House of Commons - Trade and Industry

Select Committee on Trade and Industry Written Evidence

APPENDIX 5

Memorandum by the Equal Opportunities Commission

SUMMARY

— The average hourly earnings of women working full-time is 82% (a gap of 18%) and 60% for part-time employees (a 40% gap). There are three main causes of the pay gap discrimination, including pay discrimination, occupational segregation and the effect of caring on earnings. These factors closely inter-relate to and impact on each other.

— Using its statutory powers the EOC launched an investigation into the segregation of men and women in training and work, focusing on apprenticeships and work experience in relation to construction, plumbing, engineering, ICT and childcare. An initial report was published last year. Its final report will be published shortly. The investigation has found that, despite the fact that women have crossed major occupational barriers in professions like medicine and the law, has been little or no change in the sectors studied over the last 10 years and that apprenticeships were perpetuating rather than tackling segregation. The pay in childcare, dominated by women, is generally half or less of that in the other sectors considered. The investigation has found a clear correlation between areas where men predominate and skills shortages. As well as damaging an individual's life choices, and leading to lower pay for women, occupational segregation damages the competitiveness of the UK economy by failing fully to recoup our investment in education and training; and by ignoring opportunities to improve competitiveness by drawing from the full pool of talent available. It causes employers to miss out on a huge potential pool of labour with which to cure their skills shortages, and create a better gender mix in the workforce to meet the needs of consumers.

— In the first phase report, the EOC called for national strategies to tackle gender segregation to be developed for England, Scotland and Wales, linked to key economic and skills strategies and with effective incentives for change. The planned overhaul of the Apprenticeship scheme should include actions to address the systemic barriers to taking on atypical recruits. Other recommendations included that Schools and Connexions should help to widen choice for young people by providing more information on options and pay.

— The second phase of our investigation has found that there is considerable enthusiasm for change amongst young people and support from employers. Only 20% of girls said they would not be interested in considering a non-traditional job. However, girls and boys at school are still ending up in overwhelmingly segregated employment. Our final investigation recommendations are therefore likely to focus on ways in which choice can be opened up through work experience and an agenda to challenge stereotyping in schools.

— In addition to these main findings the investigation has also identified how the Government could take a lead role in this through procurement mechanisms which should require contractors to demonstrate a commitment to tackling the barriers to gender segregation in their workforce.

— Recent research commissioned by the EOC shows that 36% of the pay gap is caused by gender differences in life-time working patterns. Rigidities in the labour market, including those that concentrate women into particular occupations mean that they are more likely to work in smaller and non-unionised firms, account for a further 18% of the pay gap. 38% is due to other factors associated with being female, including discrimination and differences in the labour market motivations and preferences of women as compared with men. All three of these factors will contribute to occupational segregation. For example, women often work in low paid sectors because it is only in these sectors that they can access part-time working. The remaining 8% of the pay gap is accounted for by educational attainment, since the average woman has less years of education than the average man.

— The current lack of good quality flexible and part time jobs therefore constricts the choices women have. Our forthcoming report on flexible and part time work is likely to include three key recommendations for opening up access to flexible work—extension of the right to request flexible working to parents of older children and carers; national strategies on skills and occupational segregation to include opening up new opportunities for flexible workers and trainees; and an effective infrastructure of support for parents and carers, including effective childcare and care services and financial support.

— An important aspect of occupational segregation is that women tend to work in lower paid sectors: the 5 "c"s—clerical, cleaning, catering, caring, and cashiering. The 2001 census confirmed that women make up 84% of employees in personal services; 78% of employees in administrative and secretarial work and 71% of employees in sales and customer services. The equal pay for equal work provisions of the Equal Pay Act provides some capacity to tackle the under-rewarding of women who work in jobs of equal weight to men; although there are limitations to its use in practice. However, the Equal Pay Act is not an instrument which can be used to tackle most of the barriers described above and will not therefore, in itself, close the pay gap.

— At present, there is no statutory duty for employers to undertake pay reviews and the EOC and others work with them on a voluntary basis to encourage them to do so. (16% have currently done so and a further 27% are the process of or have plans to complete a review.) A pay review should highlight the overall pay gap in an organisation; and it is open to employers to take action to tackle all the causes of that pay gap, not just pay discrimination.

— The Government has set up the Women and Work Commission to look at what action is needed to close the pay gap and it will be reporting later this year. The EOC's Chair, Julie Mellor, is on the Commission. A new public sector duty to tackle gender equality is also likely to be introduced in the next few years, which provides a more proactive model for employers to tackle the issues they face. The Commission for Equality and Human Rights is also expected to be established in the next few years. The EOC has joined others in calling for a review of equalities legislation to improve the tools available to the new body. The time is therefore ripe for fresh thinking on the statutory framework for closing the pay gap. A range of options are available for consideration from a strengthening of the equal pay for equal value provisions through to mandatory pay reviews, with encouragement to tackle all causes; through to a proactive, general duty on employers to promote equality and close the pay gap.

