Women, work and pay
Over the last decade, the number of women in the labour market has increased dramatically. There are now over 12 million working women in the UK. Whilst women’s economic activity has been steadily rising, men’s has slightly fallen. The employment rate for women is now 69.3% compared with 79.3% for men(1).
Yet whilst women are making a greater contribution to the workforce than ever before, inequality remains in the type of jobs that women do, their work patterns and their pay.
Unequal pay
Thirty years after the Equal Pay Act, women in the UK still earn substantially less than men. Latest figures show that women working full-time earn 82.1 per cent of the average hourly earnings of men. In 2001 women’s average full-time hourly earnings were £9.77, compared to men’s hourly earnings of £11.97(2).
The real gap in earnings is even greater, because women tend to work fewer hours than men and earn less in overtime. Women’s full-time weekly earnings are only 74.8% of men’s.
Women lose a large proportion of their lifetime’s income by taking time out of the workplace to have children. But childless women also lose out on earnings compared with their male counterparts. This is the ‘female forfeit’ - a term for disadvantage in pay women face just because they are women. The difference in lifetime earnings between men and women has been calculated at £197,000 for low-skilled worker; £241,000 for medium-skilled workers, and £142,000 for highly skilled workers (3).
Low pay
Most of Britain’s low paid workers are women. This is why 70 per cent of those benefiting from the National Minimum Wage, introduced in April 1999 at a rate of just £3.60, were women.
Four-fifths of the 2.5 million workers earning below the lower earnings limit for NI contributions are women (4). In 2000, 14 per cent of full-time female employees on adult rates, nearly 50 per cent of women aged 18 to 21, and 85 per cent of those under 18 earned less than £5 an hour. The position of those working part-time is even worse: 42 per cent earned less than £5 (5).
Women make up 79 per cent of all employees in the bottom ten paying manual occupations and 78 per cent of all employees in the bottom 10 non-manual occupations (6).
Key factors
There is a complex inter-play of factors causing the persistent pay gap between women and men. But four factors stand out: the undervaluing of women’s work, gender segregation in the labour market, differing work patterns due to the unequal impact of family responsibilities, and pay discrimination.
Historically, women’s work has been undervalued because the sort of work they’ve traditionally done has been regarded as simply an extension of the work they do at home, ie. using ‘natural’, domestic skills. But women’s work is still undervalued in today’s labour market. Many female-dominated occupations are graded at a lower point in the pay structure than male-dominated occupations. This has led to some high-profile equal pay claims in both the NHS and local authorities, for example, as (female) speech therapists have won parity with (male) pharmacists, and (female) catering assistants with (male) gardeners (7).
There is a pronounced pattern of gender segregation within the labour market, which results in some industries and occupations, like engineering, being male-dominated, and others, such as hairdressing, being female-dominated. Male-dominated industries typically pay higher salaries and are more unionised.
Occupational segregation works in two ways. ‘Horizontal’ segregation means that women are concentrated in certain types of occupations (which are typically less well-paid). Three quarters of employees in clerical and secretarial occupations are women, as are two-thirds of employees in sales and in ‘personal and protective’ occupations (this category includes jobs such as care assistant, cleaner, restaurant and catering workers) (8).
‘Vertical’ segregation means that within the same occupation, women are concentrated lower down the salary range. For example, the vast majority of those in clerical occupations are women, yet over 80% of higher paid clerical positions - stores, despatch clerks and keepers - are occupied by men.
An important factor in explaining women’s low pay is the difference in working patterns between women and men. Women work fewer hours over their lifetimes than men, mainly because of family responsibilities. They get penalised for breaks in continuous employment by missing out on promotion and long-service awards. More importantly, their caring responsibilities often confine them to part-time or atypical work.
Part-time work in Britain usually means low paid work. Britain has the second highest proportion of women working part-time and a high concentration of part-time work in low-paid jobs compared to other European countries (9).
42% of working women are in part-time employment, compared to 8% of men, and women account for over 80% of all part-time workers. Yet only 17% of women in professional occupations work part-time compared to 58% of women in partly skilled occupations and 85% in unskilled occupations (10).
Direct pay discrimination, which occurs when an employer pays men and women differently for the same jobs, or for jobs of equal value, is illegal under the Equal Pay Act, but it still occurs. Indirect pay discrimination - for example, when male employees routinely get offered overtime or bonuses that are denied female employees - is common. The Equal Pay Taskforce has estimated that pay discrimination amounts to 20 to 50 per cent of the total pay gap (11).
