Based on the OECD's 2022 report, there are three main components to Estonia's pay gap: about a quarter of it comes from lower-paid jobs for women in areas that are essential to society, such as health and education. Another quarter is due to women working in lower positions within organizations.

However, the third component of the pay gap, or about half of it, is unexplained and cannot be explained by the analyses. It constitutes unequal pay for women and men doing equivalent work.

The pay gap is not just a problem for "bad" employers

A large part of the pay gap comes from employer decisions. At the same time, both employers themselves and employees tend to believe that there is definitely no pay gap. This belief is fueled by the misconception that only "bad" employers pay unequal wages. Rarely, however, unequal treatment of workers is a deliberate business strategy to cut costs at the expense of women. Rather, it comes from unconscious norms and prejudices that creep unnoticed into pay and promotion decisions.

For example, men could be thinking that they don't have to go to kindergarten or take care of children at home, and that a woman with young children is not committed to work, often has to care for the children, or is unwilling to take on responsibilities. It is also assumed that, on returning from parental leave, the woman has somehow forgotten the professional skills and knowledge she acquired earlier and is put back on "informal probation." This also applies to pay, even though it is illegal.

However, the pay gap is not a matter of belief, but of data. Labor market researcher Figure Baltic Advisory, which analyzes the data of almost 100,000 Estonian employees every year, has pointed out an interesting fact: the more a company believes that it has no gender pay gap, the more likely it is that the opposite is true. Figure's pay analyses also allow comparisons between people doing equivalent work. Unfortunately, the data shows that year after year, men earn 7 to 10 percent more than women for equivalent work.

Just ask for a raise?

It's common advice for women to just ask for more money. Although this isn't necessarily bad advice, women need not be more assertive in their wage demands if they want to ultimately close the pay gap. Why is that?

First, salaries are often fixed and do not allow for negotiation, especially in lower-paid positions. In high-paying positions, where the pay gap is both the widest and the most opaque, there is a greater opportunity for pay negotiations.

Second, studies show that women are less likely to ask for a raise and more likely to cite a lack of courage than men. At the same time, people who are more vulnerable in the labor market for reasons other than gender, such as Russian speakers, older people, single parents, or women who have to care for family members, maybe more "timid" about asking for more pay.

These are the people who cannot risk losing their jobs. So the seemingly timid placidity of these women may be nothing more than practical concern.

Third, if receiving a raise is only determined by the spirit of the person requesting it (who asks, gets), it would suggest an opaque compensation system that eventually leads to discrimination. Assessing the value of jobs and designing an informed pay system where wages are commensurate with the skills and knowledge, responsibilities, experience, etc. required in the workplace contributes to fair pay.

This is also supported by Figure Baltic Advisory's study: employers who have conducted a job analysis and implemented a transparent pay policy tend to have a much smaller or non-existent gender pay gap.

Estonian glass ceilings do not shine through

A quarter of the pay gap is due to the fact that men often occupy more senior positions than women. This phenomenon is not unique to Estonia. In the United States, for example, the number of women among Fortune 500 CEOs did not exceed the number of men named John on the same list until 2023.

Although such illustrative statistics are not kept for Estonia, the OECD points out that the representation of women at the top of the management pyramid has been remarkably stable or, to put it bluntly, consistently low.

The lack of women in top management is sometimes explained by the argument that "there are no women to be had". In fact, if you look down the career ladder, the gender gap narrows considerably. In Estonia, for example, nearly 40 percent of managers are women, which is higher than the average for both OECD and EU countries. This means that many companies have a waiting list of female talent that will not break through the glass ceiling.

For example, the number of women on the boards of Estonia's largest listed companies has not exceeded 10 percent over the past decade. In Latvia, 23 percent of listed companies have women on their boards, in Lithuania 25 percent, and in Finland and Sweden more than a third.

Several studies show that equal participation of women in decision-making and leadership contributes to both better business results and a more innovative, inclusive and equitable organizational culture.

In addition, 56 percent of Estonian women and 36 percent of men think it is good for companies to have more women in management. Although women and men are not entirely in agreement, the perception that men are better managers than women has decreased over time.

Reducing the pay gap requires action from everyone

Estonian women's employment rate is one of the highest in the European Union, next to Sweden. Women work for economic independence, self-fulfillment, career advancement and to support themselves and their families. At the same time, we have one of the widest gender pay gaps in Europe.

This year, women will not earn equal pay to men until the eve of International Women's Day. While Women's Day often brings to mind flowers, perhaps it is an even better time to reflect on what we can do to notice, understand and reduce the pervasive nature of the gender pay gap.

We all have a role to play. Employers can do well to promote transparent and non-discriminatory pay and human resources policies.

Governments can create an enabling legal environment and support employers with the right tools.

As a society, we can move away from outdated gender stereotypes, which make half of society less valuable than the other half, including in terms of income.

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