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Mind the Gender Gap

Tiffany Tsang

13 December 2013

Yesterday saw disappointing stats released by the ONS. After more than  a decade of steady decline of the gender pay gap in the UK, it rose by 0.5% to 10% (as compared to  2012). More depressingly, when comparing mean hourly wage for full-time workers the  calculations from TUC show that women earn approximately 15% less than men per hour.

 

Why might this be? The honest answer is that we just don’t know yet. Though, there are hints as to  what these stats reveal about the reality of workplace equality. For one, we know that women are still the primary carers for children. We also know that fertility is on the rise in the UK. From 2002, ONS figures show that more women between the ages of 21 and 40 were having children. So, what we might be witnessing is a wage penalty for labour market exiting and then re-entering via part-time work. We know that part-time work is generally lower paid than full-time work, but more on that later.

 

The rise in the gender pay gap may also be a generational effect. With the great recession of 2012, there is pressure to take on lower paid work to support themselves and their families. We know that in this recession, men were hit harder and became unemployed first. If they were not able to find another job soon, they went on to become inactive in the labour market. Women have been able to hang on to work for longer, but perhaps at a detriment to their earnings, which leads us to the productivity puzzle.  Economists have been scratching their heads over this  productivity puzzle, whereby growth, investment and productivity are all low, and yet, employment is on the rise—an unprecedented post-war phenomenon in the UK. The most likely explanation for the puzzle is that workers are pricing themselves into the market: accepting lower wages to secure a job—any job.

 

Taking a closer look at earnings, we know that people working part-time are more likely than people in full-time work to be paid less than the minimum wage. Women take up a larger proportion of part-time work, meaning that they will thus be more likely to be earning less than the minimum wage. Latest ONS stats (for April 2013) say that 26% of jobs are part-time, with women occupying 20% of those gigs, while men make-up 6% of the part-time workforce. With the roll-out of Universal Credit (UC), this situation needs to be monitored carefully, as mini-jobs (up to 15 hours a week) are seen by the government as an important aspect of UC to get people into work. If more women are being “encouraged” into these mini-jobs, they could end up being in low-wage poverty cycle traps. There is evidence from Germany of mini-jobs being bad news. Latest figures do show wages have increased slightly, but certainly not fast enough to catch up to the high cost of living in the UK. A recent JRF report shows that a little over half of the 13 million people in poverty are from working families.

 

So, what now? For young women, this can be about showing them that different career paths are available. Traditionally, more women enter low-paid sectors (childcare, teaching assistants, other care work, etc.). Providing a variety of job experiences and more readily accessible information on different career choices early on is key to helping young women get into higher paid work. We should also be pushing for greater transparency of wage structures and wage progression in companies.  Providing frameworks for collective wage bargaining, especially for people in low-paid, insecure, part-time work across all sectors, is crucial. Lastly, on a wider societal level, it may be that we are not valuing enough the work in areas that do matter. For instance, we value our children, so why not value the time and expertise of the people who look after them?

 

Tiffany Tsang’s views on the gender pay gap rise can be found in an interview with Channel 4 online.

Comments in Chronological Order (Total 1 Comments)

Blenheim Augustine

16 Dec 2013 12:07PM

Public sector pay restraint probably explains a significant amount of the change given the over-representation of women in the public sector. Full-time weekly earnings up only 1.6% in public sector compared to 2.3% in private sector.

Most of the systemic full-time pay gap is explained by the proportion of females in managerial positions - see Manning (2006).

It's also worth noting that at 10% the gender pay gap is lower than at any point in the noughties (as seen by Figure 8 in the ONS briefing) so care needs to be taken in simply looking at year-on-year changes.