INTRODUCTION

1. The Equal Opportunities Commission (the EOC) is a statutory body whose duties are to work towards the elimination of sex discrimination and to promote equality of opportunity between men and women generally. The EOC's top priority is to close the gender pay gap and we therefore welcome the Trade and Industry Committee's inquiry, with its specific remit to examine the impact of occupational segregation on the gender pay gap.

STRUCTURE

2. In this submission we shall:

— Consider briefly the different factors that cause the gender pay gap and the relationship between them.

— We will go on to consider the impact that a lack of access to good quality flexible and part time jobs has on occupational segregation and finally consider the inter-relationship between pay discrimination and occupational segregation by considering the under-rewarding of women's work in gender segregated occupations and the extent to which the Equal Pay Act can be used to tackle this.

BACKGROUND

3. In March 2001 the EOC Equal Pay Task Force reported on the findings of its year long investigation of the gender pay gap. The Task Force had commissioned research, consulted experts, held a public consultation, met key stakeholders and prepared a prototype model process for carrying out equal pay reviews. The Task Force narrowed the causes of the gender pay gap down to three main factors: [13]

— Pay discrimination.

— Occupational segregation.

— The effect of caring on earnings.

4. A fourth factor, unequal educational qualifications, had all but disappeared, with girls and young women mainly outperforming their male peers. The Task Force noted that while women themselves had taken the initiative to increase their participation in education and to become continuous, or almost continuous, participants in the labour market, women were unable to change the structure of employment or the structure of pay and reward. This makes it all the more important to come up with ways of ensuring that pay systems are free from sex bias, tackling levels of occupational segregation and improving access to good quality flexible and part time work.

5. By pay discrimination we mean paying women less than men for doing work of equal value. Pay discrimination can be either direct eg paying a woman less than a man for doing the same job, or indirect, eg unjustifiably paying a woman recruit a lower starting salary than that of a man. The EOC Code of Practice on Equal Pay recommends that employers carry out an equal pay review as the best means of identifying and eliminating pay discrimination in the workplace. Pay discrimination also occurs in the wider economy, as when the rate of pay for jobs being done by women is undervalued relative to the skills and experience required to do the work, for example, in the childcare and home care sectors.

6. By occupational segregation we mean women working in jobs dominated by women and men working in jobs dominated by men, with women being clustered into a much narrower range of jobs than men. In some sectors, particularly those with lower levels of pay, there are disproportionate numbers of women, for example, almost all childcare workers are women. In better-paid skilled trades, the situation is different. Only 8% of employees in engineering occupations are women and very few plumbers are women. Occupational segregation has costs not only for women, in that it channels them into low paid jobs, but also for employers. There is a clear correlation between the sectors experiencing skills shortages and the sectors in which women are under-represented in the workforce. [14]

7. By the effect of caring on earnings we mean that women, and some men, often choose to take a career break or to work part time, because of their family responsibilities. An extensive body of existing research reveals why women work part-time. These reasons include: the need to combine paid employment with caring for children or adult dependents; the lack of affordable, accessible childcare that would enable them to work full-time; the lower educational levels of older women and the restricted job opportunities offered by local labour markets. These circumstances and conditions channel women into low paid part-time work.

8. These factors have an impact not only on current income, but also on the income that women receive in retirement, with women currently in receipt of 57% of the pension that men receive. [15]

9. The Equal Pay Task Force made a number of recommendations to Government, to employers, to trade unions and to the EOC itself. Among the key recommendations were that the EOC should develop a model process for carrying out equal pay reviews and that this should be incorporated into a code of practice. The EOC acted upon these recommendations, publishing the Equal Pay Review Kit in July 2002 and the Code of Practice on Equal Pay in December 2003. The EOC also began a programme of research aimed at tracking the progress of equal pay reviews and at finding out more about the factors that contribute to the gender pay gap.

10. Since the Equal Pay Task Force the EOC has been working proactively across all three causes of the pay gap. In addition to our work on pay discrimination the EOC launched a General Formal Investigation (GFI) into occupational segregation in May 2003 and has forged an alliance of 37 organisations, the Parents and Carers Coalition, to highlight the issues for parents and carers and to lobby for change. In July 2004 the EOC also launched a GFI into flexible and part-time working.

THE FACTORS THAT CONTRIBUTE TO THE GENDER PAY GAP

11. There has been little change in the full-time gender pay gap since the mid 1990s and in the female part-time/male full-time pay gap since the mid 1970s. The gender gap in hourly earnings for those employed full-time in Britain in 2003 was 18%, while that between women working part-time and men working full-time was 40%. Research commissioned by the EOC used the British Household Panel Survey, a sample of around 10,000 adults, to break down the components of the gender pay gap and has shed light on the importance of the different factors. [16]

12. The research clearly shows that the difficulties women face in combining care and paid employment accounts for more than a third of the pay gap. The remaining gap is largely due to the effect of discrimination and the segregation of women into particular occupations, with two contributing factors shown in the pie chart below. These factors are first, the direct impact of lower pay for "women's work," including work in non-unionised and smaller firms as well as particular occupations dominated by women—for every 10 percentage points greater the proportion of men in the workforce, the wages are 1.3% higher, even after other factors are taken into account. The second factor is discrimination and the other choices that women make about their career, which can be affected by indirect discrimination as well as lack of information. The research also shows that the fact that on average women have spent fewer years in full time education than men accounts for a relatively small but significant 8% of the gap. Women are now excelling in education so the impact of this will decline, but it is still important in limiting the opportunities of older women and those returning to work.

