Cost of the cuts 3: Welsh women shock absorbers for UK policy

Adele Baumgardt argues that the disproportionate impact of the cuts will drive back 40 years of gains women have made in Wales

There is no doubt that the UK Government’s fiscal policies and strategies to manage the financial deficit is impacting disproportionately on women. Even before the current financial situation, despite steady progress in realising women’s economic rights, women in the UK continued to experience entrenched economic inequality. For example:

  • Women experience a full-time pay gap of 14.9 per cent.
  • 64 per cent of low paid workers are women.
  • Women’s average personal pensions are only 62 per cent of the average for men.
  • 92 per cent of lone parents – a group more likely to live below the poverty line – are women.
  • The costs of childcare in the UK are amongst the highest in the world, heavily limiting women’s choices to take up paid work.

Dealing with the deficit

This is the third of a weeklong series of articles dealing with the fall-out in Wales from the Westminster Government’s efforts to reduce the budget deficit. Tomorrow Alexandra McMillan, Public Affairs Manager for RNIB Cymru, says changes to criteria for allocating the new Personal Independence Payment threaten to drive people into depression.

Since the comprehensive spending review carried out in 2010, research has highlighted how cuts to public sector spending and other savings measures such as welfare reform will disproportionately affect women. For example, the UK Women’s Budget Group has shown that last month’s budget’s above inflation increase in the personal allowance for those under 65, from £8,105 in 2012-13 to £9,205  in 2013-14, will benefit more men than women. This is because women make up the majority of people with no earnings or earnings below the current personal allowance.

Those losing from changes to the higher personal allowances for people aged 65 to 74 and 75 and over will be men. This is because generally they have higher pensions than women. That so few losers are women demonstrates the shockingly low level of women’s pensions.

Implementation of the Welfare Act will have a greater impact on women than men as they are more often dependent on welfare benefits. On average benefits make up one fifth of women’s income compared with only a tenth for men.

Women make up over 70 per cent of those employed in the public sector, and the public sector in Wales accounts for a third of the economy.  Any job cuts or pay freezes will affect women more than men and job losses will be greater amongst women than men.  The Office for Budget Responsibility has increased its estimate of how many jobs will be lost in the public sector between the beginning of 2011 and the start of 2017 to 730,000 across the UK. Women’s unemployment is already at the highest level for 25 years. Moreover, women account for two thirds of the latest monthly increase in unemployment at a UK level.

Women make up the majority of those on the minimum wage. The pre-Budget announcement freezing the minimum wage for young people and only increasing it for others by 11p means a cut in real terms for women earning the minimum wage.

In addition we have the proposal to introduce ‘regional pay’ in the public sector, to reduce the gap between earnings in the public sector and the private sector. Women on lower incomes, such as home helps and dinner ladies, will be disproportionately affected.

We do not yet have a detailed analysis of how all of these policies will affect women in Wales. However, we already know that Welsh women are more dependent on employment in the public sector and that due to low wages  more women in Wales are likely to be on the minimum wage. We also know that we have an aging demographic profile which indicates that we will have a greater proportion of older people living in Wales than the rest of the UK. Given the analysis at a UK level of the changes to pensions, income and demands placed on the NHS, we can safely assume that women in Wales will face greater financial hardship and reduction in services than men.

Childcare provisioning in Wales is amongst the poorest in the UK and is proportionately more expensive given the low level of wages. We have a greater history of relying on extended family and informal caring than the rest of the UK. Given the extension of retirement age, the loss of pension income, longer life expectancy and dependency on welfare, women in Wales are now less likely to be able to depend on this extended, informal caring network.

The Welsh Government has implemented some policies to try and alleviate these outcomes. However, as yet more than 80 per cent of the welfare reform policies still to be implemented, so the position will become dramatically worse in the next years.

There is a real danger that women’s economic independence and many of the gains made for women’s equality of the last 40 years will be lost. Women’s income, jobs and their ability to manage employment and caring for family, friends and neighbours is seriously under threat. We are allowing women to act as shock absorbers for the cuts, bearing the brunt of job losses, reduced benefits and the rollback of the NHS and other public services.

Withdrawing state support risks further entrenching the already unequal distribution of labour as women take on increasing levels of unpaid and informal care work. In turn, this limits women’s opportunities to undertake paid work and to fully engage in public and political life – including in positions of power and influence.

The ‘universal credit’ system of welfare payments will actively discourage mothers in couples from seeking paid employment where their partner is already in work or seeking work. As the Department of Work and Pension states, universal credit has been designed primarily to improve ‘work incentives’ for the household.  As it says, “work incentives for first earners have been given priority over second earners”. Given that fewer women are ‘first earners’ – because they are both far more likely to have taken time away from the labour market to raise children and because they still earn, on average, less than men – this reform risks undermining the prospects that mothers in couples will seek paid work.

It is clear that hundreds of thousands of women will lose their jobs in the coming year and there is a risk that a disproportionate number of them will be women in Wales. The number of unemployed men has begun to fall, but the number of women who are unemployed is rising.

Women in Wales are facing a serious challenge to their economic independence and way of life. The costs will huge. However, ensuring that those making financial decisions and designing economic policies in Wales are aware of the differences between the way men and women experience and respond to economic initiatives is free.

Adele Baumgardt is a consultant in equal opportunities: [email protected]

Also within Politics and Policy