The UK’s gender pay gap: two steps forward and one step back? Or is that two steps down and one up?

Blog posts

31 Oct 2019

Duncan BrownDuncan Brown, Head of HR Consultancy

The complexity of the causation and even the definition of the UK’s gender pay gap - and therefore the challenge for the government and individual employers in working to reduce it - has been very much in evidence this week. Witness the diametrically opposed headlines and interpretations of the latest annual release of the national data from the Office for National Statistics on all aspects of the gap in the UK. Or rather gaps.

The good news, according to the the Daily Telegraph’s reading of the data on Wednesday, was that ‘The difference in pay of all men and women workers…has fallen from 17.8% in 2018 to 17.3% in 2019’; while ‘the gender pay gap has fallen to almost zero among full-time employees aged 40 and under’. And for the first time women in their 40’s, on average, earn more than women in their 30’s, suggesting that the family friendly legislation and flexible working policies of employers are at last starting (literally) to pay off.

The bad news is that according to The Times headline on the same morning, the ‘Gender pay gap in UK increases for the first time in six years’, quoting the Fawcett Society’s view on progress in reducing it as ‘dismally slow’; and The Guardian’s generally negative interpretation was evident in their focus on the finding that ‘Women (are) paid £260,000 less than men over their careers’.

So, who is right in their interpretation? The answer is that both perspectives are (selectively) correct. The gap has increased for full-time employees, and somewhat ironically this is the measure that government generally likes to refer to as it is normally the lowest. But using the more representative and higher overall average figure for all-employees (which includes the high proportion of women in part-time work; and is the internationally recognised best comparative statistic) the gap has continued to decline by another 0.5%, for the second year in a row since compulsory gender pay gap reporting legislation was implemented in 2017.

Delving into the figures more thoroughly illustrates the complexity further, but also gives significant clues as to causation and most importantly, possible solutions to the gaps. We know that so-called occupational ‘vertical’ and ‘horizontal’ segregation of the UK’s labour market is a key driver of the national and many employer gaps. The ONS data confirms this, with employed women overly-concentrated in elementary lower-paying occupations and industries such as caring, cleaning and catering, where the work is often also part-time. This helps to explain the significant gaps reported in their annual reports by firms such as airlines, driven by a segmented workforce comprising of a very heavily male and relatively well-paid pilot population, but also a heavily female and much lower-paid population of cabin crew.

The government and individual employers’ actions to close the gap should therefore rightly incorporate measures to improve the representation of women in full-time, more senior and higher paying roles, as well as enforcing equal pay for the same or similar work between men and women (which has of course been illegal in this country for more than forty years). While we might for example, all want to see the appalling 44% gender pay gap reported for carpenters and joiners reduced, a significant shift in the national gap is going to require far more women working in the higher paid professional and managerial occupational groupings.

Men in the highest paid managerial grouping are currently paid £22.07 per hour more than the relatively small percentage of women in these roles in the latest data, compared to the £9.53 per hour gap in the lowest paid elementary occupational category that is dominated by women.

The trouble is that occupational shifts in the short-term at least can have a negative impact on the overall gap, for two main reasons. First, as the ONS point out, ‘The three occupations that saw the largest increase in the proportion of full-time employee jobs held by women (over the past year) were: sales and customer service, elementary occupations and process, plant and machine operatives; these all have a lower than average rate of hourly pay and will reduce the average full-time earnings among women’.

Second, even though the good news is that the proportion of women working full-time in that highest paying job category has indeed gone up, so has the gender pay gap across these jobs (by 2% over the past year). This is probably because ‘new entrants or returners to full-time jobs are likely to start from a lower pay level and may reduce average pay for full-time women employees’. This effect is particularly pronounced for older women.

I saw the same short-term effect in an energy company, where their initiatives to improve the proportion of engineers that were female were proving successful. But the initial impact of having newer and less experienced women in these higher paying roles was to increase the company’s overall reported annual hourly base pay gap.

As Jonathan Athow the Deputy National Statistician for the ONS told me on Twitter yesterday,’ there is never likely to be a single measure that captures all the nuances here, so we make sure we report lots of information about the gender pay gap’. Whether all journalists and HR professionals consider all of that data and draw appropriate conclusions is perhaps more open to question.

For those HR and diversity professionals working to close the gaps in their own employer, we would draw out three implications. First, carefully study the data and really understand the causes of the gender pay gaps in your organisation. Second, it is likely that a broad range of HR and employment actions will be required to address these multiple factors of causation. Third, give it time and don’t expect to see significant reductions overnight.

Oh and fourth, make sure you consult IES’s gender pay hub for research evidence and case studies on ‘what works’ and why in closing gender pay gaps.

Subscribe to blog posts

Any views expressed are those of the author and not necessarily those of the Institute as a whole.