13. In many instances the factors that go to make up the gender pay gap are related to each other. For example, the occupations with higher female participation in which women are concentrated will often be those where a particular working pattern, such as part-time work, is prevalent—for example, hotel and catering; retail and distribution.

OCCUPATIONAL SEGREGATION

14. Employment in the UK remains strongly delineated by gender, involving both "horizontal" and "vertical" segregation. Horizontal segregation crowds women into female-dominated occupations and industries, while vertical segregation limits career development within industries that would enable women to earn more by moving up into higher paid jobs. Either way, gender segregation means that men are more likely to work with other men and women with women.

15. On average, the occupation a man is employed in is 68% male, while that for a woman is 32% male. Men are more likely than women to work in a large firm: 32% of men work in a firm of 50-499 workers, compared with only 23% of women; and 15% of men work in a firm of 500 or more workers, compared with only 12% of women. [17]The higher the proportion of males in an occupation, the higher the wages, so the fact that women are more commonly in occupations with fewer males means that their average wages are lower.

Vertical segregation

16. The effects of horizontal and vertical segregation are different and require different solutions. There are a number of possible solutions to the problem of vertical segregation which include:

— There is a need to continue the improvements being made to maternity and parental rights so as to enable a more equal sharing of parental responsibility, thereby enabling women to maintain their position in the labour market. This should be underpinned by an effective infrastructure of childcare.

— In order to enable both women to make the best use of their skills and talents we need to ensure that recruitment and selection practices are open and unbiased, and, where appropriate, to use positive action to encourage women to apply for jobs in which they are under-represented.

— Across the UK some 20% or employees have access to flexible working. As this figure includes employees working part-time, this means that the type of flexibility that enables people to balance their responsibilities at work with those at home is available to only a minority of workers. There is therefore a need to open up senior level jobs to flexible working so as to enable both women and to balance their work and caring responsibilities. As well as a benefit to women increasing access to flexible working will also enable employers to retain skilled staff within the business.

— Discrimination within the workplace may mean that, even where women are present in roughly equal numbers to men, they do not gain promotion as quickly as men. Monitoring the progression rates of women and men within the organisation is therefore essential.

Horizontal segregation

17. The problem of horizontal segregation is more complex, but it is important to recognise that the most disadvantaged women experience both horizontal and vertical segregation—they are segregated into low grade jobs in low paying sectors and are then unable to make any further progress. While the numbers of university-educated, mainly middle-class men and women entering professions such as accountancy and law have more or less equalised over the past decade, there has been no such opening up of opportunities for the vast majority of the working population. Girls leaving education at 16 or 18 still overwhelmingly end up in "female" sectors—childcare, hairdressing—while boys continue to go into jobs in male-dominated areas, like the building trades or engineering. Traditional notions about "men's" and "women's" work limit their choices.

The productivity implications of occupational segregation

18. Our investigation into occupational segregation focused on horizontal segregation in areas of skills shortage. We found a strong correlation between a high degree of gender segregation and skills shortages in key areas. We conclude that occupational segregation benefits no one. Occupational segregation is a class as well as a gender issue, denying choice and opportunity to girls from lower socio-economic groups especially, and hindering social mobility.

— It traps many women and girls in low-paid, low-status jobs that do not give them the opportunity to improve the quality of their lives, or to provide a decent income and future for themselves and their families.

— It denies young people the chance to achieve personal or professional fulfillment by doing jobs they would love and be good at.

— It damages the competitiveness of the UK economy by failing fully to recoup our investment in education and training; and by ignoring opportunities to improve competitiveness by drawing from the full pool of talent available.

— It causes employers to miss out on a huge potential pool of labour with which to cure their skills shortages, and create a better gender mix in the workforce to meet the needs of consumers.

19. Phase 1 of the investigation, on which we reported last May, focused on gender segregation and inequality within the Apprenticeship system and had the following findings:

— There was a clear correlation between a lack of women in the workforce and skills shortages.

— There was a lack of data about the breakdown by gender of those in training, and no data on Apprenticeship pay rates.

— There was marked systemic gender segregation in all occupational sectors across all three countries—all were heavily male-dominated except childcare, which was heavily female-dominated. The exception was ICT in Scotland and Wales, where women are almost equally represented on apprenticeships (they account for only 15% in England).

— While there were many specific initiatives across Government and by employers to increase the numbers of workers in non-traditional areas, these efforts were often insufficiently joined up and sustained.

— There were no national or local targets for the number of women entering male-dominated areas via Apprenticeships, although some sectoral organisations had set targets.

