The gender pay gap in the UK

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Several recent reports have flagged up that British women are still getting the thin end of the wedge when it comes to equal pay.

The PwC Women in Work Index puts the UK 18th in a survey of 27 OECD nations, indicating that we are being outstripped by other countries with comparable economies. The fact is that while the UK has made progress in closing the gender pay gap, lowering it from 26% in 2000 to 18% in 2012, the average across OECD nations is even lower, at 16%.

More worrying, perhaps, are the findings of an Office of National Statistics report at the end of last year, which showed the pay gap widening for the first time in five years.

It seems hard to believe that in 2014, some 44 years after the Equal Pay Act, that such problems could still exist. The fact that the trend seems to be reversing is not just unjust, it’s puzzling. So what exactly is going wrong?

 

Why is the pay gap widening?

The PwC research looked at gender pay gap, women’s participation rate, unemployment rates and the proportion of women in full-time rather than part-time employment.

At face value, these statistics don’t tell the whole story. As the PwC research also points out, Europe’s economic crisis had taken its toll. One significant factor is that a much higher proportion of women than men do part-time work, which tends to pay much less per hour.

Work Foundation statistics claim 26% of the total number of UK jobs are part-time roles, with women accounting for 20% and men just 6%. It also found that during recession, when jobs are scarce, women tend to take on whatever work is going, even at a lower rate of pay, or part-time. Men, however, remain unemployed.

More obviously, the pay gap opens up when women take a career break to have children. Many swap full-time roles for part-time work, often in a different industry, and so miss out on the career progression enjoyed by men.
Last but not least, women tend to work in more badly paid industries, such as cleaning, catering and care, compared with those worked in my men, such as construction, transportation, science and technology.

 

Which sectors have the biggest pay gap?

So, the extent of the pay gap varies across each industry and job title. Statistics from the Fawcett Society show the pay gap varies across sectors and regions, with highs of 33% across the City of London and 55% in the finance sector.

Indeed, the Financial Services Enquiry Equality and Human Rights Commission, published in 2009, revealed that the gap between male and female full-time earnings is twice as large as the average gap across the economy as a whole.

Meanwhile, in its annual survey of hours and earnings, the Trades Union Congress found the pay gap was far higher in the private sector, where the gap is, on average, 19.9%, compared with 13.6% in the public sector.

 

Which sectors don’t have a pay gap?

In some sectors, the pay gap is either improving or not a problem. The Institute of Chartered Accountants in England and Wales says younger women are closing the pay gap. Women under 30 now achieve 97% of their male counterparts’ earnings, compared with 92% in 2012. Of course, it still begs the question of why they are not getting parity.

In other industries, there is little or no discrepancy. Hannah Horler, managing director at Cartwheel Recruitment, which specialises in the hospitality sector, says she has never come across it:  “We have many examples of where we have placed both men and women into the same level roles within the same company and their pay and packages have been the same.”

She adds that she has also placed women into two managing director roles recently: “Higher or lower pay did not come into it, on the whole, they’ll pay the going rate irrespective of gender.”

 

What next?

It seems, then, that the recent slow down in closing the pay gap might be a hiccough triggered by economic circumstances. But the fact there is a pay gap illustrates an underlying problem.

While bodies such as the Trades Union Congress have called for “tougher action” to bring the UK up to parr, David Leithead, managing director, Michael Page Banking & Financial Services, commented: “Some countries have accelerated change through the introduction of legally enforceable quotas. Whether such quotas would be good for the UK is hotly debated, some of the strongest proponents of equality argue that while change in the UK is slower without quotas, it is deeper and more sustainable”

One place to start, may be the board room. As Horler’s colleague, director Helen Flint, points out, women are increasingly seen in senior roles, or running businesses on higher paid salaries but there still aren’t enough: “Overall the percentage of men in senior roles, especially at board level, is still higher and it would be good to see that balance becoming more equal in the future.”

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