Reducing inequality to enhance Malaysians’ well-being and create a harmonious society is part of the “Developing Malaysia Madani” concept for the retabling of Budget 2023. — Reuters
IS pay equity a priority for organisations? Pay equity has become a key environmental, social and governance (ESG) issue, with increased pressure from investors and regulators for fair remuneration.
The concept of “pay equity” means all employees are paid fairly for their work, regardless of gender, race, ethnicity, or other personal characteristics.
It reflects good governance and has important risk implications for Malaysia’s transition to a net-zero economy.
This aligns with the International Labour Organisation’s (ILO) Decent Work Agenda which aims to create decent work, defined as productive work in conditions of freedom, equality, security and human dignity.
Reducing inequality to enhance Malaysians’ well-being and create a harmonious society is part of the “Developing Malaysia Madani” concept for the retabling of Budget 2023.
This includes addressing the persistent gender pay gap where women face barriers to equal pay and career advancement.
The ramifications of pay disparity
The root causes of pay equity issues in Malaysia are complex and multifaceted and can include a range of factors such as gender-based discrimination, occupational segregation, and the unequal distribution of education and training opportunities.
Despite some progress in recent years, women in Malaysia still face significant barriers to equal pay and opportunities for advancement in the workplace.
According to data from the Statistics Department’s Salaries and Wages 2021 Report, the median monthly income for women in Malaysia was RM2,145 in 2021 (RM2,019 in 2020), compared to RM2,315 in 2021 (RM2,093 in 2020) for men.
This can result in a persistent wage gap between men and women, with women earning significantly less over the course of their careers.
Reduced participation by women in the workforce also negatively affects Malaysia’s gross domestic product. Unequal pay devalues women’s contributions, reduces their incentives to participate in the labour force, and results in lower income, lower purchasing power, and slower economic growth.
Addressing pay equity holistically
Many countries have taken the initiative to enforce pay equity laws to promote fairness in the workplace.
In France, companies with 50 or more employees must perform a pay equity analysis every three years to ensure that they are providing fair pay.
Australia has also instituted pay equity laws that mandate employers to ensure equal pay for work of equal value, regardless of gender.
In Asia, each country’s pay equity laws and enforcement differ.
The Philippines, for instance, passed the Magna Carta of Women, requiring women to be equally paid as much as men are.
South Korea enacted the Equal Employment Opportunity and Work-Family Balance Assistance Act, prohibiting employment discrimination, including pay discrimination, based on gender, age, and other factors.
However, Malaysia has yet to implement a comprehensive pay equity law, but has taken steps to promote gender equality, such as requiring companies to have a minimum of 30% female representation on their boards.
The recently revised Employment Act 1955 and the Equal Opportunities Commission Act 2007 also offer protection against workplace discrimination, including pay discrimination.
Additionally, the government can implement anti-discrimination laws and policies through effective enforcement mechanisms, such as penalties for employers who violate them.
Another measure is to increase transparency in the labour market by requiring companies to publish data on the pay and employment conditions of their employees, including gender-based pay differences.
To better monitor pay practices and detect any potential pay discrimination, companies can use a central payroll tracking system.
This could involve employers reporting payroll information, such as salary and wage information, to the government in real-time.
Using a robust pay gap analysis tool, companies can conduct an independent pay equity review to better understand their current state and assess the extent to which key employee practices and related business processes are fair and inclusive.
The government can also support the development of educational and training programmes aimed at increasing the skills and qualifications of women and other underrepresented groups.
This can help reduce occupational segregation and increase opportunities for women to pursue careers in higher-paying industries and occupations.
Furthermore, employers and employees need to be engaged in discussions about pay equity to build support for such measures and increase awareness of the ways in which pay discrimination can harm employees and the economy.
In conclusion, to tackle fair pay and the gender pay gap, organisations should prioritise these crucial ESG issues to create fairness for employees and a more inclusive economy.
A multi-faceted approach in the areas of legal, policy, incentives, and education is crucial, aided by greater collaboration between the government and industry to truly move the needle on fair pay.
Kartina Abdul Latif is People and Organisation and Social Impact Leader, PwC Malaysia. The views expressed here are the writer’s own.
