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Women able to work from home could see wages stagnate if they were again forced to homeschool children or missed out on opportunities through not being in the office, said one expert. Photograph: Derek Meijer/Alamy
Women able to work from home could see wages stagnate if they were again forced to homeschool children or missed out on opportunities through not being in the office, said one expert. Photograph: Derek Meijer/Alamy

Gender pay gap at UK’s biggest firms is growing, data suggests

This article is more than 2 years old

Exclusive: women’s median hourly rate on average 10.2% less than men’s, compared with 9.3% in 2018

The gender pay gap reported to the government by Britain’s biggest firms is widening, Guardian analysis shows, prompting warnings that women face a bleak and worsening economic picture in 2022.

Three years after a new law compelled companies to reveal the difference between male and female wages, data shows that eight out of 10 organisations with more than 250 staff still pay men more than women.

The most recent set of government data shows women are being paid a median hourly rate 10.2% less than their male colleagues, nearly a percentage point higher than the 9.3% gap reported in 2018.

The pay gap in the private sector grew from 8% in 2018 to 9% in 2021, while in the public sector it grew from 14.4% to 15.5%

Office for National Statistics data – considered to be the gold standard – shows that the full-time gender pay gap in April was 7.9%, down from 9.0% in April 2019, although statisticians say the pandemic could have caused variations. The gender pay gap for all workers, both full- and part-timers, was 15.4% in 2021.

But the government data is considered another barometer of progress – or lack thereof – and a vital tool to push companies to take action to improve pay equality.

There are growing fears that long-term economic gains made by women could go into reverse if ministers do not act.

“The danger we face is not only a widening of the gender pay gap but a more general widening of wealth and income between men and women,” said Sara Reis, head of research and policy at the Women’s Budget Group. “There is a real risk that all the employment gains of the last decades are being put in jeopardy if women continue to be disproportionately impacted by this pandemic.”

Reis said that in the next year women across different earning demographics could be hit, with low-paid workers in hospitality and other hard-hit sectors having hours reduced and jobs cut. Women who are able to work from home could see wages stagnate if they are again forced to homeschool children or miss out on opportunities through not being in the office.

“There are likely to be different impacts for different groups of women, but they are all fairly bleak – and overall there is a real risk that progress will stagnate or go backwards,” said Reis.

According to research from the group, it is too soon to see what impact the end of the furlough scheme will have on women’s employment. But the over-representation of women in industries with some higher Covid job losses, including retail and accommodation, and the fact that twice as many women as men are in the bottom 10% of earners, leaves them more vulnerable in a faltering economy, it states.

Gender pay gap figures collected by the government are imperfect: the median hourly pay gap does not address the gap in similar job roles, the quality of the data is patchy and, due to exemptions, some high-level executives including partners and non-employed, typically low-paid workers, are not included in the data.

A Government Equality Hub spokesperson said it would put forward new measures to improve equality for women at work in 2022. It added that the national gender pay gap had fallen by about a quarter in the last decade, with 1.9 million more women in work, which it said was a result “of this government enacting legislation for the right to flexible working, shared parental leave and pay – including a new online tool to check eligibility – and doubling free childcare for eligible working parents”.

But an Institute for Fiscal Studies report this month found that “the vast majority of the modest convergence in earnings of the past 25 years” could be explained by the closing gap in education levels.

Britain’s gender pay gap data-gathering exercise – which was ahead of the curve globally when it launched – risks falling behind other nations, said Jemima Olchawski, the chief executive of the Fawcett Society. Research from the charity found the UK was “unique in its light-touch approach” to asking employers what actions they would take, while other countries required smaller companies to report.

Olchawski called on the government to address the cost of unpaid care work, make childcare more accessible and affordable, overhaul shared parental leave and “look at who is getting access to the most powerful and influential positions” to tackle power and wealth inequality between men and women.

“This is a moment of risk and a moment of potential,” she said. “The big pieces of work are still to do, but are all achievable. If we don’t address these challenges we’re damaging our productivity and profitably with our economy at a time when we can ill afford it.”

A spokesperson for the Equality and Human Rights Commission, which oversees enforcement of gender pay gap reporting, said measures to improve the gender pay gap – such as hiring more women at entry-level – could also increase the gap in the short term.

“Clearly we want to see women on a level playing field with men across society, not only in the workplace, but the reason this is taking time is complex,” they said. “Gender pay gap reporting is about transparency, which then drives action. And the effects of that can take time.”

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