A general definition for the gender pay gap is the percentage difference in hourly earnings between men and women across all jobs, not a comparison of the same jobs directly and not including over-time (ONSa, 2019). Figure 1 explains the difference in wages as a percentage between men and women, men always having a higher wage, across the years of 1997-2019. In the UK in 2019, for all employees the average man was paid 17.3% more than the average woman, for full-time employees the gap is less being at 8.9% in favour of men (ONSa, 2019). The trend of the gender pay gap has been, on average, decreasing over the last 22 years, for full-time workers, in 1997 the gap was 17.4%, the data suggests a steep narrowing of the gap in the 2000s decreasing to 10.1% in 2010 and then further decreasing at a slower rate to 8.9% in 2019, noticeably in 2018 the gap was at its lowest at 8.6% (ONSa, 2019). The UK’s gender pay gap is 2.77 percentage points greater than the OECD average, see Figure 2, the UK Government Equalities Office is working alongside business leaders to remove any gender pay gap (Ehrenberg-Shannon et al., 2020).
There are multiple theories on the evolution of a persistent gender pay gap. The human capital approach is built around a basis that an average woman’s human capital is on average less than that of the average man (Dechter, 2014). For example, women are more likely than men to leave the workforce to look after their family due to social pressures; if they choose to re-enter the workforce, they have most likely missed valuable years of experience, missed opportunities of promotion and even have diminished skills over the time when they were not utilising them (Dechter, 2014). Thus, someone in this position is likely to have a lower human capital than someone who remained in the workforce and chose not to take maternity leave or even quit their jobs for a family. Women receive a 5% to 10% wage penalty as a result of having one child on average (Dechter, 2014). Women are also more likely to work part-time jobs; part-time workers hourly average wage is £9.36 compared to £14.31 for full-time workers, interestingly, part-time women workers earn an average of £9.47 an hour compared to part-time men workers earning on average £9.07 an hour (Athow, 2019). Industries in which women are more likely to enter often require specific training and social pressures dictate women to stick to these sectors, this means that women tend to have less occupational mobility and therefore do not tend to benefit moving occupation to seek a higher wage (Fitzenberger and Kunze, 2005). The industry in which a woman enters can also dictate how big of a pay gap they receive, for example, see Figure 3, the pay gap in the financial and insurance activities sector is 22%, however, in the food and accommodation sector, the pay gap is 1% or less (Ehrenberg-Shannon et al., 2020).
Discrimination has occurred in the UK labour market, which can cause somewhat of a pay gap; the Becker taste-based model tries to explain why there is discrimination. (reference) The model’s basis is that there are two types of workers, males and females, an employer who discriminates gets disutility for employing a female for example over a male; giving the female workers a discrimination coefficient, which has the effect of increasing their wage rate to the discriminatory firm (Leonard and Becker, 1957). Woman’s wage= Ww+d, man’s wage= Wm, where Ww= women’s paid wage rate, Wd= men’s paid wage rate and d=discrimination coefficient (Leonard and Becker, 1957). If men and women workers are perfect substitutes, this will result in complete segregation in the workforce, where firms who prefer men will only hire men as their relative wage is lower than the equivalent woman, and vice-versa (Leonard and Beckre, 1957). A woman must therefore decrease their wage for it to be equal to a man’s wage bearing in mind the discrimination coefficient so that Ww+d=Wm which results in a gender pay gap with women receiving a lower wage than men, the wage of a woman is therefore equal to the wage of a man minus the discrimination coefficient (Leonard and Becker, 1957).
The UK government addresses the gender pay gap by legislation such as, from 2017, any company with 250 employees or more are subject by law to release their figures on the pay between genders to ensure that the company is not unfairly paying either men or women (Government Equalities Office and Advisory, Conciliation and Arbitration Services, 2020). Discrimination is also controlled in the UK by legislation such as the Equal Pay Act 1970, stating that is illegal to discriminate against workers simply because of their gender (UK Government, 1970).
In the year 2020 a global pandemic hit in the form of Coronavirus-19, the UK economy, see Figure 4, in the second quarter of 2020, contracted by 17.2% of GDP (ONSb, 2020) due to mass lockdowns, less travel and fears of catching the virus. The economy in GDP, as of September 2020, see Figure 5, is still 8.2% below the February 2020 level (ONSb, 2020). Many businesses were closed temporarily by UK legislation, decreasing their revenue and in turn resulting in some cases of employees being made redundant and losing their jobs. Attention to the gender pay gap has been perceived to be a low priority for the UK government throughout the pandemic, as the legislation stating for businesses to disclose their gender pay gap information has been lifted for the year, effecting 10,000 businesses of which 5,822 businesses still filed the reports (Bell, 2020). The data set, from the businesses that submitted, from the year 2019-2020 shows that the average gender pay gap has increased from 11.9% to 12.8% (Bell, 2020).
Due to the pandemic, under UK legislation, schools and day-cares have shut, this has increased pressure on parents to be able to look after their children in weekday working hours; as a result, parents have changed their working hours to account for this (Collins, 2020). Pre-existing social pressures dictate that women are more likely to pick up the extra parenting hours, in the UK reporting an extra 60% of childcaring needs during the pandemic; potentially leading to less participation from women in the labour market (Hupkau and Petrongolo, 2020). Figure 6 represents how women have increased their weekly childcare hours from 17 hours to 26.5 hours, a 9.5 hours increase, whereas men have increased their weekly childcare hours from just less than 8 hours to 14.8 hours, an extra 6.9 hours, the total displacement is a gender differential from 9.2 hours pre-coronavirus to 11.7 hours during coronavirus (Hupkau and Petrongolo, 2020). An increase in parenting hours mainly on women, has directly affected their ability to work without being interrupted, and as a result has potential for the gender pay gap to further increase (Topping, 2020). Mothers are 9% less likely to still be in paid work than fathers, experience more interruptions if they work from home due to childcare responsibilities and in many cases have reduced their working hours and these key elements indicate massive potential for an increased gender wage gap (Topping, 2020).
The sector in which one is employed also has an effect on the impact of coronavirus and whether they can work from home, they are a critical worker, or their job is temporarily suspended (Hupkau and Petrongolo, 2020). The service industry has been majorly affected due to social distancing rules and women tend to be over-represented in these jobs, workers as a whole have had no way of working from home and are not deemed critical workers; however, women are also over-represented in jobs that are deemed critical to combatting coronavirus and also jobs that can be performed at home in general, therefore it is hard to judge if women’s labour market outcomes have been hampered more or less than men’s due to the gender segregation among different sectors (Hupkau and Petrongolo, 2020).
In conclusion, the global pandemic had an initial impact on the gender pay gap, the data released on the gender pay gap from 5,822 businesses shows that the pay gap increased from11.9% to 12.8% over the year. The extent to which this trend continues is difficult to say as the pandemic is not over yet, the 2020-2021 figures will reveal more truth, but it is safe to say that women have been more disadvantaged than men in the labour market due to primarily childcare responsibilities. Schools and day-cares being shut has shifted a greater parenting time per day onto primarily mothers which has decreased their uninterrupted work time. Some of the results have been women leaving the workforce or reducing their working hours, both of these will in the future effect their human capital and increase the gender wage gap, for example they would probably be less likely for promotion. It is safe to say that the pandemic has increased the gender wage gap and most likely will continue to do so.
2023 update
The latest statistics on the gender pay gap can be found here: Gender pay gap in the UK: 2022
Among full-time employees the gender pay gap in April 2022 was 8.3%; this was 7.7% in April 2021 and 9.0% in April 2019 (pre-coronavirus (COVID-19) pandemic). Note that these stats are for one month (April) only.