20% - that is the gender pay gap in India as per a report from the statistics and program implementation ministry. This is true even for women with graduate degrees. Further, a report (Global Wage report 18-19) by International Labour Organization ranks India the highest in gender pay gap in the world, higher even than Pakistan and Sri Lanka!
The reasons for the pay gap are well-known – shorter career spans due to household responsibilities, gender bias, socio-economic factors, and personal choices. This pay gap leads to a larger problem of gender financial disparity, which has many ramifications. Working lesser years and earning lesser than men, leads to a huge gender savings gap, which vastly reduces a woman’s ability to live life on her terms.
Having run financial awareness sessions for women for the last 5 years, I find most women still do not prioritize money management and often leave it to a male member of the family. This clearly compounds the gender savings gap. So often, I find that the earnings of the woman have been invested into instruments, which may be illiquid or have been used for business or household expenses. It is common for couples to use the woman’s salary towards the EMI and expenses and the husband’s salary to be invested. This leaves the woman with very little money of her own which she can use the way she wants. A case in point is women who leave their jobs for family reasons, because they end up not having enough to pay for childcare, simply because their money is tied up somewhere else. A woman may have her own financial goals, which are typically not taken into account if she does not manage her own money. Even a small percentage of women who manage money tend not to take risks and choose traditional instruments like fixed deposits, which do not beat inflation.
While most women may be aware of goals like children’s education or retirement, their inability to plan for these goals in a structured manner coupled with multiple loans taken in their name, leads them to be stressed by their financial situation. This stress certainly shows up at workplace and affects their productivity and is a cause for attrition too.
Clearly, the gender savings gap is a bigger issue to contend with.
Employers can help bridge this gender savings gap.
- Give importance to financial wellness. In India, most organizations are focusing on physical and mental wellness, but leave out financial wellness, which is an important contributor to being healthy. Senior leaders and business vertical heads from organizations need to talk more about the importance of being financially fit, also from a selfish perspective of having better gender diversity. Financially independent women are more likely to pursue career ambitions and work towards moving up to senior positions. The truth still remains that women who are in charge of their finances do have higher gender equality at home and hence are able to take independent decisions regarding their career.
- Provide financial education programs and resources, which provide unbiased and to the point information. Given the time demands women have, providing access to these educational programs at the workplace is beneficial for women as well as the employer as it signals to the employee that the employer is concerned about overall wellness. Another challenge faced by women is who to reach out to and ask for financial advice or even where to read up, given the vast information available online. In such a situation, women tend to take advice from family and friends which may not suit them. A combination of classroom sessions along with online tools and resources works best. Interactive, exercise-based learning has more chances of action post the learning, over lecture-based awareness. Apart from classroom sessions, additional resources like online calculators, reading material and topic-specific talks by experts can be looked at.
- Organizations need to engage with unbiased and experienced partners for financial wellness. Some companies go with financial advisors or insurance brokers, which is not advisable due to the inherent conflict of interest in such associations. Woman do not trust advisors easily and hence corporations would do well by keeping away people who are looking at education as a means to build clients. The last thing a company wants is to market someone else’s business or be accused of exposing their employees to wrong selling.
The greatest gap in the world is the gap between knowing and doing and organizations would do well by taking steps to reduce the gender savings gap.