Will Blockchain Close the Gender Pay Gap?

Equality drives innovation.

In 2019, over 78% of UK companies reported a pay gap in favor of men. Though changes in the Equal Pay Act required companies with over 250 employees to report their pay gap figures, the difference in wages has been slow to change.

EU Commission president Ursula von der Leyen argues that pay gap reporting does not offer enough transparency, as these figures do not provide women with information on their male colleagues’ actual salaries. Thus, they are unable to challenge unequal wages.

With this lack of transparency at the forefront of the wage gap issue, many are turning to tech innovations for a new solution. One of those solutions being put forward is blockchain.

Tech for Transparency

The blockchain has already proven to be an incredibly effective tool for encouraging transparency. For instance, the use of cryptocurrencies by NGOs demonstrates that the traceability of digital coins can help to prevent fraud.

When donors supply funds to a charity using cryptocurrencies, they can easily track the movement of these contributions through the recorded ledger on the blockchain.

It’s this availability of information that makes blockchain a viable solution for the gender pay gap. A Medium feature titled ‘How Can Blockchain Reduce Pay Inequality’ explains how a company-sponsored HR blockchain increases transparency as far as salaries are concerned.

A company blockchain can record payments to employees for fulfilling job functions, thereby displaying salary compensation for employee work performance. Rather than identifying each individual by name, markers can instead designate specific categories, ranging from male and female, to seniority, providing transparent information with complete anonymity.

Because this data is immutable, it cannot be manipulated as data recorded on blocks are difficult to edit, according to FXCM. Each block on the blockchain contains two identification codes, including its own, and the code of the block preceding it. Manipulating data in one block will change its individual identification code. However, because all the blocks in the blockchain are connected, previous blocks can be used to check whether new blocks have been altered or tampered with.

What that means is that the blockchain can give employees access to store credible and untampered information. Female employees can view the recorded income information, take note of discrepancies, and implement appropriate action, such as seeking justification for pay gaps and negotiating adjustments in salary.

Blockchain is Putting Women in Top Jobs

Furthermore, the industry itself is paving the way for change. Though the tech sector has been historically male-dominated, women at the top of the cryptocurrency industry are working to create more opportunities for female employees.

Currently, the UNICEF Innovation fund is providing financial support to businesses that are over 50% women-owned, with the intention of promoting greater financial conclusions and making open-source, decentralized financial instruments more accessible. And Women Who Code was recently offered a $150,000 grant from cryptocurrency platform Algorand in support of their plans to launch a block-chain focused learning track for diverse women developers.

Currently, IBM’s blockchain team is led by Bridget van Kralingen and Donna Dillenberger who have changed the company’s hiring process to be more inclusive. By focusing on a skills-based hiring process, the company employed more women to develop its blockchain platform. This change in hiring attitude should have a positive effect on the gender pay gap in male-dominated industries like the tech sector.

Change is Still Slow

Yet while progress is being made there is still much to be done. In the UK, the gender pay gap narrows at a dismally slow rate. It could take up to 60 years to eradicate the gender pay gap at the current rate of decline, according to the BBC. The gap between what female employees earned on average and what male employees earned was at 9.5% in 2012 and only closed to 8.9% in 2019. This further proves the ineffectiveness of current government measures such as the Equal Pay Act.

And gender inequality is even more apparent in the fintech industry. Financial technology news outlet Fintech Times reports that in the UK, women make up only 29.5% of fintech employees, and only 20% of fintech executive roles worldwide are held by women. The article attributes these numbers to the existing landscapes of finance and technology. Both industries are known for being notoriously male-dominated, which further perpetuates a culture that fails to welcome, address, and include women.

Because the technology promises a system that can hold perpetrators of injustice accountable, blockchain could be the key to creating a work culture that can accommodate women. As technology allows women to easily track discrepancies in pay, more female employees can challenge companies to justify differences in pay.

The Bottom Line

To truly narrow the gap, it is necessary not only to make skilled roles accessible to women but also to dismantle the culture that prevents them from thriving in their fields. With these innovations in technology helping companies accelerate progress when it comes to gender inequality, there are strong signs that wage equality in the tech industry, as well as other industries, may be reached in the future.

This article is written by Mercuryo contributor Andrea Stinson.