Last week’s declaration by the Saudi Arabian Ministry of Human Resource that gender discrimination in the private sector is forbidden was a welcome step. However, overcoming labor market gender inequality requires high quality data to avoid misallocating valuable resources and implementing counterproductive policies.
For example, in Chile, a law was passed requiring employers to provide working mothers with childcare, which unintendedly resulted in lower pay for women. In Europe, generous maternity leave policies for women have contributed to decreasing likelihood that women rise to top management positions.
Now, Saudi Arabia must learn from these experiences as it looks to forge a more equitable labor market.
As an illustration of the data problems that Saudi Arabia faces, the International Labour Organization Global Wage Report does not have data on the female-male wage gap in Saudi Arabia. Shoura Council members Latifah Al-Shaalan and Moudi Al-Khalar recently found evidence of a 56 percent wage gap in certain occupations. The belief that there exists latent inequality is reinforced by the headline unemployment rate in 2020, which was 5.6 percent for men and 28.2 percent for women.
Yet the research of scholars such as Harvard University’s Claudia Goldin show why more data are needed. The simple wage gap reported in the mainstream media in all economies is equal to the percentage difference between average male and female earnings per hour. The appropriate way of eliminating the gap depends on which combination of factors, such as potential stereotypes, education levels, or societal expectations of women, are causing it.
For example, it could be that women have lower educational qualifications or experience, meaning that policymakers should focus their interventions on the sources of inequality in education and experience, rather than on artificially equalizing earnings for men and women who might have different qualifications. For example, to counter gender inequality in the case of mathematics education, there is significant evidence that women suffer adversely from being inaccurately stereotyped as being inferior at quantitative reasoning, lowering their confidence and effort, and hence their achievement in the field of mathematics. This calls for a very specific form of countermeasure, such as making stereotype-defying role models highly visible.
Alternatively, it could be that women have the same educational qualifications and experience as men, and there is no wage gap within any occupational class, but that women do lower-salary jobs, such as a bank teller rather than a lawyer. Under these circumstances, creating more egalitarian outcomes requires policies that address imbalances in either the job preferences exhibited by women, or the job opportunities that are presented to them. Some of the childcare-related interventions mentioned were based on the view that for cultural reasons, women are expected to allocate more time to childcare, making them attach greater value to jobs that are compatible with family responsibilities.
Worryingly, using high quality data, scholars sometimes find that labor-market discrimination against women stems from bigotry or misogyny. Prior to the high-profile downfall of Hollywood mogul Harvey Weinstein, on the back of his victims’ testimony, detailed analysis of pay differentials suggested that the economic deck was stacked against women in the movie industry. Clearly, a robust legal response was in order, along with a series of measures seeking to erase the exploitative norms that had taken root in Los Angeles.
Returning to the case of Saudi Arabia as they try to create an equitable work environment, building on the experience of Western countries is both challenging and risky. The difficulty stems from the large number of countermeasures, each designed to address a specific source of discrimination. The risk stems from considerable structural differences between the economy of Saudi Arabian and Western economies, and the distinct cultural norms. For example, what works in the UK might have a very different effect in Saudi Arabia. Policymakers trying to deduce the right policy mix will be left scratching their heads.
The solution lies in gathering and disseminating highly detailed data on females and males in the labor market. Researchers need to know much more than a worker’s wage: They need to know their education, their experience, the tasks that their job requires, the physical structure of the workplace, the flexibility of working hours, the number and ages of their children, and so on.
Moreover, it is critical that such data be made freely available to scholars. The improvements in our understanding of labor market gender inequality in Western countries is not the result of small teams of government researchers with exclusive access to sensitive data. Rather, a combination of universities, think tanks, and civil society organizations have been analyzing the data in detail for decades, discussing their findings in conferences, and publishing them in academic and mainstream journals. Saudi Arabia should adopt a similar model of open data access, to accelerate the development of tailored policy solutions in the fight against labor market discrimination. As the American jurist Louis Brandeis once remarked: “Sunlight is said to be the best of disinfectants.”
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