Diversity Index Shows Arab Women Face Larger Employment Gaps than Men

In February 2019, the 2018 Diversity Index was released and presented to Israel’s President Reuven Rivlin. The Index (Diversity Index: Representation and Wages in the Private Labor Market and Academia – Hebrew) is a comprehensive survey of representation and wage gaps among five underrepresented groups in Israel’s labor market: Women, Arabs, Ethiopians, Haredim and individuals age 45 and older.

The index surveys 20 major industries in the private sector employing more than one million Israelis, comprising 40% of employers in Israel. As Israeli law does not stipulate the need to ensure or even track diversity in the private sector, but only in government offices and in public bodies, the Index aims to serve “as the first step towards formulating an effective public and business policy to enhance diversity” (2016 Index, Hebrew, page 7).

This is the third time the Index has been published since it was launched in 2016 by Israel’s Equal Employment Opportunity Commission (EEOC), the Central Bureau of Statistics and Tel Aviv University’s Sociology and Anthropology Department. The National Commissioner for Equal Employment Opportunities, Adv. Mariam Kabha, is the highest-ranking Arab woman in Israel’s government.

Each year, parameters have been added to the Index, creating a cumulatively more robust and in-depth tool for examining the labor market: The 2016 Index included wage and representation gaps in the 20 industries surveyed; The 2017 Index added level of academic studies within the five underrepresented groups as an additional criterion; and the 2018 Index added data by gender in each group for the first time. The new Index also presents unique data on employment and salaries for professionals who hold academic degrees in five prestigious sectors of the Israeli economy, such as business management and computer science. Finally, the 2018 Index also includes the first in-depth analysis of representation and wages in the insurance industry and pension funds.

This summary presents the main findings of the Index pertaining to Arab men and women in Israel, and some of the detailed data per area surveyed.

Main Findings

The main findings of the Index are:

• There are significant differences in employment rates and salaries of men and of women in each of the five underrepresented groups surveyed. According to the Index, these gaps stem from barriers “related to the fact that they are women as well as to their being part of minority groups, which often include populations with traditional characteristics…[including] inequality in responsibility over the household…This is especially true for women from minority groups who often live in peripheral areas, lacking sufficient public transportation and childcare infrastructure.”

• Segments of the labor market with a relatively high level of diversity include mostly men and significantly fewer women from the minority groups. This is referred to in the Index as “gendered diversity.” For example, the Index found that “more Arab men without academic degrees are integrated into the labor market than Arab women without a degree.” And even when representation is similar, such as in the spheres of retail sales or maintenance, Arab men without a degree earn significantly higher wages than similarly qualified Arab women.

• Segments in the labor market with the highest average salaries employ extremely low numbers of academically educated Arab men, but even fewer educated Arab women, who earn approximately half the amount paid to the men. For example, in the computer manufacturing business, Arab men with academic degrees are represented at approximately 10% of their proportion in the labor force and academically educated Arab women at 5% of their labor market representation. In addition, Arab men earn 80% of the average wages of Jews working in this sector, while Arab women earn less than 50% of the average wages.

• While academic studies help narrow representation and wage gaps for some of the groups, educated Ethiopian and Arab women encounter higher gaps than their counterparts without a degree. Specifically, “Arab women who hold an academic degree exhibit the lowest level of labor market integration than all the five groups examined,” both in terms of their level of representation and their salaries. In most of the 20 economic sectors surveyed, educated Arab women are represented at less than half their population rate, and receive wages that are less than 50% of those paid to academic educated Jews. Educated Arab men earn 80% of the pay that Jews with degrees receive.

• Although educated Arab women are less represented in the labor market than Arab women without degrees, academically educated men are more represented than those without a degree. And while Arab men and women without academic degrees are both overrepresented in low-paying industries, Arab men earn significantly more than the women. In computer manufacturing, for example, Arab women without a degree earn 37% of the amount paid to Jews without degrees, around half the wages earned in this industry by Arab men without degrees.

• Due to these representation and wage gaps, there is “lower financial return on higher education” among minority groups – meaning that investing in an academic degree yields less income later on for members of these five groups than for workers who belong to the Jewish majority.

Referring to the information surveyed according to gender, EEOC Commissioner Kabha wrote, “The data that emerged from this segmentation clearly indicates the need to develop a policy of diversity and equality that relates separately to the barriers facing men and to those facing women. This is especially true among men and women with academic education entering the employment market.”

