- August 26, 2022
- Posted by: CFA Society India
- Jolly Balva, CFA, Member, Public Awareness Committee, CFA Society India
- Meera Siva, CFA, Director, Public Awareness Committee, CFA Society India
- Sivananth Ramachandran, CFA, Director, Capital Markets Policy India, CFA Institute
Gender equality is a fundamental human right. The right to equal pay and treatment has long been legally enshrined through the Equal Remuneration Act, 1976, over 45 years ago. Yet, equality for women at workplace is far from being a reality.
Gender-based discrimination and bias at workplaces are commonly meted out in several overt and covert ways — in hiring, pay, promotions, opportunities and retention. Subtler aspects include micro-aggressions, condescending and biased behaviour and attitudes by colleagues, seniors, groups or even by managements as an accepted culture.
Besides being plain wrong, this is also a huge economic loss to the country — India can have $770 billion of added GDP if it can advance women’s equality, as per a McKinsey study.
As per the gender inequality report by the World Economic Forum 2022, India ranks amongst the last — at 135 of 146 countries — in the Global Gender Gap Index, which includes criteria such as economic participation and opportunity. Women account for a paltry 18 per cent of labour income; and to become a $5 trillion economy by 2025, India Inc. will need to take urgent and huge steps.
Gender pay transparency
The good news is that small steps can achieve big results. One such is better disclosures on wage statistics by gender. Many of the developed world nations require employers to report them. These are supplemented by voluntary initiatives like the CFA Institute Diversity and Inclusion Code, which encourages investment firms to make commitment towards creating equitable and inclusive workplaces.
Intuitively, publishing aggregated data on pay may push employers to notice and address wage disparities on their own. This is backed by studies which show pay disclosures reduce gender pay-gap, with one well-cited study estimating the reduction at 20-30 per cent.
The new rules on disclosure of number of employees and remuneration by gender and organisational levels — from board of directors to workers — as part of Business Responsibility and Sustainability Reporting (BRSR) is hence a welcome step.
This was strongly recommended by the CFA Society India during the rule-making phase. The rules are mandatory for top 1000 listed corporates from FY23.
A few leading companies from the top 1000 listed companies have adopted BRSR reporting voluntarily from FY22 itself. One glimpse at an admittedly limited sample (ten large companies) reveal that women are massively under-represented and under-paid, even amongst these leaders. Interestingly, some companies left out details on gender-based numbers of employees and pay even as they reported on other BRSR disclosures, indicating discomfort.
In terms of workforce participation, there is a symbolic representation of women amongst boards of directors, partly explained by regulations mandating at least one female independent director. But most companies report no woman among their key management personnel. Sector-wise, information technology had the most women representation among employees, at around one woman for every 1.7-2 men employed.
In other sectors, including finance companies, pharma and FMCG, men outnumbered women by 2-6 times, and the maximum ratio in the sample was close to 200:1. As the data set increases, the results may likely not improve, as the small data set represented the ‘leaders’ who were reporting voluntarily.
In terms of median remuneration, women in the board were paid 5-33 per cent less than men, and the gap for women in the workforce at different levels were in the range of 25-42 per cent. A thorough analysis may reveal if there are substantive differences between various levels.
While the picture so far is alarming, there is hope, thanks to disclosures. In the era of social media, companies which do pink social media posts on Women’s Day and other forms of window-dressing, while reporting poor workforce participation and large pay gaps, will be called out.
And what can further help is enforcement. For example, companies stopped short of reporting, or stating there is no wage gap and wages are determined solely by role and experience.
A more granular breakdown across hierarchy in disclosure requirements would help. And where a significant gap is reported, especially at junior levels, regulators must tighten oversight to ensure women are not exploited. Pay disclosures will also strengthen calls for pay audits, that lets employers to identify pay disparities among workers by conducting an analysis of job evaluation and classification.
In this digital age, companies operating with archaic setups and mindsets will struggle to attract and retain talent.
The recent incident of Google having to pay $118 million to settle a class-action gender discrimination lawsuit for underpaying 15,000 women is a sign of times to come. Bridging the gorge will be the bridge for a better tomorrow.
Jolly and Meera volunteer with the CFA Society India and Sivananth is Director, Capital Markets Policy India at CFA Institute