Bureaucrats decided to fix inequality between men and women

Over the past week, bureaucrats have stepped on the gas in their misguided attempts to improve the world. We have seen tragicomic decisions, such as the ban on glass olive oil in the EU. This will hurt the industry, but it is unlikely to ruin it. The regulation may not even survive its entry into force. While EU officials have been dealing with the harm that glass can do to the human body, their colleagues at the UN are clearly on their way to introducing far more harmful restrictions.

From the article in "24 Chasa" we understand that from the fall the labor market, which seems to be hitting bottom (i.e. maybe it will start to recover (slowly, slowly), will be burdened with new restrictions. With another regulation, the CEM will be able to bring morality to female images and determine whether a half-naked model can advertise soap, or whether Aunt Maria will have to take over the promotion of other goods.

We owe the looming new restrictions to the Concluding Recommendations of the UN Committee on the Elimination of All Forms of Discrimination against Women[1]. Article 33 states: “… The Committee expresses concern at the continuing vertical and horizontal segregation in employment, as well as the persistent pay gap between women and men, particularly in the public sector, the rising level of female unemployment and the exclusion of Roma women from the formal labour market.”

The proposed solution is: “ To reduce and eliminate the gender pay gap by implementing performance appraisal schemes in the public and private sectors, linked to wage increases in sectors dominated by women, and to expand women’s access to formal employment and entrepreneurship, including for Roma women and other disadvantaged groups.”

According to the NSI data, there is indeed a difference in pay between men and women. For 2011, the average annual salary was 7,354 leva for women and 9,123 leva for men[2]. The average annual salary conveniently hides the extremes – i.e. what is the maximum and how much is the minimum salary by gender. The artificial equalization of average salaries is an equalization. And the results of such policies are well known to us (see points 2 and 3).

The authors of the document speak of segregation. By definition, “segregation” means “separation of a certain group from the whole on a given basis” (in this case, gender). We cannot speak of “separation” of women, although they do not have any legal restrictions on working. Statistics on employed persons by occupational class also reject the thesis that women are victims of discrimination in the labor market (see Table 1). At the “specialist” level, more than twice as many women are employed as men.

Table 1: Employed persons by occupational class in 2012. Source: NSI.

How then did officials and activists come to the conclusion that there is gender segregation? Again, by manipulating “raw” data, and more specifically, the absolute number of employed people by gender. According to NSI data, employed men in 2012 were indeed more than women (1,541,700 men and 1,329,300 women). But is this due to the “separation” of women from the labor market? The answer is “no”. Factors that determine the lower absolute employment rate among women are:

1. There are fewer women of working age than men[3].
2. Women are retiring earlier.
3. Traditionally, women are the ones who raise children. In Bulgaria, it is rare for a man to interrupt his work to raise a child.

That is, the argument that "segregation" is observed is untenable.

The Committee on the Elimination of Discrimination against Women is concerned about the “rising level of unemployment among women”. Such a line of argument shows an extremely one-sided interpretation of the data. Unemployment among women is significantly lower than that among men. According to data from the National Statistical Institute[4], the number of unemployed men in the first quarter of 2013 was 267,500, and the number of unemployed women was 188,800.

We continue with another false statement, namely that Roma women are excluded from the “formal labor market”. Overall, there is a low rate of economic activity among the Roma population. Only slightly more than 70% of them are economically active in Bulgaria, and 30.9% are employed[5]. This statistic is worse for women than for men. But the reasons for the “exclusion” are culture, social structure and lack of education, especially among women (only 6.8% of them are economically inactive because they are students. For men, this percentage is 10.7%), and not formal prohibitions.

The UN proposals are based on a false hypothesis. The results of this are two extremely harmful policies:

1. The state will support companies that hire more women.

2. Support for wage growth will occur with state aid. Incentives are provided for political parties that have an equal number of men and women.

