Closing the gender pay gap

Adam Barber - PhD researcher, SPERI

However, while these figures may at first appear to signal a progressive victory in combatting gender discrimination in employment, there remains a definite and persistent gap between the amount earned by men and women. Indeed, workingwomen throughout the world are consistently paid less than men, with the International Labour Organisation (ILO) estimating that the global pay gap between men and women is a staggering 23%.

Nor can this be passed off as a feature of countries which lie outside the EU and industrialised West. The reality is that many European countries continue to eschew gender pay equality. For example, despite the passing of the Equal Pay Act 1970 and its subsequent evolution and assimilation into the Equality Act 2010, which supposedly protects and ensures the equality of men and women in the work-place in respect of pay and conditions, there remains in the UK a significant disparity between the average earnings of men and women. In fact, the Women in Work Index, compiled by PricewaterhouseCoopers, which measures countries in terms of their pay equality, number of women in work and proportion of women holding full-time positions, recently ranked the UK 18th amongst 27 OECD countries.

The importance of equality in both access to labour markets and employment conditions and pay is highlighted by the Millennium Development Goals which stress that equality in the work-place can directly and indirectly help to address gender inequalities in other areas too. Promoting gender equality can be a vital tool in enabling social development, stimulating growth and reducing poverty.

However, in the UK a distinct lack of flexible working options such as job-shares and affordable childcare means that women often find it difficult to re-enter work after having children. As a result, many women choose to stay at home to care for children. However, this often increases women’s reliance upon state-provided welfare and this does not offer the same social protections as paid employment.

For example, in an age of austerity when more and more cuts are being made to key benefits by government, it is women who are disproportionately affected. Even in countries such as Norway and Sweden where female economic empowerment is much greater, due in part to a much higher rate of female participation in the labour market and much smaller discrepancies in pay between men and women, it is often young childless women who are faring much better than mothers and older women in employment.

Because in the UK women are still overwhelmingly considered to be the main providers of childcare, those women who do return to work after having children often do so on a part-time basis. This is a big problem, because part-time employment has traditionally paid much lower hourly rates than full-time work. Many of these part-time jobs are found in industries such as cleaning or caring where salaries have conventionally been much lower than male-dominated industries such as engineering and construction.

The problem is further compounded by the fact that women largely dominate the part-time labour market. For example, part-time employment accounts for approximately 26% of the UK labour market; of this figure women make up 80% of all part-time workers. As a result women have a much lower earning potential than men. As such, both men and women are more likely to be affected by gender stereotypes concerning the role of men and women in the household, with women’s lower earning position reinforcing the established gender division of the household with women still generally being seen as carers and men as ‘breadwinners’. In turn, this erodes women’s economic position, making them more financially dependent upon a male partner.

The persistence of a gender pay gap in the UK also stems from women’s under-representation in the most senior management roles and executive committees. For example, research carried out by KPMG, the professional services firm and auditor, recently found that amongst FTSE 100 companies women made up just 21% of executive boards, with men being 4.5 times more likely to be promoted to executive status than women starting out with the same company. Meanwhile, women represented just 13.2% of all board members on FTSE 250 companies. Even high educational attainment does not appear to negate the gender bias within the workplace: women make up 56% of all UK university graduates and yet still they lag behind.

Women leaving higher education with the same quality of degree as their fellow male graduates are typically likely to earn considerably less than their male counterparts. The average salary of female graduates leaving higher education in 2006 was between £15,000 and £23,999. Meanwhile, men who graduated in the same year were more likely to be earning a salary in excess of £24,000. The ILO believes that a large part of this discrepancy can be attributed to how men and women’s job status and role within the work-place is categorised. Men often find themselves with job titles that confer greater seniority, more importance and higher salaries than women found in substantively the same role.

In sum, while more women than ever before are in employment, it appears that the inclusion of women within the labour market is, by itself, insufficient to guarantee women’s empowerment. Despite legislation, there remains in the UK a distinct gender bias in relation to employment earning and opportunities. These gender inequalities and the persistence of the pay gap between men and women are likely to have a number of damaging social, political and economic consequences. Women’s limited access to labour markets and equal pay continues to act as a barrier to female empowerment, constraining women’s ability actively and fully to engage in all those aspects of social and economic life that are a prerequisite for growth and long-term sustainable development.