Gender Pay Gap Contents

7Tackling low pay in highly feminised sectors

222.A significant proportion of the UK’s gender pay gap can be attributed to high levels of occupational segregation. As the chart below shows, women remain concentrated in lower paid occupations compared to men.

Figure 13: The percentage of workers in each occupation group that are women, April to June 2013, UK

This chart shows the percentage of workers in each occupation group that are women in April to June 2013.

Source: Labour Force Survey, Office for National Statistics

223.The data in Chapter 2 shows that this is a particular problem for older women, over half of whom work in just three sectors (public administration, health and education).

224.The Government has highlighted the importance of careers advice and getting more girls to take up STEM subjects as a means of tackling occupational segregation. This does not address the issues faced by the many women over 40 working in highly feminised sectors. Their low pay is a significant factor in the gender pay gap. In this chapter we will examine pay levels in highly feminised sectors and recommend strategies to address the problem of low pay.

Low pay in highly feminised sectors

225.Women hold the majority of minimum wage jobs (some 59%), and female part-timers hold 41% of minimum wage jobs, almost twice as high as their share of all jobs.173 The sectors with the most minimum wage jobs were hospitality and retail, which account for just over 45% of minimum wage jobs followed by social care, cleaning, and employment agencies which each accounted for between 6–7 % of such jobs.174

226.In the adult social care sector 82% of employees are female. The median hourly wage is £7.10 per hour. However, when travel time is accounted for this reduces pay levels to £5.75 an hour, below the minimum wage of £6.70 an hour.175 In the commercial cleaning sector almost 80% of the workforce is female and part-time. Over a quarter are aged between 45 and 54. Median pay is very low with around a quarter of all workers earning the minimum wage in 2013, rising to around one third among female part-timers.176

227.As we have discussed in Chapter 4, the issue of low pay is particularly pronounced for part-time workers.

Figure 14: More than half of those paid less than the living wage are part-time workers, mainly women

http://www.poverty.org.uk/51/e.png

Source: Annual Survey of Hours and Earnings, ONS April 2015

228.One explanation for this lower hourly pay is the fact that women tend to be concentrated in lower skilled jobs. 47% of women work in jobs classified as low skilled, compared to 18% of men.177 For women aged over 50 this may be correlated to educational levels as they have the lowest levels of formal qualifications in the UK workforce. However, research by the Fawcett Society into low paid women found that 22% were educated to degree level.178 This figure was similar across those with and without children, and the most common explanation for it was a lack of jobs. This shows that whilst caring and the need for flexibility are important, women without children also face barriers in accessing high quality work.

229.Addressing the issues faced by women at the bottom of the labour market is critical to reducing the gender pay gap. All too often the position of these women is neglected. The Government has focused on increasing the number of women on boards and supporting women into executive roles rather than examining what can be done for women at the bottom of the labour market.

230.A similar focus on professional women can be seen in the strategies adopted by sectors and institutions. The higher education sector has been widely commended for its progress in reducing the gender pay gap. The higher education sector has reduced its overall gender pay gap at a greater rate than the economy as a whole:

Table 3: Gender pay gap in the higher education sector

Gender pay gap* in the higher education sector

All employees (full and part-time)

Full time employees

Higher education sector

All sectors

Higher education sector

All sectors

April 2014

13.5%

9.6%

16.0%

19.2%

April 2015

11.1%

9.4%

14.7%

19.2%

Rate of reduction

17.8%

2.1%

8.1%

0.0%

* Calculated using median gross hourly earnings (excluding overtime)

Source: Annual Survey of Hours and Earnings Office for National Statistics

231.But as Helen Fairfoul from the Universities and Colleges Employers Association pointed out:

Because of the focus on women getting into professorial roles, for example, our sector has not been that good at looking at the lower graded roles. One of the reasons we still have a big number as a gender pay gap is because of the predominance of women in lower graded roles in our institutions, and there is not that much being done in thinking about helping women advance from those positions.179

232.This lack of interest in how to help women in lower paid occupations progress was echoed by Emma Stewart:

We have run a number of projects to look at how we can progress low-paid workers in our organisation. There is not a lot of evidence because there has not been a lot of investment in this area of work; people do not invest in low-paid workers.180

233.Women over 40 are concentrated within highly feminised, low paid sectors. Their low pay and lack of progression play a significant part in the gender pay gap. There must be more focus and investment aimed at these low paid employees if the goal of reducing the gender pay gap is to be achieved.

