Realist, not conformist analysis of the latest financial, business and political news

There Is No British Gender Pay Gap – Not Really

Whether or not there is a gender pay gap – women being paid less than men – depends upon our terms of reference. Women do, on average, receive less money in their wage packets than men. That is not, by any means, the end of the story.

For example, it could be that women generally work fewer hours than men. Something which would show up when we compared weekly pay to hourly. And women generally do and this does show up. That’s not the end of it though. We also see differences in hourly pay.

But does that mean that women are paid less than men for doing the same job? We do see some evidence of this, yes. It’s not all that obvious and it runs both ways. Female nurses tend to get higher pay than male. Female ditch diggers rather less. Given what we think we know about male and female propensity for nurturing and what we definitely know about musculature this might not surprise. Across other jobs the male / female pay gap isn’t there to any great statistical extent. OK, depends upon which job you look at but there isn’t much of it.

Perhaps it’s that women do different jobs? Wouldn’t be any great surprise if there was some gender sorting in what people were interested in doing. Maybe they take career breaks and this means fewer reach the top of the greasy pole. This is obviously true.

So, if our definition of a gender pay gap is that there’s a difference in outcome then there is one. If our definition is the more logical, well, are women paid less just because they’re women, perhaps not.

At which point some more evidencee:

Although the average woman’s salary in Britain is 29% lower than the average man’s, the bulk of that gap results from differences in rank within companies, firms’ overall compensation rates and the nature of the tasks a job requires. According to data for 8.7m employees worldwide gathered by Korn Ferry, a consultancy, women in Britain make just 1% less than men who have the same function and level at the same employer. In most European countries, the discrepancy is similarly small. These numbers do not show that the labour market is free of sex discrimination. However, they do suggest that the main problem today is not unequal pay for equal work, but whatever it is that leads women to be in lower-ranking jobs at lower-paying organisations.

What’s causing it is important because we must know the cause before we can come up with a solution. Or even, decide whether we need a solution or not. As far as we can see, same job, same place, same pay. Whatever gap there is being driven by different job, different place. And quite how we’re supposed to equalise those in a market economy isn’t clear. Further, presumably at least, those choices of job and place are driven by the employee.

Which does lead to an interesting measurement problem. We know that such things as security of tenure are valuable, maternity pay rules, sick and holiday pay, flexibility of working hours. But these are not things that are being measured in our listings of male and female pay. If we did include them I’d be surprised not to see a narrowing of that gross gap to very much less, possibly nothing. But that, as ever, is to pursue a local bugbear, measurement.

The larger point here is that by at least one definition there is no gender pay gap. And since this is the only definition of it that I think important, as there is no problem no action need be taken.

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5 years ago

Actually there is a significant gender pay gap – when you include pensions (deferred pay according to the TUC) women are paid more. There are two components of this – firstly nominally equal rights under a Deferred Benefit Scheme are worth more to a woman who receives the pension for longer (typically two to three years if the retirement age is the same for both genders, eight years if women’s NRD is 60 and for men it is 65), and secondly because women are much more likely to be in a public sector gold-plated pension scheme. The true cost of… Read more »

Hallowed Be
Hallowed Be
5 years ago

If you’re right we’d also expect some preferential selection not just of employers non salary benefits but of partners too. And that’d be easier to measure.

5 years ago

Less of an issue in U.K. but since moving to North America wife and I are much more conscious of the impact of job decisions on benefits and impact on family as a whole.
Current job isn’t best paying but has 20days leave starting and good benefits so I can forgo some pay in that case

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