Gender pay gap examined

The gap between the average hourly earnings of men and women working full time in Great Britain narrowed in 2003, to 18%, continuing the trend of the last 20 years. This feature explores the different measures of the gender pay gap and the impact of policies designed to reduce expressions of gender inequality more broadly.

The Office for National Statistics (ONS) conducts the most authoritative annual survey of the earnings of employees in Great Britain each April, and publishes its findings in the autumn. The New Earnings Survey (NES) provides data that reveal differences in the pay of men and women engaged in full-time or part-time employment, and the most reliable estimates of the gender pay gap disaggregated by sector and occupation (TN0201101S). Three different measures of the aggregate pay gap in April 2003 can be compared from the 2003 NES data:

  • the most frequently cited measure focuses on differences in the average hourly earnings of men and women working full-time (excluding overtime). Using this measure, the pay gap was 18%, and had declined by 1 percentage point since April 2002;
  • when the average weekly earnings of men and women working full-time were compared, the pay gap was 24.6%. This is because men on average worked 3.4 hours longer than women each week, and they were much more likely to receive additional pay for overtime and shiftwork, and receive bonus payments; and
  • when the average hourly earnings of women working part time were compared with those of men working full time, the gender pay gap was 39.6%. As the pay of women working part time increased by 4.7% in the year to April 2003, there was a small reduction of 1.5 percentage points in the pay gap compared with the 2002 survey. The figures undoubtedly underestimate the scale of the problem, however, because NES data exclude employees paid below the national insurance threshold - and most of these are women working part time.

Main features of the problem

In its analysis of the latest NES data, Incomes Data Services, an independent research organisation, explored these three measures of the gender pay gap (IDS Report 895, December 2003), and discussed the most important factors that influenced the differences between the pay and men and women:

  • amongst full-time employees, the distribution of the weekly earnings of men is spread across a fairly wide range of pay levels, whereas there is a much greater concentration of women at lower pay levels. This partly explains why 70% of women were paid below the male median weekly earnings level of GBP 432 in 2003;
  • the gender pay gap reflects the pattern of occupational segregation. Men comprise the majority of employees in nine out of 10 of the highest-paid jobs, and women are in the majority in eight out 10 of the lowest-paid jobs. Half of the part-time female workforce is concentrated in only 10 occupations;
  • out of more than 250 occupations identified in the NES data, women working full time earn less than men in all except 21, including many occupations with a large majority of women (eg nursing and teaching). The gender pay gap is greater in managerial occupations - especially in the private sector - and smaller in lower-level occupations (eg bar staff, shelf-fillers and cleaners) where pay can be more easily linked to skill or responsibility in simple grading structures; and
  • sectoral variations in the gender pay gap for full-time employees, based on hourly earnings, were substantial, eg more than 40% in financial services, 26% in electricity, gas and water supply and 10% in education. In all sectors the gap in weekly earnings is greater than in hourly earnings.

Public policy and the gender pay gap

Over the last decade, the Equal Opportunities Commission (EOC) has published many reports on the causes of the gender pay gap, and campaigned for legislative and other reforms that might diminish their impact of the lives of women and their families. The disparity in the pay of men and women has been reduced significantly since the Equal Pay Act was enacted in 1970, and amended in 1983, but the EOC has argued that progress in recent years has been painfully slow. The equal pay legislation, and the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2002, have not helped low-paid women working part time in isolation from male, full-time comparators. Moreover, at higher levels of the occupational ladder, as an EOC report - Qualifications and careers: equal opportunities and earnings among graduates- published in 2002 showed, there is a significant gap between the average pay of women and men three years after university graduation, across all sectors and occupations.

In early 2001, an Equal Pay Task Force established by the EOC, and comprising representatives of employers and trade unions, and independent experts, published a major report, Just pay (UK0104126F). This identified three main factors responsible for the gender pay gap:

  • occupational segregation;
  • the impact of caring responsibilities on women in the labour market, especially constraints on their capacity to work full time; and
  • discriminatory pay practices of employers that reward women unfairly.

The report strongly recommended that the equal pay legislation should be amended to require employers to conduct regular equal pay reviews. The Labour Party government agreed that employers should be encouraged to carry out pay reviews but, faced by strong opposition from the main employers’ organisations, rejected the proposal that the reviews should mandatory.

The disappointment caused by this decision led the EOC and many trade unions to campaign actively for the wider use of pay reviews in by employers. This pressure has achieved some potentially useful results. The Employment Act 2002 (UK0210103F) and the subsequent Equal Pay (Questions and Replies) Order 2003 introduced an equal pay questionnaire enabling individual employees to request specific information from their employers to establish whether they are paid less than a colleague doing the same job, or one thought to be of equal value. Employers are not legally required to respond to such requests, but if they fail to do so, their defence in a potential employment tribunal case might be seriously weakened.

The EOC has argued that this procedure, introduced in April 2003, should help employers resolve more equal pay complaints in the workplace, and enable all parties to avoid the complex and time-consuming processes involved in employment tribunals. It may also encourage more employers to conduct equal pay reviews to protect themselves against complaints and, more positively, to demonstrate their commitment to equality in ways that might improve the recruitment and retention of staff.

A research report published by the EOC in March 2003, Monitoring progress towards pay equality, found that those employers that had conducted equal pay reviews were generally positive about their experience. Nonetheless, 40% of employers reported that they had no plans to monitor the relative pay of men and women, and 20% said that they did not allow their employees to share information about their pay with colleagues.

In the context of this uneven commitment by employers to gender pay equity, the law on equal pay has been tightened a little. In July 2003, new regulations amended the Equal Pay Act by lengthening the time limits for bringing cases, and for which arrears payments can be made, and a revised Code of Practice on equal pay produced by the EOC came into force in December 2003. The Code explains employers’ obligations on equal pay, taking account of recent equal pay legal decisions, and provides practical guidance for employers. Even though the Code is not legally binding, an employment tribunal may take into account an employers’ failure to act on its provisions.

Commentary

The extent of the gender pay gap, and other expressions of women’s disadvantaged position in the labour market, has been influenced not only by equal pay legislation, but by other policies pursued by the government, employers and trade unions. For example, low-paid women workers were the main beneficiaries the implementation of the national minimum wage in 1999 (UK9904196F), and will benefit further if the government’s national childcare strategy, launched in 1998, reaches its target of 2 million good-quality and affordable childcare places by 2006. In many parts of the public service sector, planned reforms of wage and salary structures may also improve the relative pay of women and offer better prospects of pay progression linked to competence rather than seniority. The EOC, and other strong advocates of gender equality amongst trade unions and some employers, often have to balance their dismay at the slow pace of progress with some optimism that the gradual shift in social attitudes towards fair treatment for women, alongside targeted policy initiatives, may provide better prospects for progress in the near future. (David Winchester, IRRU)

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