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Gender equality and pay gap

The gender gap still represents an important issue in various industries and countries 1. This critical phenomenon can have many different effects not only on companies, by severely affecting their culture and policies, but also on individuals and on the country they are living in1. Gender gap includes many different topics and equal and fair wages, as well as women representation, are among those1.

In 2020, the average global gender gap was around 34.4%10 and 23% was the average global gender pay gap4.

In the same year in Europe, women were paid 14% less than men on average with Estonia, Latvia, and Germany being respectively the first, the second, and the third country with the highest gender pay gap rate2.


Luxemburg, Romania, and Italy, on the other hand, are respectively the first three countries with the lowest gender pay gap within the European Union2.

The gender gap has many different causes such as the overrepresentation of women in low-paid jobs, or the fact that in some cultures the female individual is supposed to stay home and take care of the family or deal with home chores22.

The effect of gender gap and gender pay gap are various.

A high gender pay gap highlights an increase in women risk of poverty and social exclusion2, lower access to resources, and limited careers opportunities4.

On the other hand, an equal gender pay gap decreases the turnover rate of companies' human resources, increases the satisfaction of employees, and enhances the decision-making process of companies10. It also allows women to access better resources and limits their risk of poverty.

Let's now take a look at a real-world example by analysing Ericsson.

Ericsson is a world-leading provider of information and communication technology3. It operates in four areas:

  • Networks: develops, sells, licenses, and delivers hardware, software, and services to support digital transformation for the next generation of mobile services;

  • Digital Services: provides solutions in the areas of business support systems, operational support systems, cloud communication, cloud core, and cloud infrastructure;

  • Managed Services: offers Ericsson Operations Engine for managing and optimizing telecom networks;

  • Emerging Business: is focused on new technologies, such as smart manufacturing, IoT connectivity, connected vehicles, security, and edge computing3.

Ericsson is headquartered in Sweden, but it is located in many countries worldwide3. In 2020, its revenues amounted to 22 €bn and they showed a growing trend over the past years3.

In 2020, it employed around 100,824 people3 of which 25% were women9. Only 6 out 21 (29%) were in the executive board3, and 21% held a position as line managers9.

Moreover, the company's 10th consecutive NextGen Advisory Council which is a diverse group that advises the Executive Team on critical business matters was composed by 57% of female individuals9.


According to a Gov.uk report in 2020, Ericsson women and men were mostly paid equally when comparing the pound salary. Considering the median hourly wage, women's salaries were 0.5% higher than men's7. However, men's hourly wage was 3.4% higher than women's. In the same year, Ericsson averaged global salary for females was around 20% less than men's5.


Regarding gender inclusion and attraction of young girls to the Information and Communication Technologies (ICT) field, the company has put in place different activities9.

Among these, there is AlTitude, an accelerating leadership program for women only9. In 2020, 52% of females who participated reported that they experienced an improvement in their career, and 94 new female members will be joining the 2021 program9.


Another activity carried out by Ericsson is the support of the International Girls in ITC Day9. The purpose of tihs event is to create a global environment that empowers and encourages girls and young women to consider careers in ICT6. Besides supporting and participating in the event, the company is also offering job placements to 200 female university students in India who participate in ICT girls day event8. Since 2011, 300,000 girls and young women have participated in this event6.

Looking at the data, Ericsson's gender pay gap is lower than the global average. The data shows that overall, women's and men's salaries reach almost equality inside Ericsson.

However, females representation is not adequate neither in the overall workforce nor in the executive and line management positions.

Therefore, it is safe to assume that Ericsson still has room for improvement in order to reach gender equality both in terms of women's representation and equal wage globally.

Ericsson could improve remarkably its efforts to provide equal gender benefits and thus decreasing the gender pay gap and increase women empowerment by ultimately closing the overall gender gap.

By doing this Ericsson would decrease the risk of female poverty, increase their access to better resources and meaningfully improve women's access to better-paid jobs and career development. Moreover, the company could set an example and lead the industry towards a more equal working environment.


Sources:

  1. https://www.forbes.com/sites/forbesnonprofitcouncil/2020/03/27/why-gender-equality-matters-in-business-success/?sh=535258d4669c

  2. https://www.europarl.europa.eu/news/en/headlines/society/20200109STO69925/understanding-the-gender-pay-gap-definition-and-causes

  3. https://craft.co/ericsson

  4. https://www.un.org/en/observances/equal-pay-day

  5. https://www.payscale.com/research/US/Employer=Ericsson_Inc./Salary/Page-5

  6. https://www.ericsson.com/en/blog/2018/4/attracting-more-girls-to-ict

  7. https://gender-pay-gap.service.gov.uk/Employer/zE6jLZqu

  8. https://www.ericsson.com/en/cases/2019/education-and-womens-empowerment-in-india

  9. https://www.ericsson.com/492da5/assets/local/about-ericsson/sustainability-and-corporate-responsibility/documents/2021/ericsson-sustainability-and-corporate-responsibility-report-2020_eng.pdf

  10. http://reports.weforum.org/global-gender-gap-report-2020/key-findings/

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