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How Many Bridges does it take?

UK Employment rates and the Gender Pay Gap

Photo by Claudio Hirschberger

According to the McKinsey Global Institute:

Bridging the gender gap in the United Kingdom could increase GDP by billions of pounds over the next decade and add 840,000 female employees to the economy.

The 2016 McKinsey report on advancing women’s equality is not the first to predict spectacular economic growth if more women enter the UK labour market, work harder and for longer. In 2013 a study published by the newly formed Women’s Business Council argued UK GDP growth would increase 10% by 2030 if there were as many women in the labour force as men.

UK Employment Rates

Both the McKinsey and WBC’s approaches to the UK’s employment gender gap view the mobilising of women’s labour as a means to boost future economic growth. ‘There is an overwhelming business case for maximising women’s contribution to growth,’ declared the WBC. What matters here is the growth of the UK’s GDP rather than improvements in the rights and protections of women as workers, especially those employed in low paying occupations such as council cleaners, road sweepers, and restaurant workers. McKinsey suggest£150 billion could be added to UK’s GDP by 2025. Women’s advancement they claim is the key to GDP growth. But their arguments are circular and go around and around. Women advance, GDP grows. GDP grows, women advance. If women’s advancement depends upon previously excluded women joining the labour force then why do so many women depend on payday loans? What kind of advancement is it for women when GDP grows and their income falls or is insufficient to cover living costs? It is not clear what McKinsey mean by women’s ‘advancement’, especially in relation to the UK’s wealth inequality data that shows the top 10% of households own two thirds of all wealth with men owning more financial and private pension wealth than women. See here.

Too often in the past maximising growth economists viewed women as an undifferentiated group whose economic progress improved their living standards steadily despite differences in income. Take the way the long term employment rates of UK women have been calculated. According to the Institute of Fiscal Studies between 1977 and 2017 the employment rate of UK women aged between 25 and 54 rose almost continually from 57% to 78%. The UK’s Office of National Statistics estimates show a similar trend with the employment rate for females aged between 16 and 64 rising from 55.5% at the end of 1977 to 70.9% at the end of 2017. Now the UK government tells us -for the year 2017:

The difference between rates of employment for Pakistani/Bangladeshi women (38%) and White British women (73%) was 35 percentage points.

The employment rate for white British women here is only 3% short of being twice that of Pakistani/Bangladeshi women. Such a disparity contradicts the notion that the gender gap in all forms of employment can be expressed as a single gap rather than a plurality of gaps. For example, there are differences in employment rates between white British women and white EU migrant women, and differences between these groups and white British men and white EU migrant men. These differences need to be measured and included in government employment statistics.

The most marginalised women in the UK economy are not only affected by the intersection of gender with ethnicity. Their maternal and marital situations, class and citizenship statuses also influence their employment rates which are often discontinuous and interrupted. LSE research found that low paid EU migrant women with children were disadvantaged by gaps in their employment history and gender inequalities at work. This affected their rights to reside in the UK. See here.

The Gender Pay Gap

The UK’s Office of National Statistics (ONS) defines the gender pay gap (GPG) as the difference between male and female gross hourly earnings expressed as a percentage of men’s earnings. See here, Table 6. The median percentage estimate for the year 2004 (after the series break) for full time and part time employees is 24.7%. For the year 2017 the percentage is down 6.3% to 18.4%. This small decrease does not represent a continual reduction between 2004 and 2017 however. For 2007 the estimate is 21.9%. This rises to 22.5% in 2008, the year the credit crunch began.

The Annual Survey of Hours and Earnings estimates do not include the gender pay gap for overtime earnings. Why are overtime earnings excluded? Is the GPG statistically insignificant? I decided to explore these questions further by calculating the median hourly overtime earnings GPG (for all employees) for the year 2005. The results were surprising. The median hourly earnings estimate for males with overtime is £10.91. This is £10.77 without overtime earnings. Females £7.97 and £7.94. The difference between male and female earnings estimates without overtime is £2.83. GPG = 26.2%. With overtime £2.94. GPG = 26.9%. (2.94 / 10.91 = 0.269 * 100 = 26.9%). The gap between the two GPG rates = 5%.

Deducting median hourly earnings without overtime from earnings with overtime reveals male earned £0.13 in 2005. Females an extra £0.03. The difference = £0.11. The GPG = 84.6%! (0.11 / 0.13 = 084.6 * 100). Thus there is a significant gender pay gap for median hourly overtime earnings. One that is much bigger than for non overtime earnings. This conclusion is confirmed by the following graph:

Figure 1. UK median hourly overtime earnings 2007 and 2017.

Between 2007 and 2017 women did not earn above £0.03 for overtime. Their estimated overtime earnings hover between £0.00 and £0.03. Men’s overtime earnings range from £0.9 to £0.24. 2012 was the year of the London Olympics which may have contributed to men’s higher overtime earnings. Another factor might have been the need to compensate for the falling labour income share. See here. But women’s overtime pay declined to zero in 2012. Why? If more men are working overtime does that pressure women to work less overtime? Do women work more in the home when men spend more time earning?

Figure 2. UK Gender Pay Gap for overtime earnings 2005–2017.

Automation

Ending the all the UK Gender Pay gaps cannot be viewed independently from policies that make it harder for women to access the labour market and opportunities to earn wages that are sufficient to cover living costs, raise families and save for pensions. The market alone will not assist women when it can take advantage of the gender division of labour to pay women less, exploit divisions between women, skew overtime routines and schedules to benefit men and profit from exploitative payday loans. As more jobs become automated women workers need to identify their interests vis-a-vis robot manufacturers, GDP maximising economists and government officials who view issues such as ending the GPG as a means to turbo charge an economy for the few, rather than seeing that economic, financial and social justice prevails for all UK based women.

Citizen, Voter, Reader. Critic of social exclusion practices and unequal justice.

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