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6 March 2018 | ITSM
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Women in Work Index 2018
What's driving the gender pay gap and what gains can be made from closing it?...

New PwC research shows that the UK is not making progress fast enough to improve female economic empowerment in the workplace. Despite improvements since 2000, these gains have been outpaced by other countries’ efforts. In particular, slow progress in closing the gender pay gap, coupled with a persistent low share of females in full-time employment, has put the brakes on the UK making bigger strides towards gender equality in the workplace.

The latest Women in Work Index finds the UK has fallen slightly from 14th to 15th place in a ranking of 33 OECD countries based on five key indicators of female economic empowerment. Although labour market conditions for women improved, the UK was outpaced by better performance from OECD countries such as Poland, which made significant gains in reducing female unemployment. Over the longer-term since 2000, the UK’s position has improved from 17th place and it compares well to other G7 economies, being second only to Canada. The Nordic countries continue to lead the Index - with Iceland, Sweden and Norway rated as the top three countries for opportunities for women in the workplace.

Advances in closing the gender pay gap varies across UK regions. Northern Ireland has led the way in closing its gender pay gap since 2000, reducing it from 22% to 6%, the lowest in the country. This has been driven by the share of women working in public administration, a sector with relatively high pay and a relatively low pay gap.

In contrast, London has made the slowest progress, only managing a 3% reduction in its pay gap from 22% in 2000 to 19% in 2017. The capital’s pay gap increased in 2017, up from 17% in 2016 due to a rise in the gender pay gap in low paying sectors in the region.

The research found that financial services, and agriculture and forestry sectors have seen the biggest improvements in their gender pay gap over the past year, although financial services still has the highest overall gap. The pay gap has increased in accomodation and food services,  administrative and support services, mining and education sectors.

“Disparities in average pay for men and women exist across all regions of the UK. While great progress is being made in some areas, sustained business action is needed to ensure that these gains continue. We need to ensure we’re implementing long-term solutions, not just quick fixes, to close the pay gap for good” said Yong Jing Teow, economist at PwC.

Closing the gender pay gap in the UK could boost women’s wages by £90bn per annum, increasing women’s incomes on average by £6,300 per woman per year.

Identifying causes of and remedies for the gender pay gap

To identify long-term solutions to end pay disparity, PwC economists identified the underlying common key drivers of the gender pay gap across all OECD countries. The results show larger government spending on family benefits significantly pushes down the gender pay gap, which suggests that greater availability of affordable childcare could improve female participation in the workforce by helping parents, especially mothers, return to work.

Countries with a larger share of employers who are female also tend to have smaller pay gaps, which suggests that having more female entrepreneurs and women in decision-making positions increases the likelihood of promoting gender equality policies. This implies more support to promote female entrepreneurship, such as improving access to finance for female-run businesses, mentoring programmes etc. could help foster gender equality, with positive impacts on the pay gap.

The research shows that a one percentage point increase in the proportion of female business owners, with more than one employee, is associated with a .53 percentage point decline in the gender pay gap.

The occupational segregation of women, particularly in low-paid services sectors, is associated with higher pay gaps. Many women often have to combine work with ongoing caring commitments, which necessitates part-time or flexible working. However, their opportunities are constrained by the lack of flexible or part-time roles available for senior and higher-skilled jobs, which exacerbates the pay gap. Businesses can play a role in improving female representation at senior levels by making flexible work opportunities more widely available and taking active steps to build a pipeline of female leaders.

“Our research shows that there are common and persistent factors that contribute to the gender pay gap in all countries. Despite the push for organisations to publish their gender pay gaps in the UK, progress will be slow until businesses start addressing the complex underlying reasons. Merely reporting numbers without concrete action won’t change anything” said Laura Hinton, executive board member and head of people at PwC.

“Action needs to focus on bringing more women through to higher-paying and higher-skilled roles, such as those in the technology sector, providing greater flexibility so that part-time working isn’t the default option, and encouraging more men to take up shared parental leave, so that it’s not always women who take extended breaks from the workplace. The success of these business-led actions could be enhanced by policy levers that support women to have a greater participation in the workforce - such as shared parental leave incentives and better availability of affordable childcare” Concluded Hinton.

For additional information or to view “Women in Work Index 2018” click on the link https://goo.gl/6cPvPn.

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