Closing the Gender Pay Gap in Latin America

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For years on end, there has been a wide gender pay gap in Latin American countries.

According to research by the World Economic Forum, the gap averages 29.8% in the following countries: Panama, Paraguay, Peru, Uruguay, Venezuela, Argentina, Costa Rica, Dominican Republic, Ecuador, El Salvador, Bolivia, Chile, Colombia, and Brazil.

This has not gone unnoticed, especially in recent years, given public attention on the issue. Despite good intentions, the laws that regulate workplace gender equality are still considered premature in Latin America

One of the activities that work to counter this reality is the foreign investment in Latin American subsidiaries. Foreign investments in local businesses are working to create an atmosphere of inclusion and diversity with a good number of Latin American subsidiaries adopting the HR policies of their parent companies which go beyond the regional statutory minimums and standards.

The Gender Pay Gap in Latin America

The Forum’s 2017 Global Gender Gap Report shows Latin American countries in the middle of the overall gender gap, lagging behind Central Asia, Eastern Europe, Western Europe, and North American countries. Brazil, Peru, Argentina and Chile lie below average, while Venezuela and Colombia fair slightly better, placing 32 and 67 respectively, out of 144 countries.

The disparity among men and women for ‘pay for equal work’ shows Argentina, Colombia, Chile, Brazil, and Peru holding the lowest rankings. Venezuela is just slightly better off in 48th place. According to the 2017 report, the percentage a woman earns compared to a man in these six countries is between 68 percent and 49 percent. This typically means that a woman in any of these countries earns between 49 and 68 cents for every dollar that a man earns. In addition to the unfair pay, very few women in the region hold senior management or board positions.

Laws and Regulations Addressing the Gender Gap

Most of the regional governments have tried to act in response to the unattractive statistics and many have instituted new initiatives to address and close the gender gap in their countries. Colombia, Chile, Venezuela, Brazil, and Argentina now have federal laws which dictate equal pay for men and women. Peru recently accepted this initiative by implementing a law that prohibits any form of gender pay discrimination. The laws developed in these countries typically require equal pay for equal work and express harmony with the International Labor Organization’s concept of “work of equal value”. Gender discrimination is not only prohibited in the countries; its violation is accompanied by various legal actions available to employees against employers who tolerate gender discrimination at work.

Lack of Effective Regulations

As much as the Latin American countries have come up with laws and are trying hard to close the gender pay gap, enforcement of the laws hasn’t kept up with the intent. According to statistics, it will take 64 years to close the gender pay gap in Latin America. This is not a reassuring period, but it is unfortunately influenced by ineffective legislation in the region. There is no effective legislation that requires organizations to demonstrate labor compliance particularly with gender pay-related legislation to government bodies and other relevant authorities.

There are reporting obligations in place in Peru and Colombia, with Peru creating Law No 30709 (“Law prohibiting pay discrimination between men and women”) on 28th December 2017. It bans wage discrimination on a gender basis, instructs organizations to keep records of wage scales with detail on employee categories and responsibilities, as well as mandates employers to inform employees about salaries, payment policies, and performance evaluation measures. Colombia, in 2011, enacted a law that requires organizations to maintain a gender pay record as a precursor to visits and audits by the Ministry of Labor. The law also instructs employers to keep a record of remuneration, job descriptions, conditions for admission to employment, and conditions for employment, all from a gender perspective.

Shortfalls in Compliance in Colombia

Despite Colombia being one of the countries at the forefront of reducing gender-based imbalances in the workplace, it faces challenges from the United States Department of Labor. In January 2018, the U.S. Labor Department issued a progress assessment calling on Colombia to more fully comply with obligations outlined in the U.S.-Colombia Trade Promotion Agreement. The US describes “a lack of national inspection strategy” to deal with the discrepancies in short-term contracting methods condoned and facilitated by Colombian businesses as well as the continued neglect of “associational rights of workers where representational unions exist.”

Colombia’s lack of compliance under FTA (Free Trade Agreement) is just one example of many other similar non-compliance cases across Latin American countries.

Efforts to Rectify Failures in Labor Compliance

Although legislation is slow to be realized on gender-related matters, international companies are taking on the mantle of effectively tackling the pay gap through corporate governance. International organizations with headquarters in countries that have more developed gender gap legislation have created a domino effect of progressive policies. The trickle-down effect has caused many Latin American companies to begin practices such as mentoring, offering maternity and paternity leaves, and home office schemes, among other progressive policies designed to attract, retain, and motivate female employees.

Although the eradication of the gender pay gap in Latin America seems far off, if multinational companies and governments combine their efforts, together they can close the gender pay gap years sooner than expected. 

Blue Marble Global Payroll