— A bottleneck shortage of Apprenticeship places existed in sectors with a high proportion of small businesses and self-employment, because employers lacked adequate incentives to offer training.

— Apprenticeships perpetuated segregation because of the lack of places, inflexibility, and a lack of childcare support.

— Pay in childcare, the only female-dominated sector, was generally half or less of that in construction, engineering, plumbing or ICT.

20. The report went on to make two initial recommendations:

National strategies should be developed for England, Scotland and Wales, driven by a high-level alliance across Government and linked to key economic and skills strategies, to ensure a consistent approach from all relevant parties to tackling gender segregation in training and work. The Scottish Executive and the Welsh Assembly should lead this work in their countries.

The UK Government's planned overhaul of the Apprenticeship scheme should include actions to address the systemic barriers to taking on atypical recruits.

Other recommendations were that:

— Schools and careers services should help to widen choice for young people by providing more information on atypical work sectors and putting more focus on promoting non-traditional subject choices.

— Learning and Skills Councils and Local Enterprise Councils should publish annual data on Apprenticeship frameworks, and set national and local targets to reduce segregation.

— Sector Skills Councils should make gender targets an integral part of sector recruitment targets, rather than an add-on; audit pay rates across apprenticeship sectors; and develop project-based apprenticeship groups for small employers as an alternative to single employer placements.

AN APPETITE FOR CHANGE

21. Through the course of our investigation we talked to both young people and employers. Many people want things to be different and there are higher levels of interest in non-traditional work than has been recognised. There is considerable enthusiasm for opening up the world of work among . . .

. . . Young People

— Only 20% of girls said they would not be interested in considering a non-traditional job.

— A quarter of boys in England said caring sounded interesting or very interesting, and a fifth in Wales. Seventeen per cent of girls in England showed an interest in technical and engineering work, and 19% in Wales; 12% and 11% were interested in construction.

— Females have stronger views than males on whether jobs can be done by both sexes: 81% of girls in England and 82% in Wales said males and females could be equally good at plumbing, compared with just over half of boys in England and 61% in Wales.

. . . Adults

— Many believed more male role models would have a positive influence on the lives of children being cared for in nurseries.

— Women in focus groups all reported high levels of job satisfaction and that their choice of non-traditional work had improved the quality of their lives.

— Many of these women had always wanted to do this type of work but had been put off when young.

. . . Employers

— Seven in 10 England-based employers in engineering, childcare and IT, and six in 10 in construction, thought typical workers were a way of meeting skills shortages. Across all sectors, 64% of employers in Wales agreed.

— Employers in Scotland strongly identified with a growing demand for female tradespeople, particularly in construction and plumbing.

— There is evidence of pockets of flexible, women-friendly employment practices across all sectors, including construction, mainly in response to a perceived business need.

— Employers are generally opposed to any intervention that would require or coerce them to recruit more atypical workers, such as targets or ring-fencing, though they would back efforts to market non-traditional careers more effectively. More Welsh than English employers—46% versus 35%—said they would be persuaded by extra funds to recruit more atypical workers.

Barriers to change

22. Despite this appetite for change there remain many policy, practical, attitudinal and social barriers to building on this momentum for change:

Delivery and practice in education, careers, and training:

— No agenda is being set for schools and Connexions to widen opportunities, challenge traditional choices, or address young people's natural fears and concerns about working in non-traditional areas, in contrast to the way that raising achievement is on the agenda for all schools. So front-line practitioners are not supported or resourced for this work and many operate according to a freedom-of-choice model of equality that perpetuates and even strengthens the division of opportunities, not just between the sexes but between different social groups by failing to take positive action to open up wider choices.

— Few children are given the chance to explore the impact of different choices on their future pay and progression.

— There is a lack of strong links between education and industry—half of employers we surveyed in England and only 29% in Wales had links with secondary schools, while only 6% in England and 14% in Wales had links with primary schools. This means young people are not encouraged or enabled to make the connections between what they do at school and their occupational opportunities.

— Careers information on particular sectors is often given out only to the traditional sex, and often presents an inaccurate or out-of-date image.

No agenda set for schools to promote and widen opportunities through work experience:

— Work experience placements, which should be playing a crucial role in allowing young people to test and develop ideas about non-traditional work, are in reality reinforcing gender, class and race divisions. The onus is on individual youngsters to find their own placements, which favours white, middle-class children who have the resources, knowledge and contacts to create less predictable opportunities.

— Those children who cannot find suitable placements are often allocated a vacancy in a sector perceived as suitable for their gender, and sometimes whether or not they have expressed interest in it.

— The lack of strong education-business links (see above) also means there is a shortage of suitable placements for atypical candidates.

Young people's attitudes and fears:

— A range of traditional attitudes about what men and women can or should do are influencing children's choices without being challenged.

— Young people's decisions are also affected by fears about how they may be perceived and treated if they go into non-traditional sectors. Two thirds of male respondents and around a third of females said they didn't want to "stand out from the crowd" and feared the way they would be perceived and treated.

