- Centre for Employment Relations, Innovation and Change
The gender pay gap remains stubbornly wide across countries, despite efforts to narrow it. The median gender pay gap in the UK currently stands at 14.3% for all workers (and at 7.7% for full-time employees). This means that women earn 85 pence for every pound earned by men. (The “median” gap – the point where half of employees, regardless of hours worked, earn over the middle point and half earn under - is a more accurate measure than the “average” or “mean” gap.)
This year, Equal Pay Day will fall on 22 November. Fawcett Society marks the day when, based on the Office for National Statistics (ONS) data, the average woman in paid employment effectively starts working for free compared to her male counterpart. This year’s Equal Pay Day is delayed by 48 hours compared to last year due to a 0.2 percentage points decrease in the gender pay gap.
What do the figures show?
The average Gender Pay Gap (GPG) - the difference between the average pay of all men and women across the workforce, expressed as a percentage of males’ earnings - widens when women do more of the less well-paid jobs within an organisation than men. It is useful in measuring pay equality due to its simple calculation, offering a measure of the differences in men's and women's working patterns across occupations; for example, more women are part-timers who tend to earn less per hour, and there is a low representation of women in senior roles.
However, it does not measure the pay difference between men and women at the same pay grade, doing the same job, with the same working pattern (i.e. pay equity). While both measure the disparity in pay women receive in the workplace, pay equity means that men and women in the same employment performing equal work must be paid equally, as per the Equality Act 2010. It is worth mentioning that the ONS data that is used to mark Equal Pay Day is different from the GPG data based on compulsory reporting (i.e. across all organisations’ employees, not differentiated by full-time and part-time status).
In the UK (2023):
- The full-time hourly average GPG amounts to 10.7%, compared to 10.9% in 2022.
- For full-time employees, the median hourly pay is 7.7% less for women than for men, while the median hourly pay for part-time employees is 3.3% higher for women than for men (overtime pay excluded).
- Median pay for all employees is 14.3% less for women than for men. This gap is considerably wider than for full-time employees because more women than men are part-timers, generally.
- The gender pay gap for full-time employees aged 60 years and over is currently the widest of all age groups. Between 2022 and 2023, it further increased from 13.5% to 14.2%. This gap can be attributed to several factors such as women tend not to climb the career ladder at the same speed as men do – fewer women in their 40s and 50s are in occupations such as managers, directors, senior officials etc. at an age when pay for these occupations typically increases. Women also tend to change working patterns not only after giving birth, but at other major turning points in their lives such as caring for aging parents.
- The difference in pay is largest among higher earners (14.8% between the 90th percentile employees), with minimal changes in this income group.
Gender pay gap in 2023, based on hourly pay (figures for 2022 shown in brackets), in %
|Full-Time employees 2023 (2022)
|All workers 2023 (2022)
Source: ONS, ASHE data for 2022 and 2023
Leading the way
No country has thus far achieved gender pay equity, not even Iceland, a bastion of equality for 14 consecutive years. To address this, it introduced a unique piece of legislation in 2017 (amended in 2020), mandating organisations with 25 or more employees in both the private and public sectors to prove that they pay men and women the same for work of equal value. This legal change was driven by the commitment of employer organisations, trade unions, and the government to provide a tool companies could use to manage and close the GPG.
It introduced the Equal Wage Management Standard (EWMS), a mandated certification that involves a two-step job evaluation system to disassociate work tasks from skills and evaluate the task itself; here, the organisation is required to consider four criteria – expertise, responsibility, effort, and work environment. Absent from similar international equal pay certification schemes, the Icelandic EWMS requires employers, rather than the employee, to prove equal pay, using third-party enforcement and monitoring compliance. While time-consuming and resource-intensive, the process improves pay transparency and stimulates wider discussions about wage design, job value, and pay equity.
A certification process, done every three years, is undertaken by an external body of accredited auditors, with punitive measures for non-compliance (a daily fine of around GBP 350). The GPG reporting is monitored by the National Centre for Gender Equality. Although the process promotes equal pay within an organisation, it cannot, however, ensure equal pay at the societal level or address the wider undervaluation of women’s work. This is reflected in Iceland’s current gender pay gap: while the country halved it, the unadjusted GPG still stood at 9.1 per cent in 2022.
Understanding the women-labour market outcomes
In the UK, the introduction of GPG reporting offered similar hope and was the biggest business story in 2018, rivalled only by the royal wedding. The media storm at the time suggested this would accelerate progress, i.e. to be a “rocket in the arse” and to lose the “boys club” reputation, as illustrated by then creative director of JWT, Jo Wallace. Imposing pay transparency on large organisations was indeed a direct challenge to change organisational cultures and prioritise gender equality, however, trends are not promising.
This is not surprising. ‘Feminist’ scholarship holds invaluable lessons on the centrality of history to understanding today’s women-labour market outcomes. As demonstrated by this year’s economic Nobel prize winner – Claudia Goldin, there are persistent problems and inefficiencies that markets have failed to solve. These include factors ranging from organisational culture, occupational segregation, expectations, norms and biases at different levels, as well as lack of flexible working options, inadequate quality childcare, enhanced shared parental leave and sick leave, returnship opportunities, gendered care responsibilities, and outright discrimination.
Comparative work on gender inequality, including my own and certainly that of Goldin, demonstrates that the pay gap starts to emerge soon after the birth of a woman’s first child. It is generally narrower for labour market entrants. Across countries, including Iceland, GPG increases with age, especially after the age of 40, in most cases owing to childbirth-related factors such as career interruptions and reductions in working hours. In the UK, the gap for full-time employees aged 60 and over is the largest of all age groups (see above) and in Iceland, it stood at 16.3% for 55–64 years old.
In the UK, commuting is another important factor - when changing jobs, women as main care providers are more likely than men to accept lower pay for a shorter commute. This ‘commuting gap’ is particularly noticeable in the South-East and contributes to men doing the majority of high-paid jobs.
The existing motherhood / care-related penalties also translate into a higher pension gap, leading to higher poverty risks in older women. By and large, women continue to pay a high price for providing childcare and take another hit for combining work and caring for adults and grandchildren, a public good par excellence.
Action is needed
To bring about wider change faster, the EU has introduced the pay transparency directive, work-life balance directive, the directive on gender balance on corporate boards, and the European Care Strategy. Although the UK is no longer under obligation to comply with these directives, doing nothing is not an option when the country is clearly failing to make the best use of its workforce potential, more so as public investment in affordable high-quality public childcare and care alternatives, shared parenting and caring remain patchy.
To demonstrate that progress is too slow, women and non-binary people in Iceland – including the prime minister - took a day off from paid and unpaid work (kvennafrí) on 24 October this year, inspired by the events of 1975 that paved the way for equ(al)ity. An unprecedented level of societal industrial action yet again closed private and public sectors in which women are the majority, including health and education. The message was clear: women’s work is undervalued, the progress too slow, and the onus is not on women to fix inequality between genders.
The underutilisation of women in the workforce, in terms of both skills and time, means an economic loss at the individual and macroeconomic levels. Based on a simple calculation, closing the gender gap in labour force participation and the gender gap in management that drives GPG in the OECD countries would raise global economic activity by approximately 7 per cent, or about $7 trillion (£5.6). Closing the gaps in large emerging economies, including India, would raise that further.
Action is needed on all fronts and at once. The UK public policy needs to become more supportive of women and more nuanced if it is to fast-track societal change. The devastation of not acting is already reflected in our demography and economy. If we continue the way we are going, another 131 years will pass before we see gender parity and women's work be valued.
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