The Mindless Gap: Why Gender Pay Inequality Harms Us All

It’s a tough ask for 2016 to defend its growing reputation as ‘the worst year ever’, with the death of several much-loved stars and (for some people) the shock of two popular votes defying the political polls. But women really do have one big reason to wish the rest of the year away: from today until the end of December, women effectively work for free.

That’s the finding from the Fawcett Society, which has calculated that this year’s gender pay gap for full time workers stands at a indefensible 13.9 per cent, down only slightly from last year’s 14.2 per cent. As The Fawcett Society predicts, at this snail’s pace it will take 60 years to close the gender pay gap, by which time a young woman starting her first job now will be well into retirement.

It should be uncontroversial that women need to be justly rewarded for the work they do, but now there’s even greater impetus to act, with growing evidence that gender equality plays an important wider role in reducing the overall economic inequality that does so much damage to our health, education, economy and social mobility.

Here in the UK we have some of the most unequal incomes in the developed world. This poor record has not gone unnoticed by economic heavyweights, who have highlighted the strong links between gender inequality and how economically divided a country is. For example, the World Economic Forum identifies our gender pay gap and relatively poor rates of female participation in the labour market as major barriers to inclusive growth.

The IMF has also shown that gender inequality and income inequality are strongly interlinked, even after controlling for other drivers of income inequality. Specifically, larger gaps between men and women see higher income shares going to the already-rich top 10 per cent, and lower income shares going to the poorest 20 per cent.

At the heart of the problem is the reality that our labour market is so divided on gender lines that in some sectors either men or women comprise most of the workforce. There’s no inherent reason that women should make up 4 in every 5 care workers. There’s no logic behind the fact that 90 per cent of people you come across in science, technology, engineering and manufacturing are men. The concept of equal value – that jobs mostly done by women are paid less than those mostly done by men – poses a broader question for society about which work, and whose work, we value. For example, what exactly justifies someone on the minimum wage, caring for our loved ones (so almost certainly a woman) being paid a mere fraction of 1 per cent of a chief executive’s salary? That’s to say nothing of the under-representation of women in boardrooms.

So what’s to be done? Making the problem more transparent at source, with new legislation requiring mandatory gender pay gap reporting by large companies, is a very promising start, though it doesn’t particularly address the problem of sectors divided on gender lines.  Importantly, if transparency is seen as a good start on tackling the gender pay gap, there’s little reason why the same can’t apply to the problem of excessive overall pay ratios. The Equality Trust is calling for legislation to require companies to publish their top to median pay ratios, and we also encourage them to publish the ratio between the highest- and lowest-paid, to acknowledge the contributions of employees across the pay scale.

It’s obvious that women matter for the shape of our economy and society: we’re half the population. And yet despite some encouraging progress, there are signs that closing the gap is far from a political priority: the Women and Equalities Select Committee has been waiting for five months for the Government to respond to its recommendations. With the knowledge that the whole of society benefits from shrinking the gender pay gap, business as usual just won’t do.

Lucy Shaddock, Public Affairs & Campaigns Manager