Narrowing gender pay gap would increase GDP

Rhys Taylor explores the reasons why women’s work is not only never done, but doesn’t get what it deserves either

The gender pay gap that exists in the labour market remains a complex issue. There are question marks over the reasons it exists, what should be done about it, and what the benefits of narrowing the gap would be. Some claim the gap is narrowing, that some women are now earning more than men, and that generally the gap is inevitable due to reasons such as occupational segregation, pre-existing female responsibilities and the undervaluing of that work, and the concentration of women in part-time employment. However many forget that it is not only an issue of the ‘gender pay gap’ itself, but also of women receiving equal pay for equal work and other disadvantages women face in employment.

The gender pay gap is the calculation of the difference in the average earnings of women and men. What is generally thought of as ‘the gender pay gap’ is the difference in average hourly earnings of full-time male and female employees. In 2011 the full-time gender pay gap was 10.5 per cent.

The gap is calculated by the Office for National Statistics for the Annual Survey of Hours and Earnings. Median earnings are used because they are unaffected by monetary values at the extremities of earnings, such as changes in the earnings of a small percentage of high earners within the labour market.

Unequal pay can mean a loss of earnings over the entirety of a woman’s lifetime, which is not only a loss to the individual, but also a loss to her family.

The right to equal pay means that there should be no difference in the contractual terms of a woman and a man doing the same work. The law on equal pay is now set in the ‘equality of terms’ clause of the Equality Act 2010 act.

The gap primarily exists for four main reasons: Occupational segregation; pre-existing female responsibilities; the undervaluing of the work and responsibilities carried out by women; and the concentration of women in part-time employment. Occupational segregation is sometimes implied as a phenomenon which makes the gender pay gap inevitable in the labour market.

Younger women and women at the lower end of the earnings’ scale are largely exempt from the gap, but at the upper end of the earnings scale the gap shows little sign of closing, particularly for older women. Part-time work analysis shows that women experience a pay penalty – these are women who missed out on educational and career opportunities now available to younger generations of women.

In addition to this, on average men gain more from education than women, and the gender pay gap widens as experience increases. In simpler terms, men gain more from investment in themselves than women do.

Improvements in maternity, parental rights, childcare and an expansion of flexible working arrangements mean that younger women spend longer periods in paid work, working longer hours than women before them. Yet their earning capability continues to fall behind that of men.

In the three months up to April 2012 the UK labour market consisted of some 13.60 million men and 7.72 million women in full-time employment, and 2.11 million men and 5.85 million women in part-time employment. While these figures highlight the large contribution women make to the UK economy, estimates have suggested that equalising men’s and women’s work and employment levels could increase the UK’s GDP by as much as 35 per cent.

This demonstrates how the narrowing of the gender pay gap would benefit not only the individual and her family, but also the UK economy as a whole.

The later onset of motherhood, improvements in maternity and parental rights and childcare, and improvements in flexible working arrangements, mean that more women than ever before work hours comparable to those worked by men. The improvement of and expansion in flexible working arrangements also means that men are able to share the responsibility of parenthood; therefore the pay penalty for motherhood appears to be lessening.

Closing the gender pay gap requires tackling all of the four main causes. In particular, the part-time and full-time gaps call for varying approaches – it is not a one-size-fits-all issue.

Rhys Taylor is a Liberal Democrat Councillor in Bangor

2 thoughts on “Narrowing gender pay gap would increase GDP

  1. So women have to suffer for incompetent men’s management of the economy. How fair is that!

  2. Closing the gender pay gap would be an excellent thing for fairness and equality of opportunity – reason enough to support it. But it could increase GDP only if it somehow increased output. If you increase anyone’s pay and output is the same, the increase means either profits or someone else’s pay goes down. It is hard to believe that equalising pay would somehow increase GDP by 35 per cent as the article says. If just paying people more increased output we could all be rich as Croesus. The case for treating working women fairly is strong enough. It does not need to be reinforced by fantasy arguments.

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