Closing the pay gap will boost UK productivity
Radio 4’s Today programme seems to excel at finding angry people. The show does a great job giving voice to the vested interests that rail against whatever the proposal of the day is. It does not really matter what the latest proposal is, the presenters will find the indignant person who opposes it.
Last year, a proposal from the Labour government on employment rights predictably attracted a lot of heated debate on the Today programme, along with the inevitable opposition from the other side of the aisle. However, as we look ahead to International Women’s Day this weekend, buried in the proposals are some steps that might help close the unjust pay gap between the two sexes.
Reportedly, there are proposals requiring large employers to compile action plans to address gender pay gaps, and provide help during menopause. On top of that, protections against dismissal will be strengthened for pregnant women and those returning from maternity leave.
The gender pay gap has fallen in the UK over the last 20 years or so but compared to our close international peers we are laggards. The cap is about 15% in the UK, which compares unfavourably to Italy, Denmark, and Spain. This is illustrated in the chart, compiled by Goldman Sachs.
Source: Goldman Sachs
The UK has made progress in some respects in levelling up for women. Women now make up some 40% of FTSE 100 boards, and they are often the most hard working on those boards, frequently chairing the remuneration or audit sub-committees. They are rarely, though, the CEO or the chairman of the board. According to Deloitte’s annual Women in the Boardroom report, women tend to be pigeonholed into roles like director of human resources, and you very seldom find a female chief technology officer.
The gap between British men and women leaving school or university is pretty much non-existent, but it grows large for women aged 40 and older, suggesting that having children might be a factor.
Source: ONS
The chart above, though, hides an unpleasant truth; the disparity above is much greater because women tend to go into lower paying roles. The gender pay gap statistics compare men and women doing the same job, working the same hours. It represents a direct like-for-like comparison for which women are paid, on average, 15% less than their male counterparts.
However, generally women tend not to go into higher paying jobs in senior management or into higher paying sectors like technology or finance. The reality is the gender pay gap is much greater than 15%. UK companies are simply not doing enough to level the playing field by making higher paid roles more attractive to women. Rather, fewer women seem to be going into technology roles over time.
Many will see the latest government proposals as an imposition or as woke-ism gone mad, but without a legislative push it is difficult to see how we can make faster inroads into the gender pay gap.
None of us like action plans, but this may be the only way to open opportunities to women in higher paying professions, take up leadership positions, or to stay in full-time work after they are 40.
The UK has suffered from low productivity growth since the financial crisis in 2008. Apart from anything else, discriminating against women on pay or opportunity is tragic waste of human potential that the UK simply cannot afford.
There is some research that suggests that companies with women in senior positions tend to outperform the market. Going forward, as our society ages, corporate management will need to be flexible and adaptable to the shrinking pool of labour available and one way of doing that is by drawing on the pool of women aged over 40.
Those that fail to take this opportunity may find not that they underperform the market, but that they fail altogether and become part of a long list of failures to adapt like the dinosaurs and the dodo.
Women and men excel equally at university and, as a society, we need to overcome millennia of discrimination, and Radio 4’s Today programme, to ensure that excellence is harnessed far beyond university, right up to retirement.
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