Female executives earn 22% less than male colleagues in some European countries

Data from Mercer shows the extent to which female executives across Europe are paid less than their male counterparts

In the face of gender equality programmes by the EU and in advance of European Equal Pay Day (EEPD) being held across EU member states from early March 2012, data issued this morning by Mercer shows the extent to which female executives across Europe are paid less than their male counterparts.

Mercer found female executives in some countries earn up to 22% less in base salary than their male peers in similar roles and much less if other cash elements like bonuses are included.

Mercer analysed the pay of 264,000 senior management and executives in 5,321 companies, across 41 European countries. The data comes from Mercer’s TRS system which provides benchmarking information for companies looking to create and maintain salary levels within their companies. ‘Executives’ are defined here as a person who sits on a company board while ‘management’ is defined as someone holding a ‘country head’ or ‘business unit head’ role.

Sophie Black, principal in Mercer’s executive remuneration team, said: “Simple discrimination on pay is often the reason behind salary differences, but there are other factors at play here. Women, more than men, tend to move in and out of the workforce often due to childcare responsibilities. Many women have to take part-time work to balance competing family and financial demands. This has a huge impact, not only on the numbers of women in senior positions but also on their earning-power. A woman may be paid less than her male peers because the five years she spent off the corporate ladder represents, in the eyes of her employer, five years less experience.

“Part-time workers tend to earn less than their permanent colleagues and are often perceived as less loyal and committed. This can lead to lost promotional opportunities and pay-rises. This is a cultural issue and is still a hurdle that many women need to overcome in numerous firms today, even those companies which on the surface appear to encourage part-time work as part of their gender diversity programmes.”

Another cause of the gender pay gap is ‘occupational segregation’, a term used to describe how support, or ‘function’ roles, like HR and marketing, tend to be dominated by women. These roles tend to be paid less, and are often perceived as less business critical, than core activities such as sales or operations, which tend to be dominated by men. While a company may have equal amounts of men and women in executive positions, their role in the corporate hierarchy - occupational segregation - will show women underperforming their male counterparts in pay awards.

“Education also plays a part in perpetuating the situation,” added Black. “If men and women are encouraged to think that everything is within reach, then occupational segregation will be undermined and companies will see a much more diverse workforce. This can be a huge bonus to companies as it widens their talent pool, reduces turnover and absenteeism and increases innovation and creativity.”

Mercer has recently issued data showing female representation in senior executive roles across Europe. According to the data women made up around 29% of the executive and management workforce across Europe compared to 71% of men. More broadly across Europe, the EU is committed to addressing gender inequality and the Gender Pay Gap as part of its EU Gender Action Plan. It has also committed to improving the number of women on executive boards.

In Western Europe, the greatest pay-disparity occurred in Germany where women executives were paid 22% less than the total compensation of their male counterparts, followed by Austria (-20%), Sweden (-19%), Spain and Greece (both -18%), France and the Netherlands (both -14%), Denmark (-12%), Ireland (-10%), Italy, Finland, UK and Portugal (-9%), Norway (-8%), Switzerland (-7%) and Belgium (-6%).

Out of the 269 companies and over 15,300 employees analysed in the UK the typical total cash salary - which comprises base salary and any additional cash awards such as base salary - for women was £93,434. This was around £10,000 less than their male counterparts, who earned an average of £103,230.

The data showed that in central and Eastern Europe region, women in Bulgaria receive 5% more in total compensation than their male peers while women in the Russian Federation receive around 3% more. Women in Lithuania received 18% less than their male counterparts followed by Romania (-14%), Hungary (-13%), Serbia (-12%), Slovakia (-11%), Poland (-10%), with the Czech Republic and Ukraine both showing -5%.

Across the six countries in the Middle East and Africa with an acceptable sample base to draw comparisons, women were paid less in terms of total compensation than their male counterparts in Morocco (-15%), the UAE (-12%), and Turkey (-1%). In Qatar, women were paid 38% less than men while figures for Saudi Arabia were not available given the lack of female executives.

Black said: “It is interesting that there is a big jump in the gender pay gap moving from a management role to the executive sphere, too. Given the emphasis that the EU and national governments seem to be giving to gender equality and the value that women bring to the workforce, it would be prudent for companies to ensure that they are doing everything possible to create a diverse workforce.”