State support for companies that hire more women is no guarantee that wages will be equal to those of men. But we have gender discrimination and a guarantee of losses in the economy. Here are the effects we expect to see:

1. Rent-seeking behavior of companies – companies will start hiring more and more women to gain state “support”. State subsidies always lead to a loss of welfare and competition. Examples of this are ruined education, the renewable energy bubble and state-subsidized agriculture.
2. Total distortion of the wage – in a market economy, wages have two functions: assessment of the value added by the employee and information about the demand and supply of labor. Employment contracts are concluded voluntarily. If women themselves believe that their wages are underestimated, they are free not to conclude an employment contract. Under current market conditions, their added value is actually assessed, the employees themselves have agreed to this assessment and it corresponds to the demand and supply of labor. When the assessment is made by some bureaucrat, these two important functions of the wage will be destroyed.
3. Demotivation – employees are highly sensitive to the appreciation of their work. Most people have no problem with someone else earning more than them, as long as they see why. This is also observed at the macro level – people are not opposed to having rich people, as long as the source of this wealth is clear and it was accumulated honestly. But when salaries are higher due to a decision by (well-paid) bureaucrats, those who do not benefit from the benefits are likely to feel disadvantaged and their motivation to work will decrease.
4. Disproportionate increase in women's wages - in order to maximize the profit from state aid, companies will have incentives to hire women with low qualifications, because the labor costs of low-skilled employees are low. Even if there is competition for women with higher education (most of whom have not lost their jobs due to the crisis), the lowest wages will have the largest increase above the increase that will be paid by the state. Of course, this would be the case if the legislation did not invent progressive aid for companies, which increases with the higher qualification of the employees.
6. More expensive parties – it is not yet clear how exactly parties that have an equal number of men and women will be “supported”. If this is done through subsidies, the political class will become even more expensive. And it is not famous for its productivity.
7. Gray economy and zero real effect on employment – in order to increase the number of women relative to men, owners will have incentives to fire men and hire women, which will not change the number of unemployed. Companies may start to “hide” men.
8. Discrimination – when the state supports certain social groups, it discriminates against others (gender discrimination); when it supports certain companies, it discriminates against others.
9. Budget balancing issues – when someone gets used to privileges, it is very difficult to take them away, i.e. all taxpayers will pay for a long time. These higher salaries will have to be paid from the budget, which will either have to take the money for them from taxpayers, or will have to burden them with paying off debt.
10. Welfare destruction – the proposed policies will have to be financed somehow. With a government budget that is already in deficit, there are not many potential sources of financing. Whether immediately (increasing taxes) or in the long term (increasing government debt), taxpayers will have to bear the brunt of the UN’s “anti-discrimination” policy. Through their consumption, people determine what is produced and what is not. When bureaucrats intervene, taxpayers will have to deprive themselves of goods and services that they would otherwise consume – now or in the future. This not only destroys welfare, but also distorts the economy, creating artificial demand for some goods (which will inflate bubbles) and artificially low demand for others.

The UN’s proposed policies “to eliminate all forms of discrimination against women” are based on an extremely selective and one-sided interpretation of the data and omission of inconvenient facts. The authors of the report completely ignore the basis of market trade – the voluntariness of bargaining. Discrimination means that a certain group of people has limited rights. This is not the case when concluding employment contracts in Bulgaria. Both women and men have equal rights – employment contracts are concluded by mutual agreement between the employee and the company. Women can refuse to conclude an employment contract if the terms in it do not satisfy them.

The UN decisions are discriminatory – by the same logic they can increase the salaries of everyone taller than 180 cm. It is not the first time that bureaucrats have tried to use the legislative power of the state to gain benefits for a certain social group. The negative consequences are well known. The “protection” they provide for a certain group harms all participants in the labor market outside it. The laws that will be voted on in September are discriminatory.

But they will not only harm men, but will also lead to rent-seeking behavior in the private sector. This will distort the labor market. The harm to the harmed will be greater than the benefits to the gainers, and the general welfare will decrease. Added to this are the public costs of this policy, which will undoubtedly be high and will also be paid by the whole of society. But the UN bureaucrats and Bulgarian legislators will wash their hands that they did it for the good and they will not bear the price.

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