Most of the reduction in the gender pay gap over the past 25 years is down to a sharp increase in female graduates but pay inequality remains.
The Institute for Fiscal Studies (IFS) found that since the mid-1990s women of working age have gone from being 5 percentage points less likely, to 5 percentage points more likely to have a university degree than men.
The 40% earnings gap identified in its report is around 13 percentage points, or 25%, lower than it was in the mid-1990s.
However, women are still less likely to be in paid work than men (83.5% of women and 93% of men), and work fewer hours per week than men if they are employed (34 hours a week on average, compared with 42).
Women in paid work earn 19% less per hour on average than men (£13.20 compared with £16.30).In 1995 this figure was 24% and in 2005 it was 20.5%.
The research was based on data from 2019.
Monica Costa-Dias, deputy research director at IFS, said: “Huge gender gaps remain across employment, working hours, and wages. After accounting for the rapid improvement in women’s education, there has been almost no progress on gender gaps in paid work over the past quarter-century.
“Working-age women in the UK are now more educated than their male counterparts and it seems unlikely that we can rely on women becoming more and more educated to close the existing gaps.”
The Women and men at work report, part of the IFS Deaton Review of Inequalities, also finds that:
- The hourly wage gap between men and women is now bigger for those with degrees or A-level-equivalent qualifications than for those with lower qualifications. In fact, the minimum wage has helped reduce pay inequality in lower-paid roles
- Of working-age adults with GCSEs or less, 26.5% of women do not work for pay compared with 9.5% of men
- Working-age women do more than 50 hours a month more unpaid work (including both childcare and housework) than men
- Gaps in employment and hours increase substantially upon becoming a parent, with women switching to more “family-friendly” but lower-paying occupations, or part-time work
- Women have more career breaks and spend more years working part-time, which contributes to them having lower hourly earnings further down the line.
Mark Franks, director of welfare at the Nuffield Foundation, which funded the research, said: “Differences in labor market participation, hours worked, and hourly pay act together to lead to large and persistent inequalities in labor market outcomes between men and women in the UK. Some of these differences will originate from choices made by individuals and families relating to career and childcare decisions.
“However, the gender gap in total earnings in the UK is almost twice as large as in some other countries which suggest the gender earnings gap is heavily influenced by the policy environment and cultural and social norms. For example, women are likely to take on more childcare even when they are the highest earner in the household, and a number of other countries also have more generous parental leave policies than the UK.”
The report concludes that “big push” policies need to be introduced to “try to relax the financial constraints to more equitable gender roles while also shifting gendered norms”.
It says that current policies, for example around parental leave, implicitly accept traditional gendered norms around childcare, which keep society “trapped in a bad equilibrium”.
In an event launching the research this morning, Fran Bennett an associate fellow at the Department of Social Policy and Intervention at the University of Oxford suggested that women are working below their potential “partly because they’re investing in others’ human capital”, and said that improving policies around care for the disabled, elderly and children would help keep more women in well-paid work.
She said that men should also be offered well-paid parental leave to encourage them to take a greater share in childcare responsibilities, while the government should consider expanding free childcare hours.
“Generous policies could pay for themselves if there’s less wasted potential [among] women and men,” added Lucinda Platt, professor of social policy and sociology at the London School of Economics and Political Science.
Last month, data released by the Office for National Statistics showed that the gender pay gap among full-time employees was 7.9% in 2021, up from 7.0% in 2020 but down from 9.0% in 2019. The pay gap was most stark among the over 40s, suggesting that motherhood still has an impact on women’s career and pay progression.
Dr. Jo Kandola, head of digital solutions at D&I consultancy Pearn Kandola, said having more women in within an organization is unlikely to mean more women in senior roles.
“We know that the gap is caused by a lack of women in senior roles, so what’s causing this? When there’s competition over resources – which is exactly what happens in the promotion process – the standards used to assess women shift,” she said.
“When developing the talent pipeline, organizations often consciously ask ‘who are the most competent women?’ in the hope that this will translate into more women being promoted. But the number of people who sit in a talent pipeline are not restricted and so at this stage, there is no competition over resource. However, during the promotion process, when the number of people who can move up is restricted, the questions shifts to ‘who is the most competent?’. And, when considered in amongst men, due to gender stereotypes women are viewed as having less competence.”
Kandola said society needed to reject the idea that men and women are different in terms of their skills and abilities. “The common misconception is that women need to up their game, and make more effort – to negotiate salary, or develop new skills – to get into senior roles. But, actually, the true cause of the gender pay gap that we see today is gender stereotypes. To tackle these, we need to fix the system, not women themselves.”