Gender Pay Gap Contents

1Introduction

What is the gender pay gap?

1.The gender pay gap measures the difference between the hourly pay of the average man and the average woman. The UK’s gender pay gap for full and part-time workers stood at 19.2% in November 2015.1 The difference between the average hourly wage of men and women working full-time (excluding overtime) is 9.4%.

2.Although the gender pay gap is often conflated with equal pay (see Chapter 2), it does not measure the difference between what men and women are paid for the same, or equivalent, work.

3.As Chris Giles, Economics Editor of the FT explains:

If you came from Mars and were plonked into the UK labour market, you would know that if you were a woman and working full-time, you would be paid 9% less on average, in the middle of the earnings distribution, than if you were the equivalent man. There is no regard taken of the type of job you do, your background, your education or qualifications. It is a simple average, normally measured at the median.2

4.Although the gender pay gap has fallen significantly from 27.5% when it was first measured in 1997, over the past four years it has plateaued at just under 20%. In July 2015 the Prime Minister announced his plans to “end the gender pay gap in a generation.”3

5.A central plank of the Government’s strategy to reduce the gender pay gap has been the launch of compulsory pay gap reporting for organisations with more than 250 employees.4 The Government has also focused on:

6.A new ministerial group to address the gender pay gap across the UK was also announced in February 2016. This group “will look at how the Government supports women into work and help them to progress once there through sharing data on equalities, sharing learning and evidence of what works well and less well and engaging business, the 3rd sector and civil society.”5

7.The need to address the gender pay gap is clear. Data shows that women are better educated than ever before.6 As the UK Commission on Employment and Skills (UKCES) points out, we cannot afford to ignore the skills women can bring to the workforce:

Many of the most talented people coming through our education and training systems are women. It makes no sense at all that these talents are not being fully used in the UK’s workplaces. A labour market that better reflects these educational outcomes, and that works as well for women as for men is essential if we want to maximise the productive potential of our labour force.7

8.Government and employers are recognising this fact as we demonstrate in Chapter 3. There is also increased understanding that it is not just women who will benefit from action to reduce the gender pay gap. In Chapters 4 and 5 we examine how the policies needed to reduce the pay gap can help organisations with another key challenge—how to engage with “millenials” (those aged between 18-34) in order to increase productivity.

Women over 40 and our inquiry

9.One striking feature of the gender pay gap is how it varies by age. The full-time pay gap for employees aged under 40 is relatively small, and negative for women aged 22-29.8 As the chart below demonstrates, the gap widens considerably amongst older workers and is largest for women aged 50-59 at 27.3%.

Figure 1: Gender pay gap by age, April 2015

Source: ONS Annual Survey of Hours and Earnings 2015 provisional results

10.With this in mind, we launched our inquiry with a particular focus on women aged over 40. The terms of reference were as follows:

11.We received 61 written submissions, and held six formal evidence sessions with eight panels of witnesses. In total we heard from 27 witnesses. An informal briefing with experts was also held on 5 November 2015. In January 2016, we visited Bournemouth where we heard from women working in highly feminised occupations who had been gathered together by UNISON’s South West branch.

12.During this inquiry we benefitted from the advice of two Specialist Advisers: Dr Ghazala Azmat, Associate Professor of Economics at Queen Mary University of London; and Kathryn Nawrockyi, Gender Equality Director at Business in the Community.

13.We would like to thank everyone who participated in this inquiry: the organisations and individuals who submitted written evidence to us; the witnesses who gave us the benefit of their expertise; the women who gave up their time to share their insights and experience with us in Bournemouth; and our Specialist Advisers.

Is the gender pay gap disappearing?

14.Some witnesses told us the gender pay gap for women over 40 was a specific problem for women of this age now. Shelia Wild of the Equal Pay Portal explained the barriers to well-paid employment that older women have faced:

For women in the 55-plus age group, there is a very high probability that the only option open to them was part-time work. [ … ] on very much less favourable terms than we are beginning to see develop now. …We have to recognise that their choices were much more severely constrained than is the case for younger women now.9

The “part-time pay penalty,” which we consider in detail in Chapter 2, affects many more women than men and is a significant factor in the overall pay gap.

15.The Institute of Directors and Chris Giles suggested that, as younger, better educated women move through the system, we should see the gender pay gap fall. Mr Giles pointed to evidence that:

There is a generational shift … Women in their 20s closed the full-time pay gap in about 2004; in 2012, by the time they reached their 30s, it had disappeared. It has halved for women in their 40s since the data series began in 1997. In contrast, there has been no significant improvement for working women over 50.10

Figure 2: Gender pay gap for full time employees, 1997–2015

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Source: ONS Annual Survey of Hours and Earnings

16.However Chris Giles cautioned that if women continue to take time out of the labour market, or reduce their working hours after having children, the positive trajectory shown above is unlikely to continue towards eliminating the gender pay gap:

I do not think that it will get all the way towards a zero gender pay gap, which we might like to see, so we are baking in some of the problems that we had before.11

17.Research by the Chartered Management Institute shows the problems faced by those over 40 face are likely to hit younger women as they age. Referring to their National Management Salary Survey data and ONS figures they found:

Both these data sets run counter to the idea of a cohort or generational effect, which suggests that we will simply see the pay gap disappear as today’s younger women progress in their working lives. NMSS data over the last decade strongly suggests this would be wishful thinking. Women still face a ‘glass pyramid’ that both sees fewer women reaching senior management–and sees them facing a pay gap that widens with age.12

1 ONS Annual Survey of Hours and Earnings 2015 provisional results

2 Q2

3 “My one nation government will close the gender pay gap” Prime Minister’s Office, press release, 14 July 2015

4 ibid

5 “Nowhere left to hide for gender inequality” Government Equalities Office press release 12 February 2016

6 UKCES Opportunities and outcomes in education and work: Gender effects November 2015

7 UK Commission on Employment and Skills (GPG0037)

8 This means women working part-time earn more than men working part-time. However, this figure should be treated with caution as very few men work part-time. The “part-time pay penalty,” which is discussed in detail in Chapter 2, is a significant factor in the overall pay gap.

9 Q8

10 A satisfactory progress report towards wage equality, Financial Times, 18 November 2015

11 Q25

12 Chartered Management Institute (GPG0051)




© Parliamentary copyright 2015

Prepared 16 March 2016