Mind the gender gap: How women can win financially

A study conducted by the National Business Institute in 2021 indicates that the gender pay gap is anything from 9% to 35% across companies in South Africa. This means women earn R72.44 for every R100 earned by men.

Trade union UASA estimates it will take approximately 135 years to close the gender pay gap in South Africa.

We investigate the effects of the gender pay gap, and consider how women can empower themselves to win, despite the odds being stacked against them. 

Tip: Consolidating your debt can significantly strengthen your financial position.

The cost of the gender gap

When women earn less than their comparably-qualified and capable male counterparts, inequalities arise, which deepen over the years.

“If a woman’s salary increases, it will be calculated off a lower base than her male colleagues, and the gap in earnings will widen over time,” points out Hannah Myburgh, a certified financial planner at Crue Invest. 

“If she invests a percentage of her taxable earnings in a company pension fund, both the rand value of her contribution and the value of her funds at retirement will be lower, as she won’t benefit from compounding to the same extent as her male colleagues.” 

Where bonuses are linked to salaries, women will also take home less bonus pay. 

“The lost opportunity cost of money she doesn’t earn due to pay disparity may mean restrictions on further education, skills development, or investment in her children’s education,” Myburgh points out. 

She explains that a woman’s ability to save may be further compromised if her earnings or career are interrupted during her childbearing years. 

“Many women need to access their accumulated retirement benefits to help fund the costs of raising children, which interrupts the effects of compound interest,” she explains. 

The effects of discrimination

It is illegal to discriminate against women in the workplace, says financial planner Sylvia Walker, author of the book Smartwoman: How to gain financial independence and create wealth.

However, she notes, it’s difficult to highlight salary discrepancies, as few employees discuss their income, and salaries may differ based on factors such as education, experience, and specialisation. 

“Statistics are useful, but they don’t contribute to bringing about change at a company level,” Walker says. 

She believes trade unions can play a meaningful role in enforcing equal wages for their members, since women who speak up about unequal pay individually may jeopardise their careers.  

The fact that women are dealing with greater financial pressure than many of their male counterparts is borne out by DebtBusters’ Money-Stress Tracker. Compared to men, women are 10% more stressed about their finances and 20% more stressed about work life, home life, and health. 

“Your financial situation should not prevent you from seeking the support you may require during these times to ensure that your mental health is not affected,” notes Myburgh. 

Tips to overcome the gender pay gap disadvantage

Although women don’t start on equal footing with men, there are steps you can take to boost your financial security. 

• Develop a good understanding of finance to make more informed decisions about budgeting, saving, investing, and tax.
• Start investing as soon as you can. “Starting early can have a massive impact, even if you begin with a small monthly contribution to an investment. This is due to the power of compound interest,” says Myburgh.
• Don’t delay saving for retirement. Because women tend to outlive men, there’s a chance you’ll live alone later in life, possibly with an age-related disease such as dementia or Alzheimer’s. “As such, it pays to factor in the costs of assisted living, frail care, or private nursing,” says Myburgh.
  Walker agrees. “The biggest knock-on effect from the gender pay gap is poverty in old age,” she asserts.
• Consider working with a female financial adviser who understands women’s unique financial planning needs.

Tip: Women can strive for financial freedom through their investments. Find out how to invest today.