Is there gender gap in pay on the boards of listed Spanish firms? If there is, what are the factors behind the gender gap in pay? We sought to find out the answers to these questions.
Over the last few decades, payments for men have been consistently higher than those for women, even when they hold the same post and have been educated to the same level. This has created a gender gap in pay. Several studies have analysed the existence of such gender gaps in pay in national and international contexts and have shown that this gender gap in pay was caused by occupational segregation and various other factors that can be explained by human capital theory. Occupational segregation meant that women were being excluded from certain kinds of work, and tended to be concentrated in occupations with low salaries (Bayard et al., 1999; De la Rica, 2007). On the other hand, the human capital approach is focused on individuals investing themselves; i.e. adopting certain strategies to increase their own knowledge, experience and skills over the years (Amarante and Espino, 2002; Varela et al., 2010).
Spanish society was traditionally characterized by a strong ideology based on the idea that women should be dedicated to family life, which explained the low numbers of women in the labour market. However, between the 1970s and the 1990s, many changes in legislation governing the treatment of men and women were introduced. There has long been a general belief that one of the fundamental characteristics of the Spanish labour market was, and is, the persistent and strong wage gender discrimination in similar jobs: men are clearly paid more than women. To solve this problem, organisms and regulators have developed a set of standards and regulations to guarantee that women are employed under equal conditions to men and to prevent male-female director’s compensation discrimination. Among these regulations, Article 14 of the Spanish Constitution of 1978, the Workers’ Statute Act of 1980, the 3rd Plan for Equal Opportunities for Men and Women (1997-2000) and the Act 3/2007 for Equality Law have all been produced.
We posit that the percentage of female directors on boards, the presence of female directors on Nomination and Compensation Committees, the presence of well-qualified independent female directors on boards of directors (BDs), the firm sector and the geographical region have an effect on the gender wage gap. When we observe the variable presence of women on the Nomination and Compensation Committee, we find that there is a gender gap in pay in Spanish listing firms. However, the presence of well-qualified independent women directors on BDs reduces the gender gap in pay. A similar pattern occurs with the firm sector since the male-female compensation difference between directors is smaller in the boards of financial services and property sector firms. The remainder of variables analysed have no effect on the gender gap in pay.
This has special relevance in a country like Spain because the previous literature is based on that of English-speaking nations, as well as certain Eastern European and Asian countries. Moreover, previous empirical findings on the gender gap in pay use data from the European Structure of Earnings Survey (ESES).
Our results provide evidence that there is gender gap in pay in Spanish BDs. This study should encourage regulators and politicians to strive to bring about changes in legislation in order to reduce or eliminate the gender gap in pay. Moreover, they need to provide effective and strong sanctions for non-compliance with laws.
Image credit: Madrid, Cuatro Torres Business Area, by Hakan Svensson. CC-BY-SA-3.0 via Wikimedia Commons.