International Women’s Day 2022: gender wage gaps in Israel and the impact of research

Since the inaugural International Women’s Day celebration in 1909, the status of women has undergone many upheavals and changes moving toward improved equity. However, there remain various areas where we are still far from full equality, including the issue of the wage gap between men and women.

Although the wage gap between the genders in Israel has been declining in recent decades, women’s wages are still lower on average than men’s wages, both on a monthly and an hourly basis. At the international level, this gap is particularly pronounced.  Among OECD countries, in 2018 Israel had the second highest median wage gap – standing at 22.7% – between men and women full-time employees (partial explanation of the gap below).

The outbreak of the COVID-19 pandemic and its dramatic effects on society further highlighted labor market differences between the genders. On the one hand, women went on unpaid leave at particularly high rates during the lockdowns, while on the other women’s employment (including those on furlough) fell less than did men’s.  Ahead of the second wave of the outbreak in August 2020, an amendment to the Equal Pay for Male and Female Employees Law was introduced by WIZO, and brought to a vote in the Knesset. Findings from Taub Center researcher Hadas Fuchs’ study on the gender wage gap, published in the 2016 State of the Nation Report, were quoted in the proposed amendment to the bill.  The amendment, for the first time, imposes an active responsibility on the employer to collect data on gender wage gaps among employees by group, share it via an internal report with each employee and publicly report the data on an aggregate level.  The internal report by employee group holds particularly strong potential as an effective tool to support salary transparency and facilitate compensation negotiations by women.

The proposal was enacted by the Knesset and the deadline for the public reports on 2021 wage gaps is just a few months away.  By June 1, 2022, all companies with more than 518 employees will have to publish public reports about gender wage gaps in their organization. There is also a mechanism in the law that allows for the extension of this requirement to smaller employers in the future.   Fuchs’ study – the only findings by an independent research institute in Israel quoted in the bill proposal – demonstrates the ability of research to play an important part in affecting policy-making.  With the 2022 International Women’s Day around the corner, it is a good opportunity to return to the topic and share important findings from this work.

In her study, Fuchs sought to understand the reasons for the monthly wage gap between men and women, which in 2015 stood at 32%.  She examined the gap based on the personal and sociodemographic characteristics of the workers, including the number of hours worked, the level of education and the occupations and industries in which the subjects were employed. According to Fuchs’ calculation, the most significant factor – contributing 57% to the gender wage gap – is the lower number of working hours by women. In 2015, twice as many employed women as men (34%) worked in part-time jobs. Even among full-time employees, women worked on average fewer hours than men.

Differences in occupations and industries – wherein men tend to work in higher paying professions – is the next most important factor, and is responsible for an additional 14% of the wage gap.  Other characteristics, such as the fact that women tend to have more years of education and join the labor market at an earlier age (due to men’s military service being longer) actually work to reduce the gender wage gap slightly.  Via this analysis, Fuchs was able to explain about 70% of the gender wage gap based on these factors.

Fuchs then dove further into the black hole of the remaining 30% of the gap to understand which characteristics are more highly valued by the labor market and receive higher remuneration.  By using a special CBS dataset that also contained information on exam scores, Fuchs found that higher scores on the quantitative portion of the psychometric exam and the higher share of boys taking five units of math on the matriculation exams also explained about 13% more of the gender wage gap, so that all told about 83% of the wage gap is explained, leaving about a 5-6 percent unexplained gap in wages. Given the importance of mathematics scores and occupations in determining future wages, the research also sought to better understand differences in the educational and professional choices by the genders.

Fuchs found that gender segregation in the labor market begins at a young age. Gender gaps in mathematics achievement are revealed as early as elementary school; for example, among Jewish students in the fifth grade, girls’ achievements in mathematics are lower than boys’, even while their scores in English are higher.  Similarly, in PISA tests (in the ninth grade), girls’ achievements are lower in mathematics and higher in reading than those of boys. The differences continue to grow in high school, as a higher proportion of boys choose to study five units for the mathematics matriculation exam while more girls opt for three or four units.  Even among those who do take the 5-unit exam, boys have a higher average score.  Since the publication of Fuchs’s research, it has been found that there remains a gap between boys and girls (in the boys’ favor). However, the rate of improvement amongst girls is higher.

These differences also continue into course selection in higher education – with women concentrated in therapeutic and educational subjects and men in mathematical subjects.  Even among computer science graduates, a relatively high share of women do not continue to work in the field. This may be because many women seek work in areas that allow for flexibility in working hours and part-time employment, and may avoid jobs that are considered demanding in terms of working hours, such as in technology, science and finance.  However, as the Covid-19 pandemic has turned upside down traditional concepts of work hours and location, it is possible that this increased lifestyle flexibility will facilitate women’s entry into these fields.

Recent Taub Center findings included in the 2021 State of the Nation Report, however, highlight an interesting development with regard to higher education studies. First, in general there has been a major spike in higher education enrollment among young Israelis following the labor market contraction and travel restrictions stemming from the pandemic.  The largest enrollment increases in the 2020/2021 academic year among women were recorded in biological sciences (37%), business (28%) and engineering (18%), and were higher than the increases for men in these subjects, though in absolute numbers more men are still enrolled in these fields.  Interestingly, the most moderate increase in enrollment among women was in education and teaching (9%), while men’s enrollment in that field shot up by 19%. It is important to remember that these enrollment figures only relate to the past academic year and we have yet to determine if they represent a longer-term trend.  If it does continue, however, it will be important to monitor if there are parallel developments in girls’ mathematics achievements in primary and high school, which could impact both their pursuits in higher education and their long-term earning potential.

The 2022 International Women’s Day is a milestone marking many positive developments over the years with regard to equality between women and men. It is to be hoped that the amendment to the Equal Pay Law will continue the trend towards reducing gaps between men and women in the labor market. We are pleased that a Taub Center study was cited in such a significant amendment, and look forward to tracking the changes in gender wage gaps in the years to come.