Is the gender pay gap overplayed?

Despite the Equal Pay Act coming into effect over 45 years ago, it is commonly asserted that women in the UK continue to earn less than men.

Do they? The pay gap shrinks significantly if hourly rather than annual pay is calculated (given the larger number of women undertaking part-time work). However, even though this is true, questions then have to be asked about why women are more inclined to work part-time. Is this through choice or is it because they have no choice?

There are those who believe the pay gap is overplayed. Cynthia Than from Ninja Economics highlights, “since men and women tend to choose different professions, occupational segregation explains some of the difference in the gender pay gap since men are more likely to choose higher-paying fields. This results in women being disproportionately represented in lower-paying jobs. So men may enjoy an earnings advantage, but it doesn’t mean that women are being paid less for the same job.”

Even more strikingly, in the US,  the Bureau of Labor Statistics (BLS) weekly earnings report suggests that although women who work part-time earn less than men, women who work 30 to 39 hours per week make 111% of what men earn. Food for thought.

The Office of National Statistics headline figure for the gender pay gap in the UK is 19.2%. Again this is for all employees. For full time employees it is less than half the headline rate at 9.4% – the lowest since records began in 1997.

Arguments about the extent of the pay gap may continue for some time but irrespective of size or causal factors, the fact it exists cannot be disputed.

Last year, the World Economic Forum predicted it would take 118 years for economic parity to be achieved across the globe. This year, it has been calculated the gap would take until 2186 – 170 years – to close. Unfortunately the UK doesn’t even make it into the world’s top 50 for economic parity.

As the world’s fifth largest economy with a reputation for forward thinking and fairness, we should certainly be setting a much better example.

There is good news on the horizon. According to analysis from the Treasury, the new National Living Wage is expected to eradicate the gender pay gap for the lowest paid by 2020. It will be further reduced by voluntary actions such as the London Living Wage (something for which the AAT will shortly gain accreditation). However, many millions more will continue to be affected.

Government is taking specific action on the issue too. From April next year it will be compulsory for large organisations – both public and private – to calculate their gender pay gap and publish the results. This will help to shine a light on the problem and encourage action where needed. The Government is also promoting a range of voluntary initiatives such as the Women in Finance Charter (to which AAT is a signatory) which commit companies to supporting the progression of women into senior roles.

Despite pay rises for the poorest in society, legislation around gender pay gap reporting and the encouragement of some voluntary schemes, Government action is not all that it could be. In October Conservative MP Maria Miller, who chairs the Women and Equalities Select Committee, said the Government is failing to take equality issues seriously because of lengthy delays in its responses to reports by her committee.

A response to their hard-hitting report on Britain’s gender pay gap, which demands urgent action to close the gap between men and women’s pay, is more than six months overdue.

Miller said, “if you’re going to establish a Women and Equalities Select Committee and it does work which is looking at some of the most challenging issues and how they make our country a fairer place, they need to be responded to by Government in a timely fashion.”

Of course, Government alone cannot make the difference. Business has a role to play too. By working together Government and British businesses could close the gap in a relatively short period of time.

A recent AAT roundtable to discuss the gender pay gap came up with five recommendations to address the problem. These included; a new “Women’s network” to counter traditional “old boys” networks, with women in senior positions actively encouraged to help mentor less experienced women;  instead of sharing parental leave, paternity leave should be boosted in its own right; men and women should adopt far more flexible working patterns; employers must support staff requests for childcare and finally, there needs to be increased recognition that output rather than hours worked is a better measure of employee success.

There are more radical alternatives as recently demonstrated by Essex University. The Vice-Chancellor at Essex, Anthony Forster, decided a one off pay increase for all female professors was needed to eradicate their pay gap in a single swoop. Forster said he was impatient with the industry-wide problem, and that external policies were “failing to close the pay gap quickly enough”.

There are myriad ways in which the gap can be radically reduced, if not closed. 2017 should be the year that, with nudges from Government, business really starts to stop talking and start acting.

Phil Hall is AAT's Head of Public Affairs and Public Policy.