In a modern society, men and women should have equal opportunities to succeed. Any difference between the wages paid to men and women is considered an essential indicator of the non-existence of equal opportunities and the underuse of the female potential. On average, women earn less than men in all countries, and this by approximately one quarter less in Estonia.
The analysis seeks to ascertain:
- the theoretical reasons for the gender wage gap,
- the historical development trend of the wage differential in Estonia,
- the degree to which differences in human capital and work explain that trend and the components of the gender wage gap that cannot be explained by the factors mentioned above.
A gender wage gap arising from differences in the human capital and work of women and men is referred to as an explained wage gap, because these factors cause differences in the productivity of women and men. The portion of the wage gap that cannot be explained by observable factors is referred to as the unexplained wage gap. The unexplained wage gap results from the different personal characteristics and labour market behaviour of men and women, which cannot be identified on the basis of data, as well as from possible discrimination. Although the explained wage gap arises from differences in productivity, discrimination may also play a role –– for example, access to work-related training affects productivity
The results of the analysis reveal that, on average, in 1998-2000, wages paid to women in Estonia amounted to 72.7% of the wages paid to men. The average gender wage gap has decreased since the time Estonia regained its independence, but nonetheless exceeds the wage gap in most other Central and Eastern Europe countries and EU member states. The decrease in the wage differential has arisen primarily from structural changes in the labour market, as a result of which industries employing more women than men, and in which education is appreciated more, have grown. A greater than average gender wage gap existed among non-Estonians and employees who did not speak Estonian. In addition, the wage differential was greater among employees aged 30-40 years.
“One-third of the gender wage gap can be explained by differences in male and female human capital and occupational choices. Two-thirds of the gender wage gap cannot be explained by these factors.”
Hence, neither the reduction of segregation nor changes in other observable differences between men and women would contribute to a substantial reduction of the wage differential. Attention should be paid to the unexplained portion of the wage gap and its underlying causes.