Gender wage differentials in the Malaysian services sector

The Malaysian economy has undergone dramatic changes moving from a heavy dependence on agriculture to an increasing reliance on the manufacturing and services sectors. These days, the services sector has become the most important source of Malaysian economic growth. Most sub-sectors in the service industries have been transforming toward more capital-intensive and knowledge-based activities that require additional skilled-labor. An increase in demand for this type of labor will subsequently raise wages. However, it is observed that because women are perceived as being less productive compared to men they are always less preferred by employers despite being equally educated. This perception of employers may not be true and, as such, bears the element of discrimination against women. This paper attempts to examine this issue using 887 executives in three selected services sectors - education, health, and Information and Communication Technology (ICT) - from a survey conducted in 2007/2008. They comprise 315 males and 571 females. The results show that almost all incorporated human capital variables have a significant positive effect on wages for male and female workers. These variables also play an important role in reducing gender wage differentials. However, discrimination prevails, as shown by a high percentage contribution of unexplained variables to gender wage inequality.