Gender pay gap narrows

Official statistics published in December 2010 showed that the gender pay gap in the median hourly earnings of full-time UK employees shrank to a record low of 10.2% in the year to April 2010. The present coalition government had previously announced that it was abandoning the previous Labour government’s plans to make larger companies undertake gender pay audits and publish the results. It will instead rely on the voluntary efforts of employers to narrow the pay gap.

Key survey findings published

Figures from the 2010 Annual Survey of Hours and Earnings (154Kb PDF) (UK1009039D) published by the Office for National Statistics (ONS) on 8 December 2010 showed that the gender pay gap, measured by full-time median hourly pay rates excluding overtime, shrank to a record low of 10.2% in the year to April 2010 compared with 12.2% the previous year.

ONS statistician Mark Williams was quoted by the Financial Times as saying: ‘This year’s results continue the pattern seen in recent years of the gender pay gap tending to get narrower. In 1997 the gender pay gap in median earnings for full-timers was around 17% and now it’s dropped to around 10%.’

The change reflects higher pay growth in the public sector where there is a heavier concentration of women workers and may be reversed next year as pay freezes affect the public sector.

The median gender gap for all employees, including part-time workers, fell from 22% in 2009 to 19.8% in April 2010.

In the public sector, the gap for full-time employees narrowed from 11.5% the previous year to 10%, while in the private sector it fell to 19.8%, down from 20.9%.

Commenting on the figures, Brendan Barber, General Secretary of the Trades Union Congress (TUC) said:

The fall in the full-time gender pay gap up to April 2010 is welcome news for working women across the UK. The government has inherited a gender pay gap at a record low. The challenge it faces now is to continue this progress and eliminate it altogether. But with hundreds of thousands of female public servants set to lose their jobs, there are real fears that women’s income could start to fall as they struggle to find work in the private sector, where the gender pay gap is twice as high.

Equal pay audits dropped

Earlier, on 2 December 2010, Equalities Minister Lynne Featherstone had announced that the government would not be implementing the gender pay reporting requirements in section 78 of the Equality Act 2010 (UK0905029I). Instead, it intends to work with organisations that employ 150 people or more to encourage the publication of gender pay data on a voluntary basis. Most of the other provisions of the Equality Act came into force on 1 October 2010 (UK1010019I).

In a statement, the government made clear its belief that:

‘. . . the voluntary approach will give better information and is more likely to drive successful change. Each year the government will review how many companies are publishing such information and its quality in order to assess whether alternatives are required, including using a mandatory approach through section 78 of the Equality Act. While we work with business and the voluntary sector to ensure the voluntary approach is successful, we will not commence, amend or repeal section 78.’

Gender pay audits, intended to be compulsory in companies with more than 250 employees from 2013, were a key part of the previous Labour government’s equalities agenda and were strongly supported by the TUC and also by the Liberal Democrats prior to their participation in the present coalition government. Yvette Cooper, Labour’s Shadow Minister for Women and Equalities commented: ‘Scrapping Labour’s plan to increase transparency in pay is a backward step for women’s equality.’

Employer organisations welcomed the move. Commenting on the government’s announcement, Miles Templeman, Director General of the Institute of Directors (IoD) said:

There is no justification for the government using regulation in this area. We believe that the vast majority of businesses are rightly paying women the same as men for the same work. It’s a pity that ministers didn’t go further and scrap the powers to compel pay audits created by the last government. Also, we would have been more assured if a formal commitment had been given today to not introduce pay audits over the course of this parliament.

He added:

While there may be some instances of illegal discrimination still taking place, we believe this is very uncommon. Instead of leaving pay audits on the table, the government should have accepted the hard evidence which shows that influences and choices made by women at the pre-employment stage are what generally lead to average gender pay differences.

Mark Hall, IRRU, Warwick Business School

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