— Few boys view childcare as a viable career, largely because of the low pay and poor employment conditions associated with the job, and its low professional status—it is often viewed as an extension of the "mothering" role. This undervaluing of traditional women's work impacts negatively not only on the pay and progression opportunities for the current childcare workforce, predominantly women, but also makes childcare unattractive for both sexes at a time of government expansion of childcare services. In Scotland, girls (18%) were more likely than boys (0%) to be studying social care, social work, youth and community care and childcare.

— Though we found limited evidence that parents were consciously discouraging their children from making non-traditional choices, and in some cases were supporting them, their influence could operate in more subtle ways—for example, there is a tendency for children from less well-off backgrounds to follow their same-sex parent's choice of career.

— Both parental aspirations and cultural attitudes were found to be important for young people from black and ethnic minority groups and a significant barrier to widening their vocational choices.

— There is still strong prejudice against vocational training as a routeway into good jobs, particularly amongst girls. In a Welsh survey of 15 and 16 year olds, only 4% of girls and 7% of boys said they would consider doing a work-based training course at 16. The Scottish 2003 survey of school leavers found that girls were more likely than boys to study full-time as their main activity whereas boys were more likely to study part-time while in a job or on a training programme. 7% of boys were in a MA scheme, compared to 2% of girls.

Employer attitudes and practices:

— Many employers in the sectors we investigated said girls were just not interested in working in their industries, and they were reluctant to put effort into a "lost cause"—though there was little evidence of effort to attract or encourage non-traditional recruits.

— Negative, dismissive and discriminatory employer attitudes and practices were found to be widespread. Both Scottish and English research uncovered perceptions, for example, that women made unreliable trainees due to their reproductive roles, and that employers' wives would be uncomfortable with them having a mixed workforce.

— Our research found strong evidence that some childcare employers did not recruit men because they thought users of their services would be suspicious of male workers' motivations—though all the available literature says this concern is unfounded.

— Many women in non-traditional sectors face isolation and a culture of machismo, bullying and harassment, often with little or no support.

Difficulties in retraining:

— Adults who wish to retrain in a non-traditional area face many barriers, which often mirror the difficulties faced in the workplace itself—such as isolation, lack of support, and no recognition of caring responsibilities.

— The current funding system for Apprenticeships favours 16 to 19 year olds so female apprentices, who tend to be older, face further disadvantage in securing training of their choice. Indeed this system bars both men and women from making career changes via Apprenticeships.

— Many atypical trainees said they encountered prejudice, inflexibility and ageism from employers when they applied for work placements, and many received no support or practical help.

— Best practice currently takes place in women-only training centres, which tend to take a more flexible and holistic approach, but reliable, mainstream funding is needed to ensure their continued existence.

RECOMMENDATIONS

23. The final report of our investigation due to be published in February is likely to make the following recommendations. The complete draft set of recommendations is contained in the Annex[22] and the final report[23] will be sent to the Committee as soon as it is available.

— The Department for Education and Skills (DfES), the National Assembly for Wales Education and Lifelong Learning Division and the Scottish Executive Education department in partnership with the Lifelong Learning Group, should put in place a new national agenda for schools that promotes real opportunity and choice and challenges the myths and stereotypes that form from an early age.

— The DfES, the National Assembly for Wales and the Scottish Executive Education Department with the Lifelong Learning Group, should introduce a new strategic focus in work-related learning on widening opportunity.

— The DfES should take steps to improve policy, delivery and practice of the new 14-19 vocational options to ensure that atypical choices are promoted and tackling gender stereotyping should be addressed within the National Assembly for Wales 14-19 Learning Pathways review.

— The DfES, National Assembly for Wales and the Scottish Executive Enterprise, Transport and Lifelong Learning Department should pilot interventions that girls and boys said would encourage them to choose atypical apprenticeships.

— The Skills Alliance partners: Confederation of British Industry (CBI), Trades Union Congress (TUC), and Scottish TUC, Wales TUC, Learning and Skills Councils, Local Enterprise Councils, training providers, Sector Skills Councils, Small Business Service, the Apprenticeship Task Force and Careers Scotland should promote the reduction of occupational segregation not just as an equality issue but also as a business and productivity issue, and target employers in the sectors covered by this investigation to.

— Business leaders and major employers should work with trades unions, Learning and Skills Councils, Local Enterprise Councils, and Sector Skills Councils to support and promote better, more flexible employer practices that would help and encourage more women to enter male-dominated sectors.

— Trade unions should expand their efforts to challenge occupational segregation by increasingly including this on the agenda in collective bargaining.

— Companies should be required to report on measures taken and progress towards gender equality and maximising human capital as part of their annual reporting.

— Learning and Skills Councils, Local Enterprise Councils, and Sector Skills Councils and training providers should work together to develop and support training schemes designed to meet the needs of atypical trainees, using best practice identified through this investigation.

— National procurement policy and in particular the Office of Government Commerce and the Office of the Deputy Prime Minister's sustainable communities agenda, should include challenging segregation.