Productivity and fiscal benefits

234.ONS data from 2014 shows UK productivity was 20 percentage points below the average of the rest of the G7 countries, the widest productivity gap since 1991 when the ONS data series began. New analysis by the IPPR and Joseph Rowntree Foundation points to the role played by low wage sectors in this gap. It concludes that:

A high proportion of the UK’s weak productivity performance relative to our international competitors in Western Europe is due to differences in productivity levels between low-wage sectors in the UK and those same sectors in other countries. Were we to raise productivity levels in low-wage sectors to levels seen elsewhere, the UK could close a third of the productivity gap with leading Western European economies.181

235.Low pay sectors also generate a significant fiscal cost. 26% of the workforce work in low wage sectors, but 48% of working tax credit expenditure is accounted for by these sectors.182 Improving pay and productivity in these sectors would reduce spending on tax credits and also increase tax receipts.

Impact of the national minimum wage

236.The introduction of the national minimum wage (NMW) has had a significant impact on women’s earnings and thus the gender pay gap. Research from the Low Pay Commission shows that the gender pay gap among the lowest paid fell from 12.9% when the NMW was introduced in 1998 to 5.5% in 2014.183 Analysis by the Fawcett Society in 2014 found that raising the NMW from £6.60 per hour to the Living Wage of £7.65 nationally, and £8.80 in London, would immediately reduce the gender pay gap by 0.8%. According to JRF, the cost of every part of the UK public sector becoming an accredited Living Wage employer, and including contracted out services within this, would be an estimated £1.3bn.

237.Although the NMW will not be raised to the levels suggested by the Fawcett Society and JRF, from April 2016, it will increase to £7.20 an hour with the aim of it rising to over £9 an hour by 2020. In addition to raising the wages of low paid women, and thus reducing the gender pay gap, this may also have other effects on low paid sectors and occupations. Helen Fairfoul explained what she thought the impact of rising minimum wage levels would be on the higher education sector:

[It] is forcing employers into rethinking productivity, job design and tiers of jobs in the lower sections of the workforce. In some ways [higher minimum wages] will prompt some much more imaginative thinking because it will have to, because otherwise there will be a bigger productivity problem because we will just be paying more money and not getting anything more in terms of productivity.184

238.The lack of investment in raising the pay and productivity of women working in low paid sectors is short-sighted. We welcome the forthcoming rise in the National Minimum Wage and recognise this will contribute towards reducing the gender pay gap. However, levels of productivity in low paid sectors need to be addressed. Taking action in this area will reduce the gender pay gap, improve the UK’s productivity and bring fiscal returns through reduced benefit payments and increased tax receipts.

Flexibility

239.Research from the Timewise Foundation has found that that there are 1.9 million people, currently trapped in low pay who could do better skilled work if they had access to flexibility. These are predominantly parents, people aged over 50 and disabled people who hold the necessary qualification levels to attain a more skilled job. A large majority, 1,559,000 people, are currently in part-time work below the pay rate for a quality job. A further 154,000 people are not working and seeking part-time work. More should be done to help these people find flexible work at the right skill level.

240.We have heard extensive evidence on how difficult it is for people in lower paid sectors to access flexible working, rather than low paid part-time working. As Christopher Brooks from Age UK observed:

It is really clear that flexible working is a lot less available to people working in lower-skilled roles. If you are a professional, it is a lot easier to access it. That has a detrimental impact on women.185

241.Recent research from the Modern Families Index shows that flexible working is more available to those on higher incomes:

Figure 15: Availability of flexible working by income

Source: Working Families and Bright Horizons, Modern Families Index 2016186

242.Sarah Jackson from Working Families explained which employers were currently more reluctant to think about flexibility:

Businesses that think of the people they employ as unit costs, rather than as the assets who are helping them to deliver their business success, are where you will find far less flexible working … That is really what we have to tackle. We need to get to a position in the UK where our business leaders, in every sector, understand that, to succeed, their people have to have the support they need to manage their lives outside work. As the leading organisations have already proved, time and again, you get the performance back if you invest in people, you trust them and you treat them well.187

243.Emma Stewart saw current labour market conditions as offering some hope for increased interest in flexible working. “Employers are certainly more open to the conversation [on flexible working] because they need to compete harder for talent, even at the lower levels.” She described the work Timewise have been doing in this area as an example of how flexibility can work in lower paid roles:

We have done a piece of work with Pets at Home … to effectively take women off the shop floor. What Pets at Home have done is redesigned managerial and assistant manager jobs to be done on a job share, part-time or flexible basis. They have a great training programme. They have great women, but the women’s attrition rates are poor. They are losing women. The business case is that they need to keep good skills, and the way to do that is not to invest in training—they do not need to—but to take the next-level-up job and make that flexible.188

244.Some women in low paid jobs do not need further training or skills to get better paid employment. They simply need access to flexible work at the right skill level. There are projects that demonstrate that higher paid posts in sectors like retail can be worked flexibly.

