Causes of gender, disability, and ethnic pay gaps

Key findings and recommendations

The gender pay gap findings include that:

• While part-time women tended to earn slightly more than part-time men (6%), part-time women earned 36.5% less than full-time men. Women are much more likely to work part time than men.
• The mean gender pay gap has reduced considerably. As a percentage of male earnings, for full and part-time work, it fell from 27% in 1993 to 10% in 2014.
• The effect of ‘occupational segregation’ – the division of men and women into different occupations – on pay has lessened. However, within occupations, on average women are still paid less than men suggesting they are either being paid less for doing broadly the same work or they have lower level jobs in the same occupations.
• The pay gap widens with age: older women experience a larger pay gap compared with their male peers than younger women with their male peers. This is primarily because women are more likely than men to take time out of the labour market to care for children.
• The gender pay gap varies according to where people live and the sector they work in.
• The gender pay gap is larger in the private sector than in the public sector.

⇨ Recommendations to address gender pay gaps:

1. Unlock the earning potential of education by addressing differences in subject and career choices, educational attainment and access to apprenticeships
2. Improve work opportunities for everyone, no matter who they are or where they live
3. Make jobs at all levels available on a flexible basis
4. Encourage men and women to share childcare responsibilities
5. Reduce prejudice and bias in recruitment, promotion and pay decisions
6. Report on progress in reducing pay gaps

The disability pay gap findings include that:

• Disabled people are less likely to have a paid job than non-disabled people and when they do they generally earn less.
• The overall disability pay gap is 13% for men and 7% for women.
• There are variations in the size of pay gaps depending on the nature of the disability, although certain consistent patterns emerge. Those with physical impairments generally earn less than non-disabled people, but the pay gaps for those with mental health conditions are particularly large, among men at least. People who have a disability which limits both daily activity as well as work tend to experience especially poor outcomes when it comes to employment and pay.
• Ethnic minority disabled people tend to face the combined disadvantage of both ethnicity and disability. Disabled Bangladeshi and Pakistani men experience particularly large pay gaps.
• The data can only explain a maximum of roughly half of the pay gap, meaning that other factors are at play, potentially including discrimination.

⇨ Recommendations to address the disability pay gap:

1. Unlock the earning potential of education by addressing differences in subject and career choices, educational attainment and access to apprenticeships
2. Improve work opportunities for everyone, no matter who they are or where they live
3. Make jobs at all levels available on a flexible basis
4. Encourage men and women to share childcare responsibilities
5. Reduce prejudice and bias in recruitment, promotion and pay decisions
6. Report on progress in reducing pay gaps

The ethnicity pay gap findings include that:

• The mean hourly pay of different ethnic groups varied considerably. Gaps also varied depending on whether people in ethnic minorities were born in the UK or abroad. Among men, the overall picture was fairly clear. The White British group tended to outperform ethnic minorities in terms of pay – but with a few exceptions. All Indian and Chinese men (that is, both foreign-born and British) and British-born Black African men had similar earnings to White British men. However, all other groups earned noticeably less. Pakistani and Bangladeshi males had particularly severe pay gaps, especially those born outside the UK.
• The pay landscape for women in the same period was more complex. Ethnic minority women generally earned more than White British women, with all Indian, all Chinese, British-born Black Caribbean and British-born Black African women experiencing notable pay advantages. Only two groups had a clear pay disadvantage: these were Pakistani and Bangladeshi immigrant women. However, British-born Pakistani and Bangladeshi women experienced no such disadvantage. Along with female immigrants in the Black African and Black Caribbean group, their pay was found to be fairly similar to White British women’s.
• Pay gaps for ethnic minority women were much smaller than those for ethnic minority men, and some groups had a pay advantage. Female Bangladeshi immigrants and Pakistani immigrants both experienced around a 12% pay gap compared with White British women. All other groups either experienced no pay gap or a pay advantage. Black African British women had a particularly large pay advantage, earning 21% more than White British women.
• The occupational pay gap is the average pay gap within individual occupations, in which people do broadly similar work. Among men, ethnic minorities typically earn less within occupations than their White British counterparts. The picture for women is more mixed, with certain ethnic minorities outperforming women in terms of pay. However, among both men and women, Bangladeshi and Pakistani people have experienced a large and growing occupational pay gap over time.
• Several ethnic minorities have high proportions of people being paid less than the Living Wage. In the period 2011-2014, almost half of Bangladeshi men and around a third of Pakistani men were paid below the Living Wage. This compares with under a fifth of White British men. Among women the differences were less stark, although low pay is much more prevalent for women than men. Around 30% of White British women were paid below the Living Wage, compared with almost 40% of Bangladeshi women and just over a third of Pakistani women.
  • Black African immigrant men tend to be segregated into low-paid occupations and have low qualifications – both factors drag down pay.

