Women Rule the Top of Israeli Finance, but Not the Job Market

High-profile appointments of women in recent years have created the impression that the gender gap is rapidly closing. This is particularly the case in the financial sector.

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Three of Israel’s five largest banks are run by women — Rakefet Russak-Aminoach at Bank Leumi, Lilach Asher-Topilsky at Israel Discount Bank and Smadar Barber-Tsadik at the First International Bank of Israel.

The governor of the Bank of Israel, Karnit Flug, is a woman, as is her deputy, Nadine Baudot-Trajtenberg. Israel’s largest communications company, Bezeq, is run by a woman, Stella Handler.

The Finance Ministry has two women near the top: Accountant General Michal Abadi-Boiangiu and the supervisor of capital markets, insurance and savings, Dorit Salinger. The ministry’s previous director general was a woman, Yael Andorn.

These well-paying, powerful jobs are a key step in reducing wage inequality between men and women in Israel.

But last week the Central Bureau of Statistics published numbers that put a damper on the excitement over the narrowing of gaps. The most basic figure is the very large gap between women’s and men’s wages. Average monthly gross income for salaried men is 11,114 shekels ($2,864), compared with 7,439 shekels for women. In other words, women earn one-third less than men.

Of course, men work longer hours — an average of 45.2 hours a week compared with 36.7 for women — so the income gap in terms of hourly wages is smaller; women earn 16.3% less on an hourly basis. But this still requires some explaining.

The typical explanation is that women receive less because most of the burden of raising children still falls on them. This is a chicken-and-egg explanation: Men earn more so the family unit preserves their employment stability and sacrifices the woman’s job. Her job has to be flexible and limited, so she gets paid less.

Meanwhile, employers are considered less tolerant of men who leave work early "for the children." This perpetuates the viewing of the man’s salary as the main one and the woman’s salary as secondary — from both viewpoints, from both the couple’s and the employers’.

A few explanations

In such a situation, whoever is considered the primary breadwinner will demand a more appropriate salary than the one seen as the secondary provider. This explanation is just one of many and not really new. Actually, it’s antiquated, because in many households both partners work very long hours.

A second possible explanation is women’s choice of profession; they tend to choose professions that are less well compensated. The stats bureau report describes the distribution of first-year college students by major. It shows that many professions have a clear female majority: psychology, social work, physiotherapy, occupational therapy and nursing.

These are professions where the average salary is in the low-to-middle range. In comparison, there’s a clear male majority in professions such as computer science and electrical engineering, where salaries are much higher.

Does this mean men consciously choose better-paying professions? The answer seems to be yes. For them, when choosing a profession, compensation is a high priority, possibly because of social convention.

There are professions in which the division of men and women is equal, or nearly so; medicine is one. The stats bureau report states that first-year medical students are equally distributed by sex. Medicine is a decent-paying field, but within the profession there are specializations with a male majority, such as surgery, and those with a female majority, such as family medicine and pediatrics.

In areas such as accounting and law, there are slightly more women in the first year of studies — 60.7% of law students and 54.8% of accounting students are women.

In addition, there are claims that the increase of women in certain professions has brought down wages.

Again, it’s for the same reasons. Because of family pressures, they are willing to accept lower salaries — and so the average salary falls. Another explanation is simply that the supply of trained workers in a profession grows as more women enter it, expanding supply and thereby cutting wages.

Slowly narrowing wage gap

But this too is an insufficient answer, because a gender wage gap still exists in the same industries, especially in industries where wages are high. The stats bureau report shows that the industry with the highest overall salaries is communications and information technology, with an average hourly salary of 95.10 shekels for men and 72.80 shekels for women — 23.4% less than for men.

In financial services and insurance the gap is 30%; in health, welfare and care services it’s 42.7%. In only one area do women earn more than men: construction. The explanation is simple: There are so few women in the industry and they work almost exclusively in planning and engineering.

The gender wage gap in the same field also reflects a larger number of men in better-paying management jobs. This too stems from downgrading the woman’s job — because of her family obligations. And maybe it’s also a matter of the men’s “guild” that leaves women in middle-management levels.

Since the early 1990s, Israel’s wage gender gap has slowly narrowed. In 1990, the average wage for salaried women was 57% that for salaried men. This rose to 62% by 2005 and 67% today.

In certain respects, the integration of Arab and ultra-Orthodox (Haredi) women into the job market has helped keep these differentials large because they enter with very low wages.

So to reduce the gaps one must examine three main stages where such inequality begins: choice of a course of study, choice of a job and expectations about the primary and secondary breadwinner.

There’s another issue: Prestige and compensation in some fields with a female majority are too low; this a cultural issue as well as an economic one. This can only be solved by a general reform of the job market that would be based on social-safety nets as well as professional training and development. The prestige of professions would increase from the current era in which we’re measured by how much money we bring home.

And if the gender wage gap has shrunk since the early 1990s, and if the gaps between Mizrahi Jews (with Middle Eastern roots) and Ashkenazi Jews (with European roots) have also narrowed (as Prof. Momi Dahan has shown), why has inequality grown in Israel during those years, as the Gini coefficient of income distribution shows?

There are two elements: The first is inequality in education, regardless of one’s gender or country of origin. There is also the gap between ultra-Orthodox Jews and Israeli Arabs on one side and the rest of Israelis on the other. Both the ultra-Orthodox and Israeli Arabs are at the bottom of the salary scales.

The case of the ultra-Orthodox is clearer; it stems from the too-low workforce participation rate of Haredi men. Among Arabs, the employment rate for men is high, but for women it’s low.

These gaps can be narrowed if people strive to get an education and work for a living. But we also need government incentives to encourage them to do so.