The gender pay gap is not a problem. It is the result of free choices

Len Shackleton // 9 March 2017

Justine Greening, the women and equalities minister, is being criticised because she has rejected most of the 17 recommendations of the Women and Equalities Select Committee for ‘addressing the structural reasons why women are paid 18 per cent less than men’.


We should perhaps take issue with this much-touted figure for starters: the Women and Equalities Committee emphasises the 18% figure, which reflects the gap in hourly median earnings for all employees, whether full-time or part-time. The Office for National Statistics rightly prefers to compare like with like: for full-time employees, the hourly pay gap is just 9.4%.


Anyway, back to Ms Greening. She is stuck with a government commitment to ‘end the pay gap in a generation’, one of those politicians’ promises which seem safe enough to make as our here-today, gone-tomorrow rulers won’t be around to garner the plaudits for success or (more likely) face the flak for failing to deliver. She was accordingly expected to go along with the recommendations, but failed to do so.


Many of the recommendations are pretty bland. How about Recommendation 5? ‘The Department for Business Innovation and Skills (as was) should immediately facilitate a campaign outlining the productivity and business benefits of flexible working and flexible hiring, sharing best practice within sectors’. Or Recommendation 8: ‘The Government should commission research to examine how decisions about taking time out of work for caring are shared between men and women. The Government should use this evidence to support parents in considering the long-term implications of their decisions around the time they take parental leave’. These recommendation must have had even the Committee yawning.


But Ms Greening, or the Treasury, has woken up to the fact that some of these measures would have a significant cost. For instance Recommendation 6(c): ‘The three months’ non-transferrable paternal leave should be paid at 90% of salary (capped) for four weeks and then at the same level as Shared Parental Leave’ and Recommendation 6(d): ‘Payment of paternity leave should increase to 90% of salary (the same as maternity pay), capped for higher earners’. Provisional estimates suggest that these measures would cost hundreds of millions of pounds.


Committee members are apparently outraged that these measures have been rejected. They are apparently vital to persuade men to take on a bigger share of childcare and thus let women return to work earlier and enable the gender pay gap to narrow.


But Ms Greening is right to reject these measures, which would have a trivial or zero effect on the pay gap. Such costly proposals are typical of the woolly thinking around these issues.


Broad-brush government actions can sometimes have an impact on the pay gap. The original Equal Pay legislation in 1970 did unarguably have the effect of raising female pay relative to that of men as paying differentially for identical work became illegal. Similarly the European Equal Pay Directive, which broadened the scope of comparisons between men and women to ‘work of equal value’ had a measurable impact. It also seems likely that the advent of the national minimum wage had a differential effect favouring women, who constitute a large proportion of the low-paid workforce.


However, as I pointed out to the committee in a submission eighteen months ago, few more targeted measures have had a clear effect on reducing the gender pay gap, which has fallen over time in many countries mainly as a result of factors such as the changing educational ambitions and achievements of women, changes in industrial structure (favouring brainwork rather than manual labour), changes in demography (fewer children, longer lives) and lifestyle changes (more single people, easier divorce, cohabitation, gay liberation). I have no doubt it will continue to fall further, but politicians need to remember that this aggregate statistical artefact is not and never can be under their control. It depends on the individual and family decisions of 16.9 million men and 14.9 million women rather than the efforts of the government in spending bucketloads of taxpayers’ money or browbeating employers.


What would be needed to close the gender pay gap completely? Men and women would need to have the same qualifications, in the same disciplines, be employed in the same types of occupations in the same types and sizes of firms, have the same preferences between paid work and home work, share domestic tasks equally and take the same amount of time out of the workforce, have the same career plans and expectations, value the same attributes of jobs, take the same amount of time travelling to work, retire at the same age and so on and so on.


It is arguably just as likely that in a generation there will be a gender pay gap in favour of women as that there will be complete parity between the pay of men and women. What would our politicians say to that?

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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