Assessing The Gender Pay Gap In Asia's Garment Sector

Phu Huynh, International Labour Organization, Bangkok

This paper presents the gender pay gap in the garment, textile and footwear industry in nine developing Asian economies – Bangladesh, Cambodia, India, Indonesia, the Lao People’s Democratic Republic, Pakistan, the Philippines, Thailand and Viet Nam. It finds that women earn less than men in eight of the nine countries, with the imbalance particularly sizeable in India and Pakistan. Some of the pay gap can be attributed to differences in factors such as age and education, but discrimination also appears to be a contributing determinant. Women are also more likely to be at the lower end of the wage ladder. Applying standard Mincerian wage regressions and the Blinder-Oaxaca decomposition method, the paper presents empirical evidence on gender wage gaps and wage premiums in the industry, and discusses measures that can help reduce gender disparities and discrimination in the sector.

Asia’s garment, textile and footwear (GTF) industry in recent years has garnered the global spotlight. Major tragedies due to unsafe factory conditions in Bangladesh and Pakistan and industrial strife over higher minimum wages in Cambodia, for example, have brought attention to the low wages and minimum standards in working conditions that often characterize the industry. Despite some progress, wages remain extremely low (Huynh, 2015; ILO, 2014). Working hours are long and often excessive as workers depend on extensive overtime to compensate for low base wages, despite the cost in terms of workers’ health and safety. Consequently, consumers and multinational apparel companies are increasing pressure for meaningful change vis-à-vis improved working conditions and compliance with labour standards that could improve the lives of tens of millions of Asia’s garment workers. Even with these challenges, the region’s garment sector continues to grow in terms of production volume, exports and jobs, and has become the garment manufacturing hub for the world. In 2014, exports grew by 5.1 per cent and reached an astounding US$601 billion, or three-fifths of the global total (Huynh, 2015; ILO, 2015). Given the labour-intensive nature of the industry, it employs a massive workforce totalling more than 40 million. That workforce is heavily comprised of young women. In developing Asia, low-end garment production provides a conduit for millions of informal workers with limited educational credentials to shift into formal manufacturing jobs with regular wages. The wage premium for making this transition provides them, in particular women, the opportunity to increase incomes and achieve economic independence. This paper looks at women workers in the GTF industry in Asia and examines their position compared to men in regard to wages, working time, occupational segregation and other dynamics. It aims to expand on the existing literature by providing new empirical estimates of the gender pay gap in the GTF sector in nine countries – namely Bangladesh, Cambodia, India, Indonesia, the Lao People’s Democratic Republic, Pakistan, the Philippines, Thailand and Viet Nam – based on representative national household survey data which have yet to be examined in this capacity. The findings provide a valuable evidence base for fostering greater gender equality in the region with the aim of promoting equal pay for work of equal value, a key target identified under Sustainable Development Goal 8 (United Nations, 2015). Elimination of discrimination in respect of employment and occupation, including working conditions and pay, is also one of the four fundamental principles and rights at work.

The analysis presented in this study provides new insights into the GTF industry in nine different countries in Asia, with the aim of providing empirical evidence for promoting greater gender equality in terms of pay and working conditions. The industry in the developing economies of South Asia and South-East Asia remains primarily a high-volume, low-cost production base where long working hours and low pay are the norm. In the majority of the studied cases, average weekly hours of work exceed 48 hours, the international standard for defining excessive working time. Overall, average wages are less than US$1 an hour for both men and women in the vast majority of the countries examined.12 With the exception of non-tertiary educated employees in Bangladesh, hourly pay for women is consistently less than that for men although the magnitude of the disparity varies widely. For example, in Pakistan and India, where the gender wage differential is by far the largest across the nine country cases, the women in the samples earn 65 per cent and 35 per cent less than men, respectively. Controlling for variables such as age, marital status, education, geographic location, industry and occupation yields an adjusted pay gap of 39 per cent in India and 48 per cent in Pakistan. In Cambodia, the Philippines, Thailand and Viet Nam, the adjusted pay differential is significantly lower, ranging from 7 per cent to 11 per cent. By contrast, women in the Bangladesh sample earn more than men on an hourly basis, resulting from the high number of male observations working long hours for little pay or possibly due to overreporting of working hours by male survey respondents. Furthermore, compared to the economy as a whole, the adjusted male-female earnings gap is lower in the garment industry except in only Cambodia, India and Pakistan. This could indicate an encouraging trend in which wage setting mechanisms and anti-discrimination measures may be stronger in the garment sector relative to the broader economy.