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Gender pay gaps in the UK

Posted on from Cass Business School

A growing list of urgent matters for the PM to deal with stems from her ambition to create a country ‘that works for everyone’. Professor Chris Rowley discusses.

That is a difficult and multi-faceted aim. Clearly there are lots of people Britain does not work for, ranging from those on poor wages and conditions, zero hours contracts and others in the ‘gig economy’ to female workers and their unequal pay. Indeed, Mrs May gave the example of the unacceptable earnings gender gulf in her first speech, although let us recall the former PM had also vowed to end the gender pay gap.

It is more than forty years since the Equal Pay Act and there has been successive government initiatives to erode some of the underpinnings of unequal pay. This has been with policies supporting areas such as flexible working, improving part time worker rights, more affordable childcare and shared parental leave in response to concerns family responsibilities stymie female careers. These actions will be joined by forthcoming rules forcing employers (albeit only larger ones) to analyse and publish pay gaps. As transparency is a great driver of equality, we look forward to this and its results.

This sets the context for recent research on gender pay gaps which provides a ‘curate’s egg’ of finding. It is true that the Institute of Fiscal Studies (2016) shows a decline in the gender wage gap among the lowest-educated. However, the pay gap widens after having children. Also, for part timers there was a cumulative negative impact. For the more academically qualified there was no change from 20 years ago as women with degrees still earned one-fifth (20%) less and those with A levels earned one-quarter (25%) less than similarly qualified men. Similarly, the Chartered Management Institute (2016) and Office for National Statistics (2016) provide a mixed bag of findings with good news in terms of smaller gender pay gaps at younger ages, but mixed with these being widest at the top of the corporate ladder. While on the one hand this could indicate a new, more equal cohort working its way through the organisational hierarchies, so eroding gender pay gaps over time, on the other hand it may worryingly reflect the continuing problem that that careers and pay diverge when women have children. As recent TUC (2016) analysis shows the pay gap falling just 0.2 percentage points annually, it will be 47 years or 2062 before gender pay parity day is achieved!

Indeed, another reason for this gender pay gap is this continued gender imbalance in senior posts and promotions. This reflects our own research (Rowley et al, 2015) which shows career barriers are due to the poor ‘signalling’ of success for female directors and also structural issues. The messaging comes in the form of networks and nomination process bias, role model and mentor shortages, work–family balance, legal ambiguity, policies and cognitive behaviour.

All in all, gender pay gaps and discrimination is worrying as, along with moral and ethical reasons for equality, business is losing out in many practical ways. Research shows that managerial gender diversity actually delivers better financial results, cultures and decision making. A quick way for companies to address this are simple. The benefits of part time working should be recognised, measured and rewarded better by management in reality, rather than just rhetoric, such as in terms of pay and supporting career paths and patterns that are not the typical ‘linear’ ones.

References

Rowley, C., Lee, S.K. and Lan, L.L. (2015) ‘Why Women Say No To Corporate Boards and What Can Be Done: “Ornamental Directors” in Asia’, Journal of Management Inquiry, 25: 205-207

 

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