— The Treasury Initiative to promote women in enterprise should include a focus on attracting and supporting women into sectors experiencing skills shortages.

— The UK Government with the Scottish Executive and the Welsh Assembly, should highlight in the national Childcare Strategy the benefits of attracting more men into childcare and address the gendered nature of the current workforce, including attitudinal and practical barriers as a key objective for the development of the new infrastructure for the national Childcare Workforce.

— The UK Government through the Skills Alliance and the Scottish Executive through the Enterprise, Transport and Lifelong Learning department, should identify dedicated ring-fenced funding and resource support for the delivery of the recommendations in this report as part of an effective national strategy and action plan on occupational segregation.

PROCUREMENT

24. Both phases of the investigation identified that the Government could take a lead though use of procurement mechanisms. The phase 1 report called for greater accountability on equality in the public sector by requiring contractors to signal their commitment to supporting and delivering equality in apprenticeships through their supply chain and the final report is likely to identified the need for the National Procurement Strategy for Local Government and the nine regional centres of procurement excellence to provide mechanisms for building in action on procurement.

25. Every year the Government spends billions of pounds on goods and services. Recent statistics show that the Government spends an estimated £13 billion on civil procurement and an additional £10 billion on defence. [24]In England local authorities spend an additional £42.2 billion on purchasing through private contractors. [25]

26. The legal framework in this area is complex with both UK law and EU regulations to be considered. However, the Local Government Best Value order 2001 and ODPM guidance 2003 make clear that local authorities may take into account the practices of potential service providers in respect of equal opportunities where it is relevant to the delivery of the service under the contract.

27. The EOC would like to see that, in advance of the forthcoming public sector duty to promote gender equality, a more permissive approach be taken to using procurement procedures in this way. Such an approach could be used to require contractors to demonstrate a commitment to tackling the barriers to gender segregation in their workforce.

28. Following the interim report of the GFI both Secretaries of State at the DTI and the DfES responded positively to the recommendation for a national strategy and at a meeting of the Skills Alliance, a cross-government grouping of Ministers and Social and Economic Partners, directed the WEU to work with the DfES and other governments departments to draw up a plan based on the recommendations in the EOC Phase 1 report and to include action based on Phase 2 recommendations when available. These plans so far include:

— Careers advisors offering more information about traditionally male jobs to schoolgirls and advising those who want to work in these sectors.

— New drive to increase the number of female entrepreneurs starting up their own business.

— Funding for universities to help female science and engineering graduates find jobs in those industries.

— Adult education "taster courses" for men and women in non-traditional subjects, such as plumbing for women, and childcare for men; and

— Better information for school leavers about jobs that are dominated by one sex.

POSITIVE ACTION

29. Bringing women into manual jobs that have traditionally been regarded, as "men's work" cannot be achieved overnight. Women may be wary of being in a minority; men may feel that their status is being undermined and more employers need to be persuaded of the potential benefits to their business. It is because of difficulties such as this that the Sex Discrimination Act contains positive action provisions that enable employers to take special measures to recruit and train women (or men, as for example, in the case of childcare) for work in which they are currently under-represented. In the past local authorities have been leaders in the field of positive action and there is a body of good practice that can be drawn upon. Our experience is that a positive action programme succeeds best when:

— It involves close co-operation between the authority and the relevant trade unions.

— It is well-planned and executed.

— It is designed to meet a skill shortage.

— The training provided is of a high quality.

— Realistic targets are set and their attainment monitored.

— It is accompanied by the introduction of flexible working patterns (experience in both local government and the private sector shows that women tend to drop out once they have started a family).

OCCUPATIONAL SEGREGATION AND FLEXIBLE AND PART-TIME EMPLOYMENT

30. While working full-time is associated with increased wages, working part-time is not—not even pro-rata. Rather, experience of part-time employment is associated with a reduction in wages.

— For each year of part-time employment, hourly wages decrease by 1% (in addition to missing out on the 3% gain that each year of working full-time brings);

31. These findings challenge the typical assumption in human capital theory, that experience of employment increases wages by increasing human capital. Rather, whether or not employment experience leads to increases in wages depends on the location of that experience within a gender differentiated labour market. The differential impact of years spent working part-time, as compared with full-time, has serious implications for both women's wages and UK productivity and is worthy of policy intervention, whether discrimination is the whole cause of the difference or not.

32. The association between occupational segregation and part-time work is well documented. [27]Part-time jobs are concentrated in the less skilled sectors and occupations. Women experience a pay penalty for working part-time and the prevalence of women working part-time in the UK economy is a key factor affecting the gender pay gap. The clustering of women into low paid part-time work, and the associated under-utilization of women's skills are key issues to be tackled if the gender pay gap is to be eliminated.

33. Research is currently being conducted for the EOC to explore why significant proportions of the women who work in low paid, part-time jobs do so even though they have the potential to work in more skilled, higher status, better paid jobs. [28]

34. The research is still ongoing. However, an analysis of interviews conducted to date with 160 women working part-time in 13 different workplaces indicates that about a third have previously worked in jobs requiring more qualifications, skills or experience than are required for their current job. 41% had previously worked in a job involving more responsibility for supervision or management of staff than their current job.