Equal pay on the agenda
The gender pay gap has been narrowing - slowly. This is the result of demographic, social and legislative changes. Women’s position in the labour market has been improved by the Equal Pay and Sex Discrimination Acts, and by the Part Time Workers Regulations which came into force in July 2000, giving part-timers equal rights to their full-time equivalents. The introduction of the National Minimum Wage resulted in a narrowing of the gender pay gap of nearly 2 per cent between April 1998 and 2000 (12).
Women are increasingly well-qualified (and better qualified than men for younger age groups). More women are becoming managers: the number of women managers has more than doubled since ten years ago. Many women now return to work straight after maternity leave, which avoids the significant loss of pay from moving to a new, often part-time job after a gap of several years.
Equal pay is firmly on the political agenda. In October 1999 the Equal Pay Taskforce was set up by the Equal Opportunities Commission, to explore the issue, collect evidence and make recommendations about how to close the pay gap. It produced a comprehensive report in Spring 2001, recommending a number of measures to improve the effectiveness of the Equal Pay Act and wider labour market policies to counteract gender segregation. The Government accepted some recommendations and set up a review, the Kingsmill Review, in Autumn 2001, which reinforced the importance of voluntary pay reviews by private companies, recognised the adverse effect on women’s pay due to contracting out of public services and called for greater disclosure of pay information by companies.
Such measures are very welcome. Yet the fact is that improvements in the overall pay gap based on average earnings have masked the slow pace of change for many women and reflect a widening in the distribution of women’s pay, with smaller numbers of higher-earning women pushing up the figure for average pay. Average female part-time hourly earnings have actually fallen as a percentage of female full-time earnings, from 80.7 per cent in 1980 to 74.8 per cent in 2000 (13).
The gap between the average hourly full-time pay for women in the lowest income decile and average male pay has narrowed by just 1% over 25 years - from 38 per cent in 1975 to 37 per cent in 2000 (14). This says as much about the persistence of low pay as about unequal pay.
Low Pay Unit’s recommendations
The fact that women feature disproportionately in the lowest income decile groups will have a significant impact on the overall effectiveness of any measure designed to tackle the gender pay gap.
Equal Pay legislation has little impact on women’s pay in sectors such as retail where low paid jobs are the norm for male and female employees alike. Better human capital management practices are unlikely to be taken up in parts of the service sector like fast food chains where employers often rely on staff turnover to ensure an eager workforce. Career development opportunities may enable individual women to move into better paid positions, but will only be useful if such jobs are available in the first place and will do nothing to solve the problem of low pay for those who move into to fill the newly-vacated positions.
The Low Pay Unit believes that the problem of unequal pay can only be solved by tackling the problem of low pay itself. Britain’s labour market has been characterized by increasing divergence between high-wage, high-skilled employment and low-wage jobs requiring few qualifications. Whilst some women are benefiting from government initiatives and enlightened employers promoting equal pay and work/life balance policies, others are taking up low-paid, often part-time positions in the growing service sector, particularly in shops, restaurants and childcare.
At the same time, there is a downward pressure on wages in many female-dominated occupations such as catering and cleaning due to ‘contracting out’ of public services, as firms compete to win contracts by cutting staffing costs.
Good practice alone will not reach those sectors of the economy where low pay is concentrated.
This is why the Low Pay Unit is pressing for requirements on employers, for example to undertake pay reviews, to be introduced as mandatory rather than voluntary measures.
The Low Pay Unit is continuing its campaign for a higher National Minimum Wage. The National Minimum Wage is a measure which has already proved its effectiveness in reducing the gender pay gap. A higher rate would significantly increase women's earnings in low paid, gender segregated employment and make a real impact on closing the pay gap.
Refs:
(1) Labour Force Survey Summer 2001
(2) New Earnings Survey 2001, ONS
(3) Women's Earnings Over the Lifetime, Cabinet Office 1999
(4) Hansard, 9 January 2001, col 540W
(5) Next Steps, Unison 2000
(6) IDS Report 838, Aug 2001
(7) Enderby v Frenchay Health Authority and Sec of State for Health (1993): Ratcliffe and Others v N. Yorkshire CC (1993)
(8) Labour Market Trends, Nov 2001
(9) The Gender Pay Gap: Research Review, EOC 2001
(10) Labour Market Trends, Aug 2000
(11) Just Pay, Equal Pay Taskforce 2001
(12) Making a Difference, Second Report of the Low Pay Commission 2001
(13) IDS Report 838, Aug 2001
(14) Calculations by LPU on NES 2000 data
Low Pay Unit, Jan 2002
