The difference between men’s and women’s median hourly pay in the UK has edged up since companies with 250 employees or more were forced to publish this information six years ago. From 11.9% in 2017-18, the gap rose to 12.2% last year and stayed the same this year, according to analysis by the Financial Times. The proportion of employers paying men more than women has also risen, and now stands at 79.5%. This is not the result that those who pushed for compulsory reporting hoped for. The idea was that transparency would bring change, through a combination of pressure from better-informed female workers and the embarrassment of bosses.
The headline figures conceal a huge amount of variation. Education, finance and construction are the sectors with the biggest gaps – all over 22%. Of the three, only construction has made significant progress towards shrinking it in the period since compulsory reporting was brought in. Well-known businesses with huge gaps include Lloyds, with 34.8%, and prestigious law firms. The figures are a reason for anger, as well as concern, for anyone who believes that men and women should be financially equal. But the most painful effects will be felt at the bottom of the income distribution. Women, particularly black and minority ethnic women, pensioners and lone parents are consistently over-represented among the poorest households. Worryingly, research suggests that where the pay gap has shrunk, this is due to the falling wage levels of low-paid men, as well as the beneficial impact of the minimum wage.
How they will address the stubborn gap in pay levels is a question which all politicians, but above all members of the government with relevant briefs, should be called on to answer. Several current trends point to the likelihood of the situation becoming worse rather than better, with a growing number of women leaving the workforce to become unpaid carers. Already, the weaker finances of women with children, known as the “motherhood penalty”, are an important factor in explaining the disparity between male and female earnings, which widens with age. The government’s recent commitment to expand childcare provision is welcome. But nurseries remain seriously underfunded, and the number of childminders has declined by 9% in a year.
The wealth gap between men and women also requires scrutiny, as property and other assets become an increasingly important source of financial security, particularly in old age. Research for the 2020 Commission on a Gender-Equal Economy found that women in their early 60s with private pensions typically have a pot worth just one-fifth as much as men of the same age. State pension income inequality has reduced, partly due to automatic enrolment, but low-income divorced or separated women remain a financially vulnerable group.
Improved financial education is one part of the solution to this interconnected series of problems. A much stronger emphasis by policymakers on improving social infrastructure, by investing in the various care systems, is another. Ethnicity pay gaps also require closer monitoring (currently, reporting is voluntary although Labour and the women and equalities committee have called for this to change).
But as the latest figures show, an obligation to report on pay gaps does not automatically make them shrink. What the information does is to let employees know where they stand, and to provide an empirical basis for the argument that women’s position in society is not getting any better.