35. The reasons for this are largely an outcome of limited labour market and workplace opportunities and the absence of support to enable women retain their status in the labour market and to flourish and advance in the workplace. Two key factors have been identified as underlying the under-use of women's skills and experience. First, labour market conditions can severely restrict employment opportunities for women seeking work on a part-time basis. Second, workplace conditions and practice, including the overly conventional approach taken to the design of jobs; the lack of on the job training for part-time workers; their lack of access to promotion and/or full-time employment; and the intensity of full-time work. At present it requires considerable resources and determination for women to break out of the low paid sector once they become located in it.

36. Our forthcoming report on flexible and part time working is likely to include the following recommendations for opening access to flexible work:

— The existing right to request flexible working should be promoted to both men and women and that the right should be quickly extended to parents of older children and carers.

— In England and Wales implementation of the National Skills Strategy and the national strategy and action plan on occupational segregation should specifically address the needs of people working flexibly or part-time.

— In Scotland, a national strategy to tackle gender segregation in training and work should form part of the key Scottish Executive economic and skills strategies. This would complement the work being done to ensure that employers have the right skills to support the success of their business and individuals have the skills they need to be both employable and personally fulfilled.

— All governments major economic and labour market policy proposals should include an equality impact assessment. This should be done before and during the design of the policy, not as a bolt on after policy has been formulated.

— We welcome the government's recent commitments to improve access to childcare in a more coherent way and to increase funding for parental leave. But these changes need to be implemented as part of a coherent package of support for families—the National Family Strategy to support working families through a nationwide infrastructure of childcare and care services, and enhanced paid leave arrangements for parents and carers.

OCCUPATIONAL SEGREGATION AND THE EQUAL PAY ACT

37. An important aspect of occupational segregation is that women tend to work in lower paid sectors. The 2001 census confirmed that women remain concentrated in the five lowest paid employment sectors and 60% of women work in just 10 occupational groups. Women make up 84% of employees in personal services; 78% of employees in administrative and secretarial work; and 71% of employees in sales and customer services. There are only 9% in skilled trades; 17% as machine operatives; and only 34% are managers, senior officials and professionals. So far we have just considered how women can be drawn into new areas of work but we also need to consider the aspect of occupational segregation that relates to the under-rewarding of women's work.

38. The definition of equal pay derives from the equal pay legislation, and in the context of this Inquiry, it is important to recognise that the Equal Pay Act was specifically designed to deal with the under-rewarding of women's work in gender segregated jobs. The concept of equal pay for work of equal value (see footnote) enables comparisons to be made between jobs that are entirely different. [29]This means that any organisation, or part of an organisation, that has work done predominantly by men and work done predominantly by women, is liable to equal pay claims if one group is earning more than the other and if the lower earning group perceives the work as being of equal worth. While recruiting one or two employees of the under-represented sex will not provide an organisation with a defence against an equal pay claim, in the long-term breaking down occupational segregation will reduce the likelihood of equal pay claims being brought. There are, however, limitations on the ability of the Equal Pay Act to deal with occupational segregation and we look at these below.

39. As we have seen, the definition of the gender pay gap derives from national and workplace level statistics. Calculating the gender pay gap from national data produces a statistical definition that is unlikely to reflect the gender pay gap within a particular industrial sector, or within a specific workplace. However, the headline statistics mask the incidence of occupational segregation and are unable to give any indication of the existence or whereabouts of high-risk areas—the gender pay gaps that are most likely to give rise to equal pay claims.

40. Employers are responsible for providing their employees with equal pay and for ensuring that pay systems are transparent. The EOC recommends equal pay reviews as the most appropriate method of ensuring that a pay system delivers equal pay free from sex bias. [30]Equal pay reviews are also a means of identifying patterns of occupational segregation within an organisation eg women clustering in some jobs and men in others, or women not progressing beyond certain levels of responsibility. Whatever kind of equal pay review process is used, the essential features are the same:

— Comparing the pay of men and women doing equal work—this includes an assessment of equal value.

— Explaining any equal pay gaps.

— Eliminating those pay gaps that cannot satisfactorily be explained on grounds other than sex.

41. At present, there is no statutory duty for employers to undertake pay reviews and the EOC and others work with them on a voluntary basis to encourage them to do so. (16% have currently done so and a further 27% are the process of or have plans to complete a review). [31]A pay review should highlight the overall pay gap in an organisation; and it is open to employers to take action to tackle all the causes of that pay gap, not just pay discrimination.

The relevance of equal value to occupational segregation

42. Comparing jobs on the basis of equal value means that jobs that are entirely different in their nature can be used as the basis for equal pay claims. Job comparisons can be made both within a particular pay/grading structure and between different structures.