Training opportunities

245.For women that do need more training to improve their pay prospects and opportunities there can often be barriers to accessing this. Anna Ritchie Allan used the example of admin workers to illustrate some of the barriers facing women:

Low paid, part-time female workers [are] the least likely to receive any type of training. There is the issue of availability of training and whether or not it is held within the hours that a part-time worker is working, but particularly looking at admin, it is very, very unusual to find a clear progression pathway from an admin job into a non-admin job.189

246.This is significant because 23% of women aged over 50 work in administrative or secretarial roles.190 Although older women are more likely than older men to benefit from training in the workplace, and also more likely to work in organisations that offer training,191 there is also evidence that being part-time or having caring responsibilities can impede access to training. As women are disproportionately carers and part-time workers this is likely to impact them more than men. Furthermore, as Age UK point out:

Those on low pay or in insecure jobs may receive little or no training, or, if on casual contracts, may have to pay for their own training. Women often fall into these categories.192

247.Specific cuts to training budgets were also raised by unions. UNISON pointed out their Unionlearn scheme, which engages a quarter of a million working people into learning, working with 2,500 private companies and public sector employers, had faced funding cuts.

248.Baroness Wolf also raised the issue of cuts to further education particularly impacting women:

There has been a consistent move in the sector I work on, which is higher education, towards pushing funding and support away from part-time students—this is about not just fully fledged degrees, but also further education—and away from older students and towards young, full-time students. …If people are coming back in, they are finding it harder than they did 20 years ago to get meaningful, supported reaccreditation, requalification and retraining. And women, because they have had the interruptions, are the most penalised.193

249.When questioned on this area, the Minister for Skills once again referred to the apprenticeship scheme as an effective route into retraining and upskilling. As discussed in Chapter 6, we recognise the potential for apprenticeships to fill this gap, but they must be better structured and marketed to meet the needs of older women.

250.The Government is committed to increasing funding for training and development through the Apprenticeship Levy. However, the evidence shows that women who work part-time are often unable to access training opportunities. It is imperative that women in low paid occupations have access to training where it is needed to improve their opportunities to progress. There is a clear opportunity for more national, regional and local strategies to support this work.

Care sector

251.The health and social care sector is the largest sector by employment in the UK economy, representing over 13 per cent of total employment in the year up to September 2014. The vast majority (just under 80%) of employees in this sector are female, and there are also a larger proportion of older workers (aged 50-64) working in health and social care compared to the economy as a whole. These demographics show how important this sector is in addressing some of the issues faced by older women.

252.The impact of problems in the social care sector on the gender pay gap were raised by several witnesses to our inquiry including Robert Stephenson-Padrose:

You have about 12 million female workers in England and about 1.2 million female workers in social care—so if a large number of them have very poor working conditions their poor working conditions feed into the national gender pay gap.194

Figure 16: Mean hourly pay rates for different types of care worker, 2013-14

cid:image001.png@01D1709A.8E3AD5B0

Note: UK Living Wage here refers to the Living wage Foundation’s National rate announced in November 2013

Source: NMDS-SC workforce estimates 2013/2014

253.As shown above, wages in all parts of the care sector are low. The problem of social care workers not being paid for travel time means already low hourly wages can often fall below the NMW. Robert Stephenson-Padrose points to data from Lang and Buisson which suggest that average travel time for care workers in England is 19% of their work time. He argues that this implies that a typical home care worker in England receives an effective gross wage of £5.75/hour. 195

254.In addition to low wages, other issues in the care sector include: the high turnover of staff, estimated as being over 30% in England;196 poor job design and management; and low levels of training. As the chart below demonstrates, levels of investment in care sector employees are extremely low:

Figure 17: Net capital expenditure per worker by sector, relative to all business sectors (excluding financial services)

Source: IPPR (2016 forthcoming) analysis using the Annual Business Survey, 2015

255.Despite the many problem faced by the care sector it is an area of growth within the UK economy. As a recent Government evidence report by UKCES points out:

Given the size of the sector by employment, and its importance in keeping the UK population healthy and active, skills and performance challenges facing the health and social care sector can have a major impact on the wider UK economy. 197

256.Despite clear evidence of the importance of the care sector and the endemic problems it is facing, there is currently no overall Government strategy focusing on addressing these issues. One solution suggested to overcome this is the creation of an industrial strategy for the care sector. As Claire Turner of the Joseph Rowntree Foundation explained:

We know that we can create industrial strategies for high tech, advanced engineering, but we do not do the same for low pay. If you took care as a sector, we would feel that would be a priority area for an industrial strategy. The things that are linked to productivity in those service sectors are things around workforce development. For us, thinking at scale about this in terms of an industrial strategy for these sectors would be a way of linking workforce development and pressure with productivity.198

257.One of the advantages of this approach is that it demonstrates that care is sector of key national and strategic importance. As we demonstrated in Chapter 2, caring has long been undervalued as a profession. However, it is a growth area with great potential for productivity gains and cannot easily be outsourced abroad.

