A new report from the Institute for Fiscal Studies finds a small shift in the gender pay gap over 25 years, despite the number of women graduating overtaking the number of male graduates.
The average working-age woman in the UK earned 40% less than her male counterpart in 2019, according to a study by the Institute for Fiscal Studies which considers all types of work, both paid and unpaid.
Although the gap is about 25% lower than it was 25 years ago, the IFS says the vast majority of the “modest” closing of the gap can be explained by women’s rising education levels. Over three-quarters would have been expected from the rapid catch-up of educational attainment of women, who are now 5% more likely to have graduated from university than men, the report says, adding that “this suggests that the additional contribution to closing the gender earnings gap from other changes in policy, the economy and society over the past quarter-century has been muted”.
The report says that in 2019, working women still earned 19% less per hour than men. This gap was 5 percentage points smaller than the gap in the mid 1990s, in the main due to women’s relative advances in education.
The report attributes the gap in part to the fact that women have more career breaks and years working part time. It says that, unlike in the past, the hourly wage gap between men and women is now bigger for those with degrees or A-level-equivalent qualifications than for those with lower education due to the increase in the minimum wage.
The report says gender gaps in hourly wage rates are especially large at the top, with women failing to reach the same levels of high pay as men. In 2019, women at the top (90th percentile) earned per hour only 77% of what their male counterparts did, while that figure was about 90% for women at the bottom (10th percentile) compared with men at the same level, says the report.
It also finds that gender differences in time spent doing paid work are not completely balanced out by the differences in time doing unpaid domestic work, saying that working-age women in the UK do 1.5 fewer hours of paid work and 1.8 more hours of unpaid work per day than men on average.
Inequalities in earnings increase vastly after parenthood, says the report. “The opening of gaps around childbirth suggests that unpaid care work is central in shaping inequalities in the labour market,” it states, adding that this is not necessarily because women earn less. “Even mothers who earn more than their male partners before childbirth are more likely than their partners to reduce hours of work in the years after childbirth,” it says.
In part this is due to policies, including around tax and benefits, that incentivise traditional gender divisions, which are backed up by social norms. for instance, two-fifths of both men and women in the UK agree that ‘a woman should stay at home when she has children under school age’. However, changes in policies could boost women’s earnings and have a positive impact on the economy, says the report. “Given the huge economic costs associated with the status quo, even expensive policies could potentially pay for themselves if they successfully ensure that the talents of both women and men are put to their most productive uses, whether in the labour market or at home,” it states.