43. Equal value is likely to be relevant where, as for example, in local government, men and women are in the same employment or service but are segregated into different types of work. Local government claims have succeeded in a wide range of equal value comparisons, including: classroom assistants and van drivers; nursery nurses and archivists; and kitchen assistants and refuse workers. Occupational segregation is both about women being paid less for work that is of equal value and about fewer women being employed in higher paid jobs. Higher paid jobs are not necessarily more senior jobs; they may also be jobs that attract additional payments, such as productivity bonuses. Local government employees, aided by unions with an understanding of how the equal value provisions can be used to tackle the impact of occupational segregation on women's pay, have made good use of the equal pay legislation, and will continue to do so until the underlying issue of occupational segregation has been tackled.

44. However, there are severe limitations on the ability of the Equal Pay Act to tackle the undervaluing of women's work:

— The Equal Pay Act deals with individual instances of discrimination when they occur, but it is not geared to tackling the underlying causes of inequality in a systematic way.

— A woman is unlikely to be able to succeed in an equal pay claim brought against a man in a post senior to her own in terms of the demands of the job, and thus the equal pay legislation does not provide a means of tackling vertical segregation—fewer women being employed in more senior posts.

— A woman can only bring a claim in respect of a comparison with a man in the same employment as her. Women working in female dominated workplaces are unlikely to be able to find a male comparator; this is especially true of women working part-time. It is only where (as in local government) the workforce is sufficiently large to provide a range of comparators, that women are able to make use of the Equal Pay Act to challenge the unequal pay associated with occupational segregation.

— Young people are generally unaware of the rates of pay for different jobs. This makes it unlikely that they would know that they could, in some circumstances, be able to ask for equal pay.

CONCLUSION

45. It is in our individual, business, and wider economic and social interests to do things differently. Abolishing gender segregation will not be an easy task. It is a challenging and complex issue that goes right to the heart of our economy and society. But we believe the momentum for change is building. We believe that some of the difficulty in closing the pay gap stems from the fact that the issue of equal pay has been separated from that of occupational segregation but as we have demonstrated there is an clear link between each cause of the pay gap and action of all causes is necessary to deliver change.

46. Policy makers, employers and trade unions need to recognise the connection between the different factors and to take action to open up opportunities to both women and men. Women need to be able to maximise their earnings and their hours of work, and to be enabled to reach their full potential; men need to be able to make the trade-off between earnings and hours of work that is currently often only available to women with access to part-time jobs; men and women to combine work with their domestic responsibilities, whatever their level of seniority.

47. Employers can use equal pay reviews not just to look at pay discrimination but to go beyond the scope of the law and use a review to examine all of the causes of the gender pay within their own organisations to ensure that they are maximising the potential of their whole workforce. Government should also take national, strategic action of all three causes of the pay gap and we have highlighted in this paper some of the ways in which this agenda can move forward. This will reduce skill shortages and increase productivity and UK competitiveness.

48. The Government has set up the Women and Work Commission to look at what action is needed to close the pay gap and it will be reporting later this year. The EOC's Chair, Julie Mellor, is on the Commission. A new public sector duty to tackle gender equality is also likely to be introduced in the next few years, which provides a more proactive model for employers to tackle the issues they face. The Commission for Equality and Human Rights is also expected to be established in the next few years. The EOC has joined others in calling for a review of equalities legislation to improve the tools available to the new body. The time is therefore ripe for fresh thinking on the statutory framework for closing the pay gap. A range of options are available for consideration from a strengthening of the equal pay for equal value provisions through to mandatory pay reviews, with encouragement to tackle all causes; through to a proactive, general duty on employers to promote equality and close the pay gap.

31 January 2005

— The same, or broadly similar, (known as like work)

— Different, but which is rated under the same job evaluation scheme as equivalent to hers, even if the evaluations were carried out at different times (known as work rated as equivalent), or is

— Different, but of equal value in terms of demands such as effort, skill and decision-making, (known as work of equal value).

12 The investigation, launched in May 2003 will publish its findings in February 2004. The investigation focused on five sectors (construction, engineering, plumbing, Information and Communications Technology and childcare) but makes the case for addressing stereotyping and segregation more widely in our economy. The evidence base for the investigation included: A BRMB survey of attitudes towards jobs traditionally done by women or men, research amongst employers, young people, women in non-traditional training and work and key stakeholders including Learning and Skills Councils. Back

13 Just Pay: the report of the Equal Pay Task Force EOC 2001. Back

14 Plugging Britain's skills gap: challenging gender segregation in training and work May 2004. Back

15 Based on women's median income in retirement, ONS 2004. Back

16 Modelling gender pay gaps; Wendy Olsen (University of Manchester), Sylvia Walby (University of Leeds), EOC Working Papers series No 17, 2004. Back

17 ibid. Back

18 Statistics from survey of 1,281 year 10 pupils in eight schools with varying characteristics and performance and Wales. Back

19 Statistics from work experience survey of 566 pupils in 20 schools in England. Back

20 Survey of 1,100 adults aged 16-59. Back

21 Survey of 140 apprenticeship employers In England and Wales. Back

22 Not printed. Back