Bridging the Gender Pay Gap: Achieving Malaysia's Developed Economy Status

Claudia Goldin, a Harvard University professor, was recently awarded the Nobel Prize in economics for her research on the history of women's employment and the gender pay gap. She is the third woman to win the Nobel Prize in Economics, and the first to win it without a co-recipient. Her research has advanced our understanding on the enduring issue of women's underrepresentation in the workplace and for having advanced our understanding of women's labor market outcomes.

Goldin found that social expectations about women's careers and domestic life contribute to lower female workforce participation and earnings. Her research explains these disparities and raises awareness of the issue (Keyton et al., 2023).

Echoing Goldin's findings, Smialek and O’Grady (2023) explained the influences of women's labor force participation and how much they earn, such as:

• Occupational segregation: Women tend to work in lower-paying occupations, such as education and healthcare.
• Discrimination: Women may face workplace discrimination, which may lead to lower wages and lesser opportunities for advancement.
• Work-life balance: Women are more likely to assume caregiving responsibilities, which may limit their ability to work full-time or in high-paying careers.

Gender Wage Inequality in Malaysia

The United Nations Development Programme (UNDP) ranks Malaysia 103 out of 146 countries on its 2022 Global Gender Gap Index, despite Malaysia's commendable performance on the Educational Attainment sub-index, where women and men have nearly equal scores (0.995).

A study by Khazanah Research Institute conducted from 2010 to 2019 used microdata from the Department of Statistics Malaysia's Salaries and Wages Survey to assess wage inequality for women. In the course of the research, they found that financial security of women with low wages have improved relative to women with high wages over the years.?However, their findings also demonstrated the wide gender wage gap in Malaysia.

The graph above shows the difference in the unadjusted mean wages between women and men, which includes all workers, both citizens and non-citizens. The data indicates that women's wages were averagely 2.97% lower than men's during this period, but the gap was small (under 10%) and generally decreasing.

However, the report also stated that this does not necessarily denote equal pay for equal work. After adjusting for various factors such as occupational segregation, the average gender pay gap widened to 17.8% with women getting paid less than their male counterparts for the same job.

The Motherhood Penalty

Goldin's research shows that the gender wage gap is closely tied to women's reproductive choices. While the contraception pill has resulted in greater autonomy and advancement in earnings for women, having children still seems to be the decisive point where wages for men and women start to differ. Across her lifetime, a typical working mom might have to either take on less hours, change to a lower paying flexible job, or leave the workforce altogether.

At the recent Khazanah Megatrends Forum, Nurul Izzah Anwar (former Member of Parliament for Permatang Pauh) urged Malaysians to take decisive actions to address the gender gap in the workforce. She emphasized that this is imperative for Malaysia to achieve developed economy status, and facilitating the return of women to work after childbirth is another important dimension to consider. The government's 2023 budget includes a RM290 million grant program to help women return to work after childbirth. The program will also provide grants equivalent to 80% of the Social Security Organisation contributors' salaries to over 130,000 women.

To achieve developed economy status, Malaysia must tap into the full potential of its workforce, especially women. By addressing the gender gap in the workforce, Malaysia can boost economic growth and create a more equitable society for everyone.

What LeadWomen is doing

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For more information, contact Hajar at [email protected] or head on to our website to browse all our available programmes: https://www.lead-women.com/women-leadership/

? For more insights and updates on gender equality, read our articles?here.

Citations:

1. Gender equality: United nations development programme. United Nations Development Programme Malaysia, Singapore & Brunei Darussalam. (2023). https://www.undp.org/malaysia/gender-equality#:~:text=Under%20the%20Global%20Gender%20Gap,with%20a%20score%20of%200.681.?
2. Kasinathan, S. (2023, October 6). Malay Mail. Nurul Izzah: Vital for Malaysia to close employment gender gap. https://www.malaymail.com/amp/news/malaysia/2023/10/06/nurul-izzah-vital-for-malaysia-to-close-employment-gender-gap/94776?
3. Muthusamy, N., Abu Rahim, M. A. R., & Khalidi, J. R. (2023, September 27). The returns to Malaysian labour – part II wage gaps within and between subgroups from 2010 to 2019. Khazanah Research Institute. https://www.krinstitute.org/Working_Paper-%40-The_Returns_to_Malaysian_Labour_%E2%80%93_Part_II_Wage_gaps_within_and_between_subgroups_from_2010_to_2019.aspx?
4. Keyton, D., Wiseman, P., & Casey, M. (2023, October 10). Nobel economics prize goes to Harvard’s Claudia Goldin for research on the Workplace Gender Gap. AP News. https://apnews.com/article/nobel-prize-economy-224c204c0cc20843636e5525d6a61673
5. Inman, P. (2023, October 9). Claudia Goldin wins Nobel economics prize for work on gender pay gap. The Guardian. https://www.theguardian.com/world/2023/oct/09/claudia-goldin-nobel-economics-prize-gender-pay-gap
6. O’Grady, C. (2023, October 9). Gender pay gap research wins economics Nobel - science. Science. https://www.science.org/content/article/gender-pay-gap-research-wins-economics-nobel?
7. Smialek, J. (2023, October 9). Claudia Goldin wins Nobel in economics for studying women in The work force. The New York Times. https://www.nytimes.com/2023/10/09/business/economy/claudia-goldin-nobel-prize-economics.html#:~:text=Prize%20in%20Medicine-,Claudia%20Goldin%20Wins%20Nobel%20in%20Economics%20for%20Studying%20Women%20in,woman%20to%20win%20the%20prize.