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UK gender pay gap unaffected by government policy over past 25 years

Government policies have made almost no difference to the gender pay gap for the last 25 years, according to a report by the Institute for Fiscal Studies.

On average, working-age women in the UK earned 40% less a week and GBP3.10 less an hour than men in 2019.

Comparing official earnings data for more than 2 million 20 to 55-year-olds between 1995 and 2019, the report, published on Monday, found that women were less likely to be in paid work at all (83.5% of women and 93% of men), worked eight fewer hours a week if they were employed, and were paid 19% less an hour on average (GBP13.20 rather than GBP16.30).

Although the 40% earnings gap is about 13 percentage points lower than in the mid-1990s, the report calculates that more than three-quarters of the reduction in the earnings gap over the past quarter-century can be explained by the rapid increase in women’s educational attainment. 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.

“If you account for education attainment, there has been very little progress in reducing the gender earnings gap since 1995,” said Alison Andrew, co-author of the report and senior research economist at the Institute for Fiscal Studies. “The highest female earners take home just 67p for every GBP1 that the best-paid men do, while fewer than one-quarter of men earn the same or less than the median woman.”

The additional combined effect on the gender earnings gap of other changes in the economy, society and government policies, such as improvements in parental leave and funding for childcare, has been close to zero.

The differential in hourly pay is now widest for graduates. The report, part of the IFS Deaton Review of Inequalities, funded by the Nuffield Foundation, calculates that whereas minimum wage rates have reduced the hourly pay gap – men who left school at 16 or earlier were paid 17% more an hour than their female counterparts – male graduates earned 23% more an hour than female graduates. “There’s been no progress in reducing the pay gap for graduates, whether that’s the number in paid employment, the number of hours worked or hourly pay,” said Andrew.

When it comes to gender gaps in overall earnings, these remain largest when comparing men and women with the fewest qualifications. Women who left school at age 16 or earlier are paid less than men, because those who have jobs typically work nearly 11 fewer hours [10.8] a week. And among working-age adults with GSCEs or less, 26.5% of women do not have a job, compared with 9.5% of men.

Part of the reason for the lack of progress in closing the pay gap is the detrimental impact having children has on women’s earnings, the findings show. Women still take the bulk of parental leave and are more likely to reduce their hours, find a more family-friendly but lower-paying job, or stop work altogether after having children. They also typically do just under two hours more unpaid work each day than men.

Going part-time has a serious impact on women’s earnings and pay progression over time. The report calculated that the average 50-year-old female graduate spent 3.7 years working part-time, causing their hourly wage at age 50 to be 7.7% lower than had they worked full-time for those years. Although non-graduates are also penalised for going part-time, it is less marked.

The report calls for more targeted policies to close the gap and argues that even expensive policies, such as much more widely available free childcare, could eventually pay for themselves if they successfully ensure that the talents of both men and women are put to their most productive uses.

Responding to the findings, Jemima Olchawski, chief executive of the Fawcett Society, said: “This report shows what many women already know, that modern workplaces simply aren’t fit for modern life. From a lack of quality flexible jobs that allow women to progress alongside caring roles, to a culture that funnels them into lower-paid roles and undervalues the work they do – women are getting a raw deal. And it shows in their pay packet.

“But this is hurting men too. We know many men want to spend more time with their families … We have an incredible opportunity to rebuild in a way that works for the 21st century. Let’s see real investment in creating good-quality, flexible childcare, jobs advertised as flexible by default, a parental leave system that genuinely supports dads and second parents to spend time and bond with their children.”

A government spokesperson said: “The national gender pay gap has fallen significantly under this government – and by approximately a quarter in the last decade, with 1.9 million more women in work than in 2010. This is a result of this government enacting legislation for the right to flexible working, shared parental leave and pay – including a new online tool to check eligibility – and doubling free childcare for eligible working parents.

“We will shortly put forward a range of measures to advance equality for women at work, increasing opportunity, and tackling the issues that are holding women back. We are committed to building back fairer, and making workplaces more equal so everyone can reach their full potential.”

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UK gender pay gap unaffected by government policy over past 25 years

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