What do the latest data reveal about the UK’s gender pay gap? – Economics Observatory

In 2021, the UK’s gender pay gap rose from 14.9% to 15.4% (Office for National Statistics, ONS, 2021). This means that, on average, women earn just over 15% less than men per hour.
Every year these data are subject to fluctuations due to short-term labour market conditions and sampling variance. This means that the latest change in the figures is, while still notable, relatively unimportant compared with the longer-term trend, which shows a continual decline. In 2019, the gender pay gap was 17.4% – over the past decade, it has fallen by over a quarter (see Figure 1).
The gap varies by employment type, with full-time and part-time workers affected differently. The data show that the gap appears higher if you consider all workers, rather than looking at full- or part-time workers individually.
While this may seem paradoxical, it is because women are more likely to work in part-time jobs than men. Part-time jobs are, on average, lower paid. And while the gender pay gap for full-time workers follows the same trend as that for all workers, the gap for part-time workers is actually negative (and has the gap has been narrowing since 2015).
One of the clearest ways to view the evolution of the gender pay gap is to compare it across different age groups. For those under 40, the pay gap for full-time workers is less than 3%. But for those aged 40-49 and above, the pay gap jumps to 12%.
For those over 40, there is a lower incidence of women being promoted to higher paid positions and a higher incidence of women moving from full- to part-time work. The gap widens over time. As men move up the pay ladder, women fall behind, either staying in lower paid positions, reducing their hours, or both. Others drop out of work entirely.
Comparing wages by occupation type is also useful. Although men are pay more on average than women across all nine main occupation groups, there are different trends within job types (see Figure 2).
Almost all job types have experienced an increase in the gender pay gap in 2021. For some occupations (such as skilled trade), the gap is now equivalent to or greater than the 2019 level. But managers, directors and senior officials – a group with one of the biggest gender pay gaps in 2019 – have had the largest falls in the pay gap over the course of the pandemic (from 16.3% to 10.3%). As the group with one of the highest median pay rates, this has a significant effect on the overall gender pay gap.
The largest gender disparity is among the highest earners. The 90th percentile of full-time men’s earnings is 16.1% higher than the 90th percentile of full-time women’s earnings. This means that men in the top 10% earn substantially more than women in the top 10%.
This is compared with a 7.9% gap in median earnings. Unlike for lower earners, top earners were less likely to be furloughed and fewer workers in this category experienced a reduction in pay during the pandemic. As a result, the pay gap for this group continued to decline in 2021.
Finally, there are large regional disparities in the gender pay gap. It is highest in London and the South East (12.4%), lowest in Scotland (3.6%) and Wales (5%). It is negative in Northern Ireland (-4.1%), where a higher proportion of women work in the higher-paid public sector.
These geographical differences have changed over time. In 1997, there was much less variation in the pay gap, and the current pattern is the result of some regions having a much larger decrease over the past 25 years than others. This is especially the case in London, where the gap has barely changed.
Some factors that influence the gender pay gap are not captured in the data. For example, data on overtime hours worked are not included. This could lead to an underestimate of the gender pay gap, as men are more likely to work overtime. The factors described above only account for 36% of the difference in pay between men and women.
As a result, if one were to hold all these characteristics equal, the gender pay gap would still exist. This signals the need for further in-depth analysis and measurement of the gender pay gap.
Given its recency, it is difficult to determine exactly how big and how persistent the effect of the pandemic has been on unequal pay. But the ASHE data do provide some early insight into what these effects could be.
Under the Coronavirus Job Retention Scheme (CJRS), 8.8 million workers were furloughed in 2020, falling to 3.7 million in 2021. Roughly half of those furloughed also had their pay reduced. In 2021, a slightly higher proportion of women who were furloughed were done so with reduced pay, compared with men who were furloughed (see Figure 3). 
This is a reversal from 2020. It means that the increase in the gender pay gap over the past year could be the result of a short-term fluctuation in labour market conditions, triggered by the pandemic and resulting emergency measures.
The Covid-19 crisis may also have affected the gender pay gap in other ways. For example, the closure of schools created an increased childcare burden, which exacerbated the childcare gap. In a pooled global sample, women spent, on average, an additional 5.2 hours per week on childcare. This means that total hours spent looking after children rose to 31 hours per week – equivalent to a full-time job. This compares with 3.5 extra hours for men (and a total of 24 hours).
It also brought an increased mental health burden for mothers, 27% of whom reported deteriorating mental health during the pandemic, compared with 16% of fathers.
The full effects of Covid-19 are yet to be seen. What is clear from the latest data is that a challenge remains in addressing the gender pay gap. The inequality of pay between men and women is affected by short-term labour market conditions, but longer-term social norms are also central to the gulf in remuneration.
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