The gender pay gap, understandably, receives a lot of attention. It is a headline-friendly representation of the challenges women still face in the modern workplace. But while important, its limitations should be acknowledged. To support women on low or no pay, which is the new focus for the Government Equalities Office, it is time for politicians and policymakers to look beyond the gender pay gap.
There is a significant scale of misunderstanding about the gender pay gap: 71 per cent of the British public in a recent poll defined it, incorrectly, as “the difference in pay between men and women doing the same job.” The gender pay gap does not show unequal pay, which was made illegal by the Equal Pay Act in 1970. Rather, it measures the difference between average male and female earnings, both at a national and now company level.
The latest UK data shows the gender pay gap for full-time employment across the whole of the economy is 8.6 per cent, down from 10.1 per cent in 2010. The introduction of mandatory gender pay gap reporting for larger businesses from April last year exposed employment patterns within individual organisations. Some organisations reported pay gaps of over 70 per cent.
However, the latest data shows there is also a small pay gap to women’s advantage among the smaller portion of the workforce who are part-time. Just bashing bad bosses for the gender pay gap, then, is both ignorant and ideological; certainly, there are some, but there are clearly complex causes of gendered employment patterns, where women are concentrated both in lower-paying sectors and lower-paying roles.
Some of this is the product of choices made by individuals, proving that unequal outcomes are not always the product of injustice in a free society. But, alas, choices are shaped to an extent by both the cultural values and material realties of the society in which we live. In other words, the higher proportion of women who choose to work part-time can only be understood in the context of high childcare costs and continuing cultural norms surrounding the division of labour.
The national calculation of the gender pay gap, then, is a helpful spot-check of the extent to which gender still sadly shapes how we perceive ourselves and others in modern society. To provide a fuller picture, the obligation to calculate it could be extended to smaller businesses, if it was anonymised for them.
A note of caution, though: bringing economically inactive women into employment at the lower end of the pay scale could put downward pressure on average female wages and increase the gender pay gap. This is why policymakers should not focus exclusively on the gender pay gap statistic: it is an important, but potentially limited, indicator for measuring gender inequality and progress.
The underlying causes of unequal outcomes between men and women are numerous and varied. But what is indisputable is the impact of women’s caring responsibilities on their earnings. Women’s pay has been shown to drop, on average, by 2 per cent for every year spent away from the labour market looking after children. The gender pay gap widens significantly at the age that women tend to have children: while for men and women working full time ages 30-39 there is a gender pay gap of 1 per cent, this rises to 13 per cent among full time workers a decade older.
Public policy should and could do more to provide greater choices for women, especially those in tougher financial circumstances, to better balance their work and caring commitments, including with their partner. Currently, employees must work 26 consecutive weeks with an employer before they obtain the right to request flexible working. This should instead apply upon being offered a job.
While the Government’s 30-hour free childcare offer for all three- and four-year-olds is generous, for many parents, quality childcare for the first three years of their children’s lives remains unaffordable. New parents should be able to take out government-backed, income contingent loans to pay for childcare, above and beyond the current government subsidies they receive. These loans would replicate the structure of university loans, meaning they are only repaid once the main carer re-enters the labour market and earns a salary above a certain threshold. Since they are voluntary, this is not forcing people into debt; rather, it is enabling parents to smooth sometimes crippling childcare costs over a longer period of time.
Though the Government introduced Shared Parental Leave, the take-up of this by men remains disappointingly low. The reason for this, in part, is that women are still able to receive greater financial support when on parental leave than men are, both from the statutory support available as well as from occupational schemes. Clever and careful policymaking could reduce this gender pay gap in parental pay.
The Government Equalities Office is right to pivot its work towards supporting women with the lowest incomes and in the most vulnerable circumstances. Those in need should be of the prime concern for any Government.
Ryan Shorthouse is the Founder and Chief Executive of Bright Blue. He is a participant in the Government Equalities Office ’Gender Equality and Economic Empowerment’ conference on Friday 25th January, 2019.