glass Ceilings versus Sticky Floors: Evidence from Southeast Asia and an International Update. Asian Economic Journal29(3), 215-242.

Hughes, J., & Maurer‐Fazio, M. (2002). Effects Of Marriage, Education And Occupation On The Female/Male Wage Gap In China. Pacific Economic Review7(1), 137-156.

Iwasaki, I., & Ma, X. (2020). Gender Wage Gap In China: A Large Meta-Analysis. Journal for Labour Market Research54(1), 1-19.

Lee, J-W, & Wie, D. (2017). Wage Structure And Gender Earnings Differentials In China And India. World Development97, 313-329.

Li, S., Sato, H., & Sicular, T.      (2013). Rising inequality in China: Challenges to a harmonious society. Cambridge University Press.

Norris, E.D and Kochhar, K. (2019). Closing the Gender Gap. International Monetary Fund. Retrieved on June 6, 2022, from, https://www.imf.org/Publications/fandd/issues/2019/03/closing-the-gender-gap-dabla

Qin, M., Brown, J. J., Padmadas, S. S., Li, B., Qi, J., & Falkingham, J. (2016). Gender Inequalities in Employment and Wage-Earning Among Internal Labour Migrants In Chinese Cities. Demographic Research34, 175-202.

Sitzmann, T., & Campbell, E. M. (2021). The Hidden Cost Of Prayer: Religiosity And The Gender Wage Gap. Academy of Management Journal64(4), 1016-1048.

Wang, H., & Cheng, Z. (2021). Mama Loves You: The Gender Wage Gap And Expenditure On Children’s Education In China. Journal of Economic Behavior & Organization188, 1015-1034.

Wang, J., & Wong, R. S. K. (2021). Gender-Oriented Statistical Discrimination: Aggregate Fertility, Economic Sector, And Earnings Among Young Chinese Workers. Research in Social Stratification and Mobility74, 100622.

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