A Resolution Foundation report on the impact of the new National Living Wage (NLW), published today, makes for interesting reading. It shows that three in ten women in work are set to receive a pay rise, and that women will account for 61% of the benefits of Osborne’s increase. Let’s pop our champagne corks, shall we? Or shall we pause for thought: of course, if women are the main beneficiaries, it can only mean they are heavily concentrated in low paid work to begin with.
When the government announced the impact of the NLW, which will be £7.20 for all over-25s from April next year, they claimed it would have a positive effect on the gender pay gap, currently stubbornly large at 19.1%. It will do, to an extent, but let’s be clear: the gender pay gap is complex and has multiple causes. Lifting the wages of lowest paid will therefore improve their relative position and help to narrow the gap, but, in the absence of progress on other fronts, the impact will be relatively small.
This isn’t just a matter of fairness and the entitlement to equal pay women have had for over 40 years, this is about UK productivity. The pay gap represents a productivity gap of £600 billion – our economy is losing out due to women’s qualifications, experience and talents not being effectively utilised. This isn’t a ‘women’s issue’ – we should all be worried, and indeed, the Prime Minister has committed to closing the gender pay gap ‘in a generation’. The government is, as we speak, consulting on the implementation of section 78 of the 2010 Equality Act, which makes gender pay audits mandatory for large employers, but what remains to be done?
We know that the pay gap really opens up when women become mothers. Women are assumed to be the primary carer, take time off on maternity leave and then tend to reduce their hours when they come back to work or delay their return, some for a significant period . Despite progress made on the right to request flexible working and the growing practice of working from home, the availability of part-time, job-share, or full-time minus roles (ie: 30 hours per week) are rare. If you search for a part-time management or senior role you will find that your options shrink to just a handful of jobs. This forces many women to work way below their skill level, and represents a waste of talent and expertise.
The solution is inescapably simple: dads must be facilitated to take on more caring responsibilities. Shared Parental Leave is a good start, but I fear not transformative. Not least because a woman must give up her (possibly very generous) maternity package in order for her and her partner to use Shared Parental Leave, which is paid at the basic statutory rate of £139.58 a week. For many families, SPL isn’t an option financially.
Beyond the financial practicalities, we need a shift in public attitudes. Society’s default must become an expectation that men will care, not expression of surprise when they do. In too many workplaces, fathers still feel inhibited about taking leave or asking for flexible working. They are also more likely to be turned down. The price of childcare for working parents is far too high to really make work pay, particularly if you have more than one child. So as well as transforming the world of work we must invest in universal, flexible, quality childcare, treating is as investment spending.
We also need employers (and not just those with more than 250 employees) to calculate their organisational gender pay gap – they must look at the positions women and men hold in their organisation, consider how they reward different roles, identify whether they have any unlawful discrimination taking place and then take steps to correct it. We need transparency, including the data that underpins their headline pay gap figure. Without it individual women at work cannot be certain that they are being paid fairly. Employers should be proud of their equal pay status and promote it to prospective female employees. It’s essential to bring employers with us on this, so the government must provide all the guidance and support they need to tackle the problem.
When they look at their spread of employees, many organisation will find that women are concentrated at the bottom and men at the top. So in addition to workplace flexibility we also need to look at the pipeline of women coming through the organisation, pick off the barriers to progression, create routes to promotion, tackle unconscious bias and recruit women into senior roles in sufficient numbers to challenge a male-dominated culture. Targets and quotas have a role to play here.
Finally, we have to start young. Just 21% of physics A-level entrants are female and only 14% of engineering graduates are women. We have to get more women in to science and technology careers because this is where the job shortages are, and yes, because they pay more. Women comprise 84% of the social care workforce – notoriously low paid and undervalued because it’s “women’s work”.
So, whilst lifting the wages of the lowest paid helps is something to be tentatively celebrated, it is just one small part of closing the pay gap. The government must rise to the challenge elsewhere.