Pay gap revisited

The new official figures on the gender pay gap, published last week, make an interesting read and have, as usual, been used as a stick with which to beat employers. It’s worth looking at them in a bit of detail. It’s a bit complicated, so bear with me.

The internationally used comparison takes the mean pay gap – the difference between men’s pay and women’s pay, expressed as a percentage of men’s pay – for full-time hourly pay, excluding overtime. On this basis, the pay gap fell from 17.4% in April 2008 to 16.4% in April this year.

The Office for National Statistics prefers to publicise the median pay gap as this gives a better picture of “typical” gaps – the mean being distorted by a small number of very high earning individuals, who are mainly male. On this criterion, the pay gap fell from 12.6% to 12.2%.

Small shifts – and almost certainly the falling aggregate gap - are the result of a faster fall in private sector than in public sector jobs in the recession. The pay gap has historically been quite a bit larger in the private sector than the public sector and changes in the public/private employment mix affect the weights.

The government and the Equality and Human Rights Commission are pressing for stronger action on private sector gender pay differentials in the proposed Equalities Bill. Much has been made of alleged discrimination in the finance sector, for example (see earlier post).

To publicise their demand for more legislation, the government seems to have forced the ONS to agree to publish another pay gap indicator, the “all employees” – whether full-time or part-time – indicator. The publication of this measure was resisted by Sir Michael Scholar, Head of the UK Statistics Authority, in a caustic exchange with Harriet Harman earlier this year. Not surprisingly, because more women work part-time than men, this measure shows a big differential: a 22.0% median gap this year, only marginally down from 22.5% the year before.

But part-time and full-time pay are chalk and cheese – very different jobs, done by people in very different age groups. This means that we have the rather odd result that although there is a big pay gap (18.3% on the median measure) in favour of men amongst part-time workers in the public sector, in the private sector this gap has virtually disappeared. This year it is just 0.4%: in 2008 the measure was negative – that is, women earned more than men.

Paradoxes like these show how difficult these figures are to interpret – and thus even more difficult to influence by government policy. Gender pay differentials are strongly influenced by different education patterns, career choices and acceptance of caring responsibilities of men and women. Aggregate measures tell you very little.

The public sector has pushed very strongly on this issue. But it’s been to little avail. The full-time public sector gap has actually risen on the median measure for each of the last three years, and on the mean measure for each of the last two.

Not a strong base, one might think, for arguing for the effectiveness of yet more restrictions and controls on private business.

“Small shifts – and almost certainly the falling aggregate gap – are the result of a faster fall in private sector than in public sector jobs in the recession. The pay gap has historically been quite a bit larger in the private sector”So that means that recessions do not just fight poverty (http://blog.iea.org.uk/?p=264), but also promote gender equality. Maybe we should have recessions more often, and deeper ones.

It is a relief that public policy has not reduced the gap. If it had reduced the gap then it would be an indication that there were fewer choices at different levels of pay open to both males and females (with females suffering most). Of course, the problem with people like Harman is that, despite their socialist and anti-materialistic rhetoric, they really believe that money is the only thing that people get out of working. There are many women (and men, for that matter – especially once their formal careers are over) who work part time in jobs they enjoy and would rather not work than do higher paid jobs they enjoy less or which are less convenient given their lifestyles.

I’ve said before and I’ll say it again, it’s not a “gender pay gap”, it’s a mothers vs everyone else pay gap.1. Seeing as most mothers are married and share income and expenses with husband, half the problem melts away.2. As to the small residual gap that thus arises between “parents” and “everyone else”, that’s nothing that can’t be fixed by increasing child benefit a bit and reducing Child Tax Credits (which mainly accrue to non-working single mothers).

I wonder if there is an ‘age gap’ that a government with evidently not enough to occupy itself should be trying to ‘close’? Or perhaps a ‘religious gap’? If nobody knows I’m sure someone could invent questionnaires that all employers could be required to fill out. In my later days as a head of department at Cranfield we had someone with a title like ‘Diversity Co-ordinator’ who was concerned with race. I wrote a sarcastic response to some inquiry, purporting to list the sexual preferences of members of the department, together with details of their grandmothers’ religious beliefs. For some reason, I never got any reaction!

“Small shifts – and almost certainly the falling aggregate gap – are the result of a faster fall in private sector than in public sector jobs in the recession. The pay gap has historically been quite a bit larger in the private sector”So that means that recessions do not just fight poverty (http://blog.iea.org.uk/?p=264), but also promote gender equality. Maybe we should have recessions more often, and deeper ones.

It is a relief that public policy has not reduced the gap. If it had reduced the gap then it would be an indication that there were fewer choices at different levels of pay open to both males and females (with females suffering most). Of course, the problem with people like Harman is that, despite their socialist and anti-materialistic rhetoric, they really believe that money is the only thing that people get out of working. There are many women (and men, for that matter – especially once their formal careers are over) who work part time in jobs they enjoy and would rather not work than do higher paid jobs they enjoy less or which are less convenient given their lifestyles.

I’ve said before and I’ll say it again, it’s not a “gender pay gap”, it’s a mothers vs everyone else pay gap.1. Seeing as most mothers are married and share income and expenses with husband, half the problem melts away.2. As to the small residual gap that thus arises between “parents” and “everyone else”, that’s nothing that can’t be fixed by increasing child benefit a bit and reducing Child Tax Credits (which mainly accrue to non-working single mothers).

I wonder if there is an ‘age gap’ that a government with evidently not enough to occupy itself should be trying to ‘close’? Or perhaps a ‘religious gap’? If nobody knows I’m sure someone could invent questionnaires that all employers could be required to fill out. In my later days as a head of department at Cranfield we had someone with a title like ‘Diversity Co-ordinator’ who was concerned with race. I wrote a sarcastic response to some inquiry, purporting to list the sexual preferences of members of the department, together with details of their grandmothers’ religious beliefs. For some reason, I never got any reaction!

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