By Michael Scholes & Aidan Stennett
To highlight International Women’s Day, the following article updates our previous blog article examining the gender pay gap in Northern Ireland, by presenting the latest available data.
The UK Government defines the gender pay gap (GPG) as:
… the difference between the average earnings of men and women, expressed relative to men’s earnings. For example, ‘women earn 15% less than men per hour’.
The GPG should not be confused with equal pay, which refers to paying men and women differently for doing the same work. This discriminatory practice was outlawed in the United Kingdom (UK) by the Equal Pay Act 1970.
There are a number of factors which lead to a GPG. Again, these are defined by the UK Government as:
- A higher proportion of women choose occupations that offer less financial reward (e.g. Administration), whilst many high paying sectors are disproportionately made up of male workers (e.g. Information and Communications Technology);
- A much higher proportion of women work part-time, and part-time workers earn less than their full-time counterparts on average; and,
- Women are less likely to progress up the career ladder into high paying senior roles.
The reasons for these factors are complex and overlapping. However, research, such as work carried out by the Institute for Fiscal Studies (IFS), shows that certain elements recur in the literature:
- Work by the IFS found that the pay gap widens in the late 20s, with male wages increasing and female wages flat-lining. This is, the IFS believes, a result of women having children. Following this, the gap continues to widen as women lose out on labour market experience, lowering their future wage potential;
- Women also tend to enter part-time employment following the birth of their first child, reflected in the high number of women working part-time. This part-time working also appears to be persistent. Even after a child has reached the age of 20, women are more likely to remain in part-time employment, potentially reflecting the impact of a loss of labour market experience; and,
- Choice of occupation, as noted above by the UK Government, also plays an important role in the development of a gender pay gap. In broad terms, women tend to work in lower paying sectors.
Importantly, and as noted by the IFS, this does not explain the wage gap prior to the arrival of a woman’s first child.
Measuring the GPG
There are various ways to measure GPG. The Office for National Statistics (ONS) and the Northern Ireland Statistics and Research Agency (NISRA) prefer to use median hourly pay excluding overtime. In their view, overtime can often distort the picture as more men than women tend to work overtime. The median is preferred because using the mean (another measure of averages) can misrepresent the data due to small numbers of very high earners. NISRA also asserts that using hourly earnings, ‘better accounts for the fact that men work on average more hours per week than women’.
GPG in Northern Ireland
The GPG has been a consistent concern for the Northern Ireland labour market. However, PWC’s Women in Work Index, published in March this year states that of all the UK regions, Northern Ireland has seen the largest narrowing of its GPG since 2000. This improving picture is also reflected in the recent Northern Ireland Annual Survey of Hours and Earnings (ASHE). This survey shows that in Northern Ireland, female and male earnings are more closely aligned than in other parts of the UK.
Figure 1 provides a summary of the Northern Ireland gender pay gap since 1997:
As figure 1 shows, using the measure of median hourly pay excluding overtime reveals an 8.7% pay gap in Northern Ireland. This has narrowed from 22.4% in 1997.
Put simply, the latest data shows that in terms of median pay, for every £1 a male employee earns, a female employee will earn 91.3 pence.
However, when we look at hourly pay separated out into full time (FT) and part time (PT) employment, the picture becomes more complicated, as both FT and PT appear to produce a reverse GPG, in which women earn more than men.
Figure 2 illustrates how the GPG in Northern Ireland varies depending on the measure chosen to calculate it.
As we see from Figure 2, although a pay gap is evident in male and female hourly pay exluding overtime, with females earning 8.7% less than males, there is a reverse GPG in Northern Ireland for both hourly FT and PT pay. The data shows that in 2017 median hourly female FT pay was 3.4% greater than the male equivalent. Similarly, median hourly female pay was 10.5% greater than the male equivalent. NISRA explains that the main reason for this is due to the ‘part-time effect’:
The inclusion of part-time employees increases the gender pay gap as part-time employees earn less on average than full-time employees […] and a higher proportion of part-time employees are women.
In order words, because more females occupy more part-time jobs than males and these jobs tend to be lower paid than full-time jobs, this has the overall effect of increasing the GPG.
Figure 2 also shows the GPG to be much greater in the private sector (10.5%) than the public sector (3.4%). Drilling down in the data shows even greater variation in the GPG found in specific industry sectors and in specific types of occupation.
Figure 3 shows the variation in the GPG across standard industrial classifications (SIC), using median hourly earnings excluding overtime for 2017.
Women earn less than men in 14 of the 16 industry sectors. Only the arts, entertainment and recreation, and the water supply, sewerage and waste management sectors, show a reverse GPG. The widest gap is in the financial and insurance sector.
Figure 4 shows the variation in the GPG across standard occupational classifications (SOC), using median hourly earnings excluding overtime for 2017.
Females earn less than men in all of the nine occupation groups. The GPG is widest for skilled trades, this is also the group with the smallest number of females employed (only 1%). The narrowest GPG is in administrative and secretarial occupations.
In the highest paid occupations group – managers, directors and senior officials – men earn 10.8% more than women. This may go some way in explaining the overall GPG as the higher paid will have a greater impact of the overall median earnings figures.
To conclude, it is evident, based on the above, that although the overall gap between male and female pay is narrowing in Northern Ireland (as measured by the ONS preferred measure – median hourly pay excluding overtime), the gap in pay still remains. It is also evident that the GPG is not equal across industry or job type. Specific industry sectors show much wider pay than others, whilst some (arts, entertainment and recreation, and water supply) demonstrate a reverse GPG. Similarly, the gap between male and female earnings in specific occupations shows considerable variations. Most notably, the GPG in skilled trades is almost seven times greater than the gap in administrative and secretarial occupations. The evidence presented above shows that the GPG in Northern Ireland remains an issue still to be addressed.