The goal of equal compensation for equal work has been a mission globally for a long time now. But worldwide, women make about 20% less money than men do, and efforts to close this disparity have been sluggish. This is a result of discrimination, and workplace structures may also unintentionally encourage unequal raise.
On one hand, framing raises in budgets as percentages results in managers associating the raise of employees to that percentage and this causes the existing pay gaps to continue. This happens as when raises are given as percentages, higher salaries automatically receive larger increases and this maintains disparities. However, as fixed amount raise doesn’t automatically reward higher salaries, it is less likely to cause this which shows how this inequality may be reinforced unintentionally.
On the other hand, the gender pay gap also persists because of inequalities in the society. Such as through gender stereotypes, discriminatory hiring and promotion practices. Many organizations have tried to remove it yet, its implementation remains difficult due to a number of reasons. For example: even unbiased managers can carry on unequal practices because of the in which the pay raise systems are structured. This shows that pay inequity is not only about intentional discrimination but also due to flawed decision structure.
In fact, recent studies show the potency of these structural decisions. When pay raise budgets happen as percentages, managers frequently base their decisions on that percentage and give all employees proportionate raises to reduce the bias. But the current salary disparity continues because higher-paid employees automatically receive larger increases under this system. So, this raise structure itself can perpetuate previous inequality even in cases where employees have equal performance. In this sense, unequal pay might increase.
All in all, achieving equal pay for work of equal value requires more than good intentions. It demands structural change in both society and organizations. Hence, no matter how much or how many international bodies call for collaboration to close pay gaps, internal company practices can significantly influence these outcomes. We can try to ensure that equal work truly leads to equal compensation by reframing pay raises.
Food for thought: How many other unfair practices persist as a result unintentionally that impact our growth?
References
- Gunnell, H. T., Schuhmacher, K., & Towry, K. L. (2026). Un-Nudging Pay Gaps: The role of pay raise budget framing. The Accounting Review, 1–31. https://doi.org/10.2308/tar-2024-0105
- United Nations. (2025). International Equal Pay Day | United Nations. https://www.un.org/en/observances/equal-pay-day