October 19, 2015 Print

Photo credit: (c) Can Stock Photo

Media reports often talk about a gender wage gap, and suggest that a primary cause is systemic wage discrimination between men and women. At the end of 2014, the Swiss government announced a proposal that would require those who employ at least 50 individuals to regularly have their employee wages analyzed by a third party.  A new study from Switzerland-based Atlas Network partner Institut Libéral shows how regulations that monitor and control wages are counterproductive, creating substantial additional costs without consideration for who will ultimately pay the price. Titled “À travail égal salaire égal” (“Equal pay for equal work”), the study concludes that salary discrepancy stems from individual preferences, which lead to varying choices throughout life, including within job markets and decisions about work-home balance.

“If women really accept lower wages than men for the same work, wouldn’t contractors only hire women to obtain a competitive advantage?” researcher Christian Hoffman asks (translated from French). “But such a strategy, in a competitive economy, is simply not possible because it would be copied by other competitors immediately. In economies based on contractual freedom, ideological scenarios suggested by unions that include claims of repression or exploitation have almost no chance of being realized. Rather, we observe a symmetry of interests between employers and employees that serves to create new value and a steady rise in living standards.”

The Swiss market is highly competitive, and women represent a majority of workers, so willfully discriminating against them would constitute a loss for employers. Hoffman’s research compares average salaries between men and women based on different characteristics, such as level of qualification, amount of hours worked, choice of profession, employment history, and negotiation skills. Men and women tend to choose different degree programs in school, with only 30 percent of women choosing economic or engineering degrees, which have a higher salary base. Hours worked is also a factor that greatly influences wage; a full-time staff member will higher compensation than their counterparts working in part-time positions that are disproportionately filled by women who choose to spend more time at home.

Institut Libéral researches ideas that advance freedom through individual liberty, openness, and the free exchange of goods, and produces work in German, French, Italian and English. Founded in 1979, the organization received the Templeton Freedom Award in 2005 and the Freedom Prize from the Max Schmidheiny Foundation. Institut Libéral is most widely known for its research work, but it also organizes student programs and presents the Röpke Prize for Civil Society to those who have made a significant contribution to the advancement of liberty in Switzerland.