A lack of affordable childcare in the UK is forcing women out of work and hampering career progression, causing the UK to fall five places in a global index of women’s employment outcomes.
According to PwC’s annual women in work index, which looked at data from 2021, the UK ranked 14th for women’s employment outcomes among OECD countries, down from 9th in 2020.
The UK’s gender pay gap widened by 2.4 percentage points to 14.4% in 2021, four times the average increase across the OECD as a whole. This, coupled with a 0.4 percentage point decline in the female labour force participation rate, led to the UK slipping down PwC’s list.
The average OECD gender pay gap was 14%, based on median hourly earnings.
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The professional services firm said rising childcare costs were pricing many women out of work. In 2021, childcare costs relative to average income were one of the highest among OECD countries, representing nearly a third of the income of a UK family on an average wage.
In Germany, for example, childcare costs represent just 1% of household income on average.
PwC suggested that encouraging fathers to take more time off following the birth of a child would mean an additional 720,000 women in the UK could remain in full-time employment, over a 20-year analysis period.
Rates of postpartum depression would also likely fall, benefiting an estimated 230,000 mothers and 240,000 fathers over the analysis period.
Larice Stielow, senior economist at PwC, said: “The motherhood penalty is now the most significant driver of the gender pay gap and, in the UK, women are being hit even harder by the rising cost of living and increasing cost of childcare.
“With this, and the gap in free childcare provision between ages one and three, more women are being priced out of work. For many it is more affordable to leave work than remain in employment and pay for childcare, especially for families at lower income levels.”
Stielow said an 18-year-old woman entering the workforce today will not see pay equality in her working lifetime, as it would take more than 50 years to close the gender pay gap at the current rate of progress.
Zlatina Loudjeva, a partner in PwC’s international development team, said: “We can no longer talk about the impact of Covid-19, it is clear that the cost of childcare in the UK and attitudes towards childcare need urgent focus and action, with government and business to work together to help mitigate the confluence of shocks that have occurred over the last few years so that women are not priced out of the workforce.
“There is no panacea, nor a one-size-fits-all policy, that will solve the problems for women at work today. We should consider enhanced parental leave policies and more flexible working so that all parents can balance work and caring responsibilities, alongside tackling the cost of childcare, to help create a more equitable and prosperous society for all. The index shows that this is doable and a number of OECD economies are leading the way through successful interventions.”
PwC found Northern Ireland was the highest performing region for gender equality. Northern Ireland’s pay gap sits at just 5%, which is a third of the size of the gender pay gap for the UK overall.
Luxembourg was the top OECD country for women’s employment outcomes, followed by New Zealand and Slovenia. Hungary made the greatest improvement in its ranking, rising nine places on the index from 22nd to 13th place, while Switzerland saw the largest drop in ranking, falling from 14th to 20th.