Five Prestigious Economic Sectors Surveyed

According to the EEOC, “Many claim that representation and wage gaps in the labor market stem from the differences in academic spheres chosen [by the different groups]. This Index [therefore] presents, for the first time, data regarding equal representation and wages of men and women from minority groups who hold a diploma in one of five prestigious fields.” The Index surveyed a number of business sectors where graduates of five prestigious academic spheres — business and management, economics, computer science, engineering and law – are employed in significant numbers. Major findings include:

• Business and management graduates: In 2016, of all graduates in these spheres in Israel, only 2.4% were Arab men and only 1.3% were Arab women. Of these, 63% of the Arab men and 53% of the Arab women were employed. The legal services sector hires the most diverse group of employees who hold business and management degrees, with Arabs comprising 4.1% of employees, but pays the lowest wages of all sectors examined. In contrast, computer programing pays the highest wages but is the least diverse sphere in hiring these gradates, including having only 0.5% Arab employees with these degrees. The greatest wage gaps for these graduates were found in the insurance industry, where Arab men earn 40% of the salaries of Jewish men, and Arab women earn half of that.
• Computer science graduates: In 2016, of all graduates in this field in Israel, only 2.5% were Arab men and only 0.6% were Arab women. Of these, 60.3% of the Arab men and 56.7% of the Arab women were employed, the lowest employment rates of all minority groups examined. These Arab graduates represent 4.1% of the scientific development and research field, 2.4% of programmers, and in computer manufacturing, the least diverse industry, they represent only 1.2%. In all these spheres, women, and Arab women especially, are underrepresented. Example of wage gaps (in NIS) are in the graph below:

• Economics graduates: In 2016, only 3.1% of graduates in this field were Arab men and only 1.4% were Arab women, but even these low numbers represented the highest percentages of the underrepresented groups examined. Of these, 57% of Arab men and 53% of Arab women were employed, constituting the lowest employment rates of all minority groups examined. Compared to the rates among graduates, Arab graduates of this sphere are over-represented in legal services, which employs 9.5% Arabs, and is the most diverse employment field for these graduates.
• Engineering graduates: In 2016, 4.3% of engineering graduates were Arab men and only 0.9% were Arab women, nonetheless representing the highest percentages of the underrepresented groups examined. Of these, only 36% of Arab men and 35% of Arab women were employed, significantly the lowest employment rates of all minority groups examined. As a result, Arab women with an engineering degree are all but absent in the labor force.
• Law graduates: In 2016, only 1.8% of all law graduates were Arab men and only 1.1% were Arab women. Of these, 90% of the Arab men and 86% of Arab women were employed, the highest employment rates of all minority groups examined. Arab graduates of this sphere are over-represented in the legal services and the financial services sectors of the employment market, and underrepresented in the insurance field, which is the least diverse according to the Index.

In conclusion, the Index states that while university graduates with prestigious degrees are represented equally in some fields (e.g. Arab graduates of law or of business management), they “still suffer from severe wage gaps vis-à-vis the majority group…and gender-related wage gaps within the minority group.” This supports the major findings of the Index mentioned above – relatively low financial return on higher education for minority groups.

Insurance and Pension Fund Industry

According to the EEOC, the insurance industry has been working with the Commission to enhance its diversity and wage equality policies. The current Index therefore includes “an in-depth examination of diversity and wages in this sphere, in order to create a basis for future examination of the underrepresented groups, following implementation of the new policies formulated [in cooperation with the EEOC).” The Index also states that the insurance sphere “is one of the most lucrative professions in Israel” with wages almost twice the average of the employment market.

In the insurance industry, Arab women earn the lowest salaries of any group, with their pay half of the amount earned by Arab men. Significant wage gaps in the insurance sector also exist among graduates holding the same degrees. For example, Arabs who hold degrees in Business Administration earn 40% of the average salary in the industry for employees with the same degree. Israelis of Ethiopian origin with that degree earn 50% of the industry average and Haredim 63%. The Index also states that in large organizations in the insurance industry, the employment rate of Arabs is the lowest and their wage gaps are the highest. In this sector, Arab women and men with academic degrees only earn 20 and 25% more, respectively, than Arabs without degrees.

Based on the findings, the Index recommends broad-based evaluation of the effectiveness of diversity programs in this sector: “Diversification programs in the insurance industry should examine the entry-level positions of employees of each group and the opportunities for promotion offered to them, both in terms of the formal promotion track…and in terms of further training that enables advancements later on. Diversity programs should also examine whether there are unconscious biases in the assessments of employees as a basis for staffing and promotion decisions. Many studies in psychology and sociology have found systematic and unconscious biases in employee assessment that are then reflected in the gaps in promotion opportunities and wages.”