In Israel, the Gender Wage Gap Is Worst at the Top

At large firms, women earn 32% less than men, TheMarker finds.

Wage gaps between men and women are nothing new in Israel, or elsewhere. In 2011 the gap in Israel was 25% on average - with the difference being greater in the private sector, while in the public sector the gap was less than the average. In high-tech, the difference narrowed to only 10%.

One assumption was that women in more senior positions understood better how to demand the salaries they deserved: For example, the chairwoman of the HOT cable company, Stella Handler, was near the top of the country's wage earners at public companies with an annual salary cost of NIS 14.8 million last year.

But new research conducted for TheMarker by the BDO Consulting Group shows a much more distressing reality.

An examination of the total compensation packages, including salary, bonuses, options and the rest, for the five highest wage earners at the 100 companies in the TA-100 index shows that women at the highest levels earn in general less than their male colleagues. The gap was over 30%. The average wage gap in hourly wages between men and women in Israel is "only" 20%.

All told, BDO examined the wages for 327 senior executives, men and women, for companies that are listed only on the Tel Aviv Stock Exchange. The average wage package for the men was worth NIS 3.58 million and for women NIS 2.72 million. Only about 8% of the executives were women.

"These numbers are amazing," said Keren Kibovich, head of the executive compensation department at BDO Ziv Haft Consulting, who conducted the research based on information in the companies' financial reports.

"These are the largest companies in Israel, and these are the women who have reached the top. Nonetheless, the average wage gaps were even higher than the average for the entire population," Kibovich said.

"It was especially surprising because these are career women who hold senior positions, which demand investment and responsibility, and it is impossible to accuse [the women] that they work half-days. Their output is no lower than that of the men who work alongside them, but nonetheless the gap in compensation between them is enormous."

Worse at negotiation

The explanations for the large wage gaps generally come from two different directions. One is the claim that the numbers reflect the well-known "glass ceiling" and the notion that women deserve to be paid less since they are responsible for the home and family - and therefore their productivity will always be less than men's.

But this view has been weakened by dozens of studies that show productivity is not necessarily a function of long hours in the office, and that career women are more focused than men and know how to do the same amount of work in less time. But has this convinced employers? It seems not.

The other main explanations concern women's abilities to negotiate and demand the salaries they deserve. Women often fight for other people's fair salaries, usually if they are men, but they fail on their own behalf.

Also, since women tend to be more loyal to their employers, they often miss out on the leap in wages from switching employers.

"Men are found in higher percentages in areas where wages are higher, such as finance and high-tech, while women are in areas with lower wages such as manpower or sales and marketing," said Prof. Dalia Mor of the College of Management in Rishon Letzion. "Therefore the jobs are not similar, even if the title is."

Since one's current wages tend to be the yardstick for future expectations, lower wages today lead to continued lower wages in the future as the women demand less in salary negotiations, said Mor. "Since women traditionally earn less than men, they also demand less and in the end, they earn less," she added.

Another explanation is that people prefer to compare their salaries, and expectations, to those like themselves, said Mor. Men compare themselves to men, and women to women. Women, in all positions, prefer more equality, said Mor. Men tend to take greater advantage of the system and grab all they can, she said.

Dissecting the wage packages

Another important explanation for the differences is based on an analysis of the executives' wage packages. For women, their package was made up on average of 79% salary, 14% in bonuses and 6% in stock and options; for men salary was only 45% of the total while the rest came in bonuses and stock and options.

Since there is usually little relation between bonuses or the value of options packages and performance, it is easy to see how men earn more: All they need to do is convince the board of directors to grant such a wage package.

Women's wage packages are characterized by stability, conservatism and security while for men uncertainty and risk are much larger - but can also translate into much more money, said Kibovich. "It is possible that women prefer security while men are looking for challenges," she said.