Women paid 18 per cent less per hour than men

Chris McDowall

On average, women in paid work receive about 18 per cent less per hour than men, according to a new report by the Institute for Fiscal Studies (IFS).

The IFS research, funded by the Joseph Rowntree Foundation, shows that the wage gap is smaller when comparing young women – before they become mothers – with their male counterparts. But the gap widens consistently for 12 years after the first child is born, by which point women receive 33 per cent less pay per hour than men.

The widening of the hourly wage gap after childbirth is associated with reduced hours of paid work, but not because women see an immediate cut in hourly pay when they reduce their hours. Rather, women who work half-time lose out on subsequent wage progression, meaning that the hourly wages of men (and of women in full-time work) pull further and further ahead. In addition, women who take time out of paid work altogether and then return to the labour market miss out on wage growth.

For the mid- and high-educated, the gender wage gap is essentially the same as it was 20 years ago. It is only among the lowest-educated (those with less than A levels) that the gender wage gap has been steadily declining. The other main driver of the fall in the overall gender wage gap has been an increase in the education levels of women relative to men.

A big difference in employment rates between men and women opens up upon the arrival of the first child – and is highly persistent. Before the first child is born, the employment rates of men and women are almost identical. But between the year before and the year after the birth of the child, women’s employment rates drop by 33 percentage points for those with GCSEs, 19ppts for those with A levels and 16ppts for graduates – while barely changing for men. By the time that child is aged 20, women’s employment rates still have not caught up again with men’s.

By 20 years after the birth of their first child, women have on average been in paid work for four years less than men and have spent nine years less in paid work of more than 20 hours per week.

Robert Joyce, associate director at IFS and an author of the report, said: “The gap between the hourly pay of higher-educated men and women has not closed at all in the last 20 years. The reduction in the overall gender wage gap has been the result of more women becoming highly educated, and a decline in the wage gap among the lowest-educated.

“Women in jobs involving fewer hours of work have particularly low hourly wages, and this is because of poor pay progression, not because they take an immediate pay cut when switching away from full-time work. Understanding that lack of progression is going to be crucial to making progress in reducing the gender wage gap.”

Speaking to Scottish Legal News about the report, Chris McDowall, a partner at Anderson Strathern, said: “From a legal perspective, it is the Equality Act 2010 which implements the principle that men and women should receive equal pay for equal work. The law seeks to achieve this by implying a “sex equality clause” into every contract of employment. The clause operates so as to replace the less favourable term with the equivalent more favourable term of a comparable colleague who is of the opposite gender.

“The sex equality clause does not operate, however, if an employer can show that the difference in contractual terms is due to a material factor which is neither directly nor indirectly sex discriminatory. That means that a factor that is ostensibly gender-neutral but which, in practice, has a disproportionate adverse impact on women will need to be objectively justified by the employer.

“Accordingly to understand whether the results from the report from the Institute of Fiscal Studies will mean that women will have valid claims for equal pay against their employers, we really need to get underneath the statistics from the report and look at the reasons for the gap being in place in each employer’s business.”

He added: “Also, any employer who is concerned about a gender pay gap in their business should consider conducting an equal pay audit as a preventive measure to flush out any problems that may exist. It will give the employer an opportunity to address any concerns.

“It is, of course,  also worth reminding ourselves that final Regulations are expected to come into force by April 2017, which will require large private and voluntary sector employers (those with 250 or more employees) to publish the overall gender pay gap figures within their organisation. It is not clear at this stage what impact that will have on the gender pay gap in the future. Currently, however, the draft Regulations do not contain any enforcement provisions or sanctions for non-compliance.”

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