Closing the Gender Pay Gap
Gender pay gap reporting is viewed by many as the first step towards a solution to gender pay disparity. By highlighting unequal pay levels between female and male workers, gender pay gap reporting is expected to lead to a more modern workforce ensuring that women have the same opportunities to fulfil their potential in the workplace as men. But the motivation behind achieving gender pay parity goes beyond workplace modernisation.
Closing the Gender Pay Gap – How Pay Gap Reporting could benefit the economy
In McKinsey’s 2016 report, ‘The Power of Parity: Advancing women’s equality in the United Kingdom’, it is estimated that eliminating work-related gender gaps could add £150 billion to the UK’s annual GDP by 2025.
With fewer women currently working in highly paid professions, a lack of well-paid part time or flexible roles, obstacles to promotion within companies, and unconscious biases, many women are deprived of the opportunity to further their careers. Bringing greater transparency to gender pay differences could pave the way for women to occupy more higher-level roles, support productivity gains and enable the United Kingdom to bridge productivity and skills gaps on its peers. This could translate into an additional 840,000 female employees in the UK workforce.
At present UK women’s GDP contribution is currently 39%. While this is slightly higher than the global average (37%) it is significantly less than some EU counterparts, such as Portugal (47%) or France (43%). This is due in part to the fact that only 72% women of working age are economically active, women work fewer hours on average (29 hours per week compared with 37 for men) and women are more concentrated in less productive sectors, such as public administration, education, and health. Closing these gaps could provide a considerable boost to women’s contribution to the UK economy, with every one of the United Kingdom’s 12 regions potentially gaining 5–8% in GDP.
For many women, low-productivity, low-paying work reduces their financial stability. This has serious ramifications for unmarried female retirees and families headed by single mothers. The problem is compounded by low economic mobility within the United Kingdom. Research shows that the poverty rate of working women could be cut in half if pay disparities were resolved.
Similarly, resolving retirement income disparity is another important economic driver. Prudential’s Class of 2018 study showed that while women’s expected retirement income has increased, they will still be 29% worse off than men. Closing the gender pay disparity gap would increase the likelihood of women being able to provide for their own pensions, thereby reducing both pensioner poverty and the welfare support needed to counter it.
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