258.Analysis of the care sector by JRF shows it aligns well with the Government’s own five drivers for productivity growth: investment in physical capital; improving skills and human capital; greater innovation and more R&D; competition; and enterprise.199

259.When questioned on the feasibility of an industrial strategy for the care sector, the Minister for Skills told us it was more a matter for the Government’s skills strategy:

There are a lot of people thinking about [improving skills and earning potential], but it just does not specifically constitute an industrial strategy. The care sector would be a bit surprised to be considered an industry with a need for a strategy by BIS. It needs help with the skills of its workforce, so that it is able to provide excellent care and pay people higher wages.200

260.It is clear that improving skills in the care industry is essential to increasing productivity. However, the industry also suffers from significant market failures, a lack of investment and a lack of strategic thinking about how to address these problems. An industrial strategy for care, championed by BIS, would demonstrate the Government’s commitment to a joined up approach to the significant problems faced by the industry. This would drive efforts to improve the pay and productivity of 1.2 million low paid women working in the sector.

Supporting pay progression

261.A key issue raised regarding pay progression was the question of how to pay women more if they do not wish to move away from front-line services. This is particularly relevant in the care sector. As Claire Turner told us:

We need to think about supporting career progression on frontline roles, rather than thinking that progression is all about becoming a manager of others delivering frontline. It is: how can we create better jobs that are working on the frontline?201

262.One suggestion from Robert Stephenson-Padrose involved offering additional front-line training to care workers. This is a model adopted by Penrose Care which uses training to enable social care workers to offer premium services that can attract customers willing to pay extra for more skilled workers.

263.Career ladder schemes were also suggested as an effective way of supporting pay progression. Claire Turner outlined evidence from the US which showed these schemes, where brokers help individuals get into employment, or progress to better employment, can be very successful. An evaluation of three programmes in the USA found that, compared to a control group, participants:

264. Claire Turner called for local authorities and local enterprise partnerships to take a lead role in developing and trialling similar brokerage programmes here. These would aim to support businesses in low paying sectors to increase their productivity by developing their workforce practice and developing the individuals within their workforce.

265.Emma Stewart also described how effective she had found brokerage systems in terms of accessing flexible working:

One of the best things you can do and what worked in the pilots that we ran, which was taking a group of women in low pay and getting them better jobs, was to broker on behalf of the candidate to the employer to say, not dissimilar to a Jobcentre Plus model, “I have great candidates. I can give you them for free, but would you consider flexing the way the job is done” … .In most instances, having seen the candidate’s CV, the employer said yes.203

266.The role that local and regional bodies, in particular Local Enterprise Partnerships (LEPs), could play in facilitating career ladder schemes was emphasised by both Emma Stewart and Claire Turner. However, this would require them to change their current focus as Emma Stewart pointed out:

The challenge at the moment is that the LEP model is very much, certainly in some areas, focused on careers and young people.204

267.Changing the focus of LEPS to include a focus on women in low paid sectors could have other positive impacts. LEPs could also be an effective vehicle for investing in support for managers in the care sector. Emma Stewart argued that a focus on the care sector would fit well with their remit:

They are supposed to have a demand-side employer-driven function of thinking about low-paid sectors and investing in how to support low-paid sectors where there is not enough inward investment, to help their managers to think more creatively and differently, and to align with the use of technology. The [care] sector itself has no capacity to invest in it and to invest in its own managers. That is an opportunity that is not being addressed at a regional level.205

268.There is significant scope for Local Enterprise Partnerships to address some of the issues faced by women in low paid sectors through brokerage services and investment in training. Regional solutions to the problems of women’s progression out of low pay have shown evidence of success elsewhere and should be given more support by central Government.

Recommendations

269.Our key recommendation is that:

270.We also recommend that:

173 Low Pay Commission National Minimum Wage Low Pay Commission Report 2015 Cm 9017, HMSO.

174 Ibid para 2.17

175 Penrose Care (GPG0065)

178 Fawcett Society The Changing Labour Market August 2014

179 Q209

180 Q205

181 IPPR A strategy for boosting productivity in low-wage sectors forthcoming 2016

183 Low Pay Commission National Minimum Wage Low Pay Commission Report 2015 Cm 9017, HMSO

184 Q218

185 Q123

186 The Modern Families Index is based on an online survey. Online surveys are not always fully representative of the whole population as they can exclude poorer households and over-represent those with stronger IT skills.

187 Q160

188 Q205

189 Q132

190 TUC Age Immaterial February 2014 p10

191 ibid p24

192 Age UK (GPG0054) para 3.20

193 Q28

194 Q102

195 Penrose Care (GPG0065)

198 Q205

199 IPPR A strategy for boosting productivity in low-wage sectors forthcoming 2016

200 Q275

201 Q204

203 Q207

204 Q216

205 Q215




© Parliamentary copyright 2015

Prepared 16 March 2016