⇨ Recommendations to address the ethnic pay gap:

1. Unlock the earning potential of education by addressing differences in subject and career choices, educational attainment and access to apprenticeships
2. Improve work opportunities for everyone, no matter who they are or where they live
3. Make jobs at all levels available on a flexible basis
4. Encourage men and women to share childcare responsibilities
5. Reduce prejudice and bias in recruitment, promotion and pay decisions
6. Report on progress in reducing pay gaps

Media coverage

This research was used in the following news reports:

Advertise all UK jobs with flexible working to tackle pay gap – report (Guardian, 15 August 2017)
Men should be given more paternity leave to help close gender pay gap, equality watchdog says (Independent, 15 August 2017)
Employers should offer everyone flexible working and give dads more paternity leave to tackle gender pay gap says equality watchdog (The Sun, 15 August 2017)
Tackling gender, ethnicity and disability pay gaps CIPD blog, 15 August 2017)
EHRC proposes flexible working for all to close pay gaps (Relocate Global, 15 August 2017)
Equality and Human Rights Commission recommends measures to reduce pay gaps (Employee Benefits, 15 August 2017)
Pay gaps need to tackle ethnicity and disability as well as gender, urges EHRC (Personnel Today, 15 August 2017)
If Flexible Working Will Close The Gender Pay Gap Why Aren’t We Doing More About It? (Grazia Daily, 15 August 2017)
Shake up of working culture and practices recommended to reduce pay gaps (Insight, 15 August 2017)
Flexible working should be offered across all jobs, says equality watchdog (City A.M., 15 August 2017)

Background

There is ample evidence that women, on average, receive lower pay than men and that, although this pay gap has reduced over time, it has not been eliminated yet. There is more limited evidence on the existence of pay gaps for ethnic minorities and for disabled people. Since for most people and families labour income is the main – or the only – source of income, exclusion from the labour market or from good jobs may make some groups of people more vulnerable to poverty. It is therefore important to understand the reasons for their lower employment and lower pay.

Aim

This project, funded by the Equality and Human Rights Commission, produced three separate reports analysing pay gaps by gender, ethnicity, and disability in Great Britain. The reports have provided new evidence on the size of the pay gaps and how they have changed over time. They also identified the main determinants of the pay gaps and ways to reduce them.

Data and Methods

The data used for this project are the Quarterly Labour Force Survey (LFS), and Understanding Society (UKHLS).

We used the LFS to:

1. Provide background information on employment and trends in median pay over time. This gives us information on how employment and median pay differ across groups
2. Measure pay gaps for the different groups and how pay gaps change when we account for characteristics (for example for the fact that men and women, ethnic minority and disabled people have different levels of education, etc.)
3. Measure which characteristics have the largest impact on the pay gaps

For gender pay gaps, we supplemented the above analysis with UKHLS data to analyse the impact on these of family and caring responsibilities.

For ethnicity, we focused on the largest minorities: Indian, Pakistani, Bangladeshi, black African, black Caribbean and Chinese and compare outcomes of ethnic minorities born abroad (migrants) to those born in the UK. We compared pay of ethnic minority men to pay of white British men, and pay of ethnic minority women to pay of white British women.

For disability we compared pay of non-disabled people to pay of people with disabilities of various types (physical, mental, etc.) and severity (whether activity and/or work-limiting).