Audits are best way to close the pay gap

Rebekah Wade’s decision to stick with the daily Page 3 ‘boob fest’ has
detracted from her success at becoming editor of The Sun. As the first female
editor, she has broken through a significant glass ceiling.

For those seeking sex equality, however, there is depressing news – the
gender pay gap got wider last year, with the earnings of full-time women
workers (£10.22 per hour) now trailing those of men (£12.59) by 18.8 per cent.

Direct pay discrimination, where an employer pays a woman less than a man in
the same job even though she is as effective a worker, is not the major cause
of the gap. Three-quarters of the gap is explained by differences in patterns
of employment between men and women – although this does reflect unequal

Women’s employment is highly concentrated by occupation – almost two-thirds
of women work in 10 service-related occupations, mostly performing admin,
secretarial or caring roles – and such ‘women’s jobs’ tend to be poorly paid.
Women’s role as the primary carer in most households limits their choice of
occupation, lifetime work experience, and/or their ability to commute to where
the best jobs are. Society, in turn, tends to undervalue ‘feminised’
occupations relative to those that men dominate – and because of limited
opportunity, women crowd into these occupations, depressing pay rates still

Moreover, in all occupations, job grading and appraisal systems have been
found to undervalue women’s contribution. Indeed, the pay gap widened last year
precisely because women received lower bonus payments than men.

The good news is that underlying labour market developments seem to be
shifting in women’s favour. During the past 20 years women’s share of total UK
employment has grown from 40 to 45 per cent, while the proportion of women
without formal skills has shrunk from 45 to 17 per cent, gradually opening up
the range of jobs from which women can choose. The proportion of female
managers has also grown considerably during the past decade from fewer than one
in 10 to more than a third, according to Chartered Management Institute

Yet despite this, the need for further encroachment by women into the
high-paid bastions of UK industry is pressing if the gender pay gap is to
narrow significantly. Women still make up only 7 per cent of all board
directors of FTSE 100 companies and are not in enough senior positions to
challenge indirect or unconscious pay discrimination.

CIPD surveys indicate that few organisations have taken action to rectify
differences in male and female earnings and fewer than half carry out pay
audits. This undermines the ability of organisations – and society as a whole –
to realise the potential of all in the workforce and enable women to find their
rightful place in the sun.

By John Philpott, Chief economist, CIPD

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