The gender pay gap - what action is needed?

Understanding Society Impact Fellow Raj Patel on the action needed to tackle the gender pay gap.

Probably one of the greatest social transformations over the last century has been the feminisation of the workforce and the workplace – not simply in terms of the trend towards greater employment of women, but also of what psychologists, human resource management professionals and sociologists have described as a cultural change in workplaces where the world is becoming more sensitive to workplace issues.

As a result, work arrangements have become more flexible involving a range of offsite and part-time ways of working for employees. This has allowed women with family demands, young mothers and people with various disabilities into the workforce, and helped bring their talents and creativity into play and into the marketplace. The growth in women’s employment has brought about many benefits for women, families and employers, and a growing array of research has sought to compare the commercial performance of these ‘modern workplaces’ to those that have been slow to change.

This social transformation though represents an unfinished revolution. In the UK, women are grossly under-represented in senior management and leadership positions, whilst pay differentials between men and women show a large gap of around 20 per cent (depending on the data used). Analysis of Understanding Society and the British Household Panel Survey data reveal a convergence in recent years from 19 per cent in 2007 to 13.4 per cent in 2015 (with other data sources also showing a downward trajectory). However, Gender Pay Gap reporting, which measures the difference in the average hourly wage of all men and women across a workforce, shows that nearly 8 in 10 organisations with more than 250 employees still have a pay gap in favour of men.

A life-cycle approach to understanding and tackling the gender pay gap can be immensely helpful to understand the pay gap and develop policy solutions. There are many reasons for the gender pay gap but here are just three interesting facts:

  • The gender pay gap is closely linked to family formation. According to Costa-Dias et al. (2018), the arrival of the first child is a critical turning point – not via any sudden jump in the gap, but because it is the start of a long, gradual widening. An average pay gap of 8 per cent at the time of child birth grows to 30 per cent by the time the child reaches the age of 20 - with part-time working and its impact on work experience a key issue.
  • We know that wages grow over time with one’s career but they also become more unequal as workers age. Women’s career progression drastically slows down after family formation whilst that of men continues to climb until around the age of 50. Due to caring responsibilities women tend to be restricted in terms of the 'spatial reach' of their jobs. Insight into women’s progression in different occupations, sectors and localities could offer important clues and solutions.
  • Research evidence also shows that the growth in women’s employment has helped to mitigate the trend of rising income inequality and helped reduce rates of child poverty. Because women are disproportionately represented in low paid jobs, policy initiatives such as the introduction of the National Living Wage (not to be confused with the Real Living Wage) has helped narrow the gender pay gap at the bottom of the labour market but could the roll out of Universal Credit be a bomb-shell for many women and their families

Tackling the gender pay gap is fundamental for driving forward gender equality and improving economic performance. In policy terms it presents a complex set of challenges. To discuss the issue, Understanding Society is hosting a lunch time debate on Wednesday 7 November, with presentations on evidence from Understanding Society and a stellar line-up of panellists:

  • Fran Bennett, active member of the Women's Budget Group and Senior Research and Teaching Fellow, Department of Social Policy and Intervention, University of Oxford
  • Monica Costa Dias, Associate Director, Institute for Fiscal Studies and Research Economist, Centre for Economics and Finance, University of Porto
  • Sam Smethers, Director, Fawcett Society
  • Helen Wright, Founder, employment solutions

Please join us for the event, which will also see the launch of Insights 2018/19. You can now reserve a place here.