What is the gender pay gap?
We hear about the gender pay gap a lot in the media – but what does it really mean and how bad is it? Here's a straight-forward guide…
Yes it's the 21st century, but we're still a long way off achieving true equality in the workplace. Research has shown that women, ethnic minorities and disabled workers are all paid significantly less than other groups, and that white, non-disabled men still dominate senior management positions in many industries.
Shockingly, women are paid 17% less than men in the UK. Last year, 10th November marked Equal Pay Day; the day women effectively start working for free relative to men because of the gender pay gap. That's a whole 51 days of unpaid work.
It's an issue that effects everyone from recent graduates to senior workers – in fact, Save the Student found that the gender pay gap begins even at university, with women anticipating a salary £3,325 less then men. Research has also shown that women from pretty much all degree subjects are earning less than men a year after graduating,
But tackling pay gaps is a lot more complicated than just paying everyone the same – there's a whole range of factors that create them. Here's your complete guide to exactly what pay gaps mean, why they exist and most importantly, what is being done.
What’s on this page?
Is there a gender pay gap in the UK?
People seem to have lots of different opinions on the gender pay gap in the UK, and some will claim it doesn't actually exist at all.
However, research shows that the gender pay gap in the UK very much exists – it officially stands at 17.4%. The Office for National Statistics (ONS) reported that:
The gender pay gap for full-time workers is entirely in favour of men for all occupations.
But why it exists, and what we can do about it, aren’t as simple as they might seem. Why? Because the gender pay gap isn’t quite the same as equal pay.
What is the difference between the gender pay gap and equal pay?
People often assume the gender pay gap is caused by men and women getting paid different amounts of money for doing the same job – while this is part of the problem, the gender pay gap is a much more complex issue.
- Equal pay As stated in the Equality Act 2010, it is illegal to pay men and women differently for performing equal work.
- The gender pay gap This measures the difference between men and women’s average earnings across an organisation or the labour force as a whole.
This basically means that the gender pay gap is caused by much more than men and women being paid differently for the same jobs – things such as the different types of jobs men and women tend to work in are also a big factor. Equal pay is a legal issue, while the gender pay gap is a much broader problem in society.
How is the gender pay gap calculated?
As you can imagine, calculating something as complex as the gender pay gap isn’t exactly straight forward, and figures vary depending on what method is used. For example, you’ll see different numbers cited depending on whether the average is calculated as a median or mean, or whether part-time jobs have been included.
The official figure is based on the average hourly pay of workers, excluding overtime hours. It is presented as a percentage of men’s earnings which can be a little misleading. If the pay gap was at 50%, for example, men would be earning twice as much as women do.
How big is the pay gap?
The official figure for the gender pay gap in the UK is 17.4% – this is based on the mean average hourly earnings of all workers, both full-time and part-time.
This basically means that for every £100 a man earns, a woman earns £82.60. While this is an improvement on previous years, it's obviously still a shocking figure and change is very much needed.
However, it’s important to remember that the gender pay gap isn't the only pay gap that exists.
BME workers, for example, are often paid significantly less, particularly women of colour. Pakistani and Bangladeshi women are reported to face a 26% pay gap in comparison to white British men, while black African women experience a full-time gender pay gap of 19.6%.
The disability pay gap in the period 1997-2014 was 13% for men and 7% for women. (This is based on median rather mean average pay. The current gender pay gap equivalent stands at 9.1%.)
While the stats are important, we need to remember that behind the numbers are real people struggling against prejudice, a lack of support and access to opportunities.
Is there a graduate gender pay gap?
A lot of people think of the gender pay gap as something that won’t affect them until they’re much older. But our National Student Money Survey found that the pay gap can show itself before you even enter the workforce.
We asked over 2,000 UK students to estimate how much they’re anticipating their starting salary to be when they leave uni.
Both men and women students were expecting salaries well below the national average, but women were predicting salaries £3,129 less than men.
Other research has shown that across almost all degree subjects women are earning less than men in the first year after graduation. Even in nursing, a subject dominated by women, men were typically earning £2,000 more after graduation.
Some of the highest pay gaps were in subjects typically dominated by men, such as engineering and computer science. In engineering and technology for example, women are on average earning £4,300 less than men five years after graduation. Reports also show that Pakistani, Bangladeshi, and Black Caribbean women graduates face some of the worst pay gaps.
Why does the gender pay gap exist?
There a wide range of reasons why the gender pay gap exists – it’s not just about pay itself, it’s about the kind of jobs women tend to do and their working habits in comparison with men. Here are some of the biggest factors:
According to the Office for National Statistics, 41% of women worked part-time in April-June 2016, in comparison to just 12% of men. For both men and women, those working in part-time work tend to get paid less per hour than their full-time colleagues.
Women choose to work part-time for a number of reasons, but one of the main ones is for childcare. Which leads us on to…
Having and caring for children
The statistics show that even though the gender pay gap does exist among younger workers, it gets significantly larger for those aged 40+. This is most likely due to women leaving or reducing their time in the workforce to have children.
We all know there’s no such thing as ‘girl jobs’ and ‘boy jobs’. But some occupations are dominated by a certain gender, and the earning potential between sectors can vary.
For example, women dominate the caring and leisure industries, where they earn less than those who work in management or director roles – and these are roles that tend to be dominated by men.
While these factors explain why the gender pay gap exists, they shouldn’t be taken as excuses to explain away the gender pay gap. It’s still a problem and needs addressing, but the solution clearly isn’t as simple as just paying men and women the same.
What is being done about it?
This year, all companies with over 250 employees are being legally required to report their pay figures to the government, crucially revealing the difference between what they pay men and women for the first time.
They have until April 2018 to do so, and from the 1,290 companies who have already reported their figures the results are already pretty clear – 74% of the companies pay men more than women.
It’s thought that 9,000 companies will be involved in total, reporting on the pay of over 15 million workers.
It's great news that these companies are being legally required to publicise this information for the first time, but it needs to be followed up with concrete action by the government and employers. Knowing the scale of the problem is just the first step.
How we can all help
Pay gaps based on gender, ethnicity or disability aren't going to disappear over night. It's going to take employers, educators and the government coming together to create some real change.
We need better education, awareness and shifting attitudes to create real equality and fairness, but now that thousands of companies are being legally required to reveal their gender pay gap for the first time, the first steps are being taken.
However, we can all do our bit to help close these pay gaps. If you or someone you know thinks they're being affected by an unfair pay gap at work, always report it to your manager of HR department.
Talking more openly about our salaries will also help. People often shy away from talking about pay, but this only allows pay gaps to continue. Pay gaps can only be called out and challenged if people know they exist after all.
Finally, we can all do our bit to help and support each other in the workplace. While we need the government and employers to take real action, helping those around us where possible can help create a more inclusive atmosphere.
Looking for a graduate job? Take a look at our guide to applying for graduate schemes and nail that application.