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1
The Minimum Wage and Gender Equality
ESRC GeNet Conference on
The Credit Crunch: Gender Equality in Hard Times6th March 2009
William Brownwith warm thanks to Low Pay Commission staff
2
Women in the labour market
• Rising proportion in employment: - women in workplaces of 25 or more rose 38% to 48% between 1980 and 2004
• 40% of women work part-time• Three-quarters of part-time workers are female• Women’s membership of trade unions is now same as for men• Activity rates (16-59/64, 2008iv): women men
– Employment rate 70% 78%– Unemployment rate 5.7% 6.9%– Economic inactivity rate 26% 16%
• 29% of women compared to 13% of men are employed in the public sector (2006)
• Two-thirds of employees in low-paying occupations are women
3
Source: LPC estimates of LFS Microdata, data not seasonally adjusted, calendar quarter, Q2 2008
Gender segregation tends to be higher in low-paying occupations
0
10
20
30
40
50
60
70
80
90
100
Se
curit
y
Ag
ricu
lture
Fo
od
pro
cess
ing
Le
isu
re
Ho
spita
lity
Cle
ani
ng
Re
tail
Te
xtile
s
So
cia
l Ca
re
Off
ice
wor
k
Ha
irdre
ssin
g
Ch
ildca
re
Lo
w-p
ayin
go
ccu
pat
ion
s
Oth
erO
ccu
patio
ns
All
occ
up
atio
ns
Low-paying occupations
Pro
po
rtio
n o
f m
ale
an
d f
em
ale
em
plo
ye
es
(p
er
ce
nt)
Men Women
4
What has happened to the gender pay gap?
• Gender pay ratio = women’s earnings as a percentage of men’s (e.g. 85%)
• Gender pay gap = percentage difference between women’s and men’s earnings i.e. 100% minus gender pay ratio (e.g. 15%)
• Annual gender pay gap > weekly > hourly– Difference in working hours and additional payments
• Mean pay gap– Used for international comparisons– But includes extreme earnings– Less stable
Used here: median gross hourly pay excluding overtime for full-timers, aged 18 and above
5
The gender pay gap 1997-2008lowest decile and median declining; upper static
Source: LPC estimates based on ASHE without supplementary information, 1997-2004, ASHE with supplementary information, 2004-2006 and ASHE with supplementary information new methodology, 2006–2008, normal weights, UK.Note: Care should be taken when comparing ASHE series. 18+, full time workers.
Year
Lowest decile
MedianUpper decile
Lowest decile
MedianUpper decile
Lowest decile
MedianUpper decile
1997 4.44 8.19 17.24 3.87 6.87 13.83 12.9 16.1 19.71998 4.62 8.54 18.10 4.08 7.14 14.44 11.6 16.4 20.21999 4.85 8.85 18.89 4.29 7.46 15.22 11.5 15.7 19.42000 4.94 8.87 19.45 4.41 7.65 15.67 10.8 13.8 19.42001 5.15 9.32 20.84 4.65 8.02 16.54 9.7 14.0 20.62002 5.40 9.72 21.94 4.88 8.41 17.43 9.6 13.5 20.62003 5.63 10.03 22.53 5.11 8.75 18.00 9.1 12.7 20.12004 5.81 10.48 23.44 5.36 9.21 18.94 7.6 12.1 19.22004 5.76 10.36 23.02 5.33 9.10 18.75 7.5 12.2 18.62005 6.00 10.80 24.24 5.60 9.60 19.76 6.7 11.1 18.52006 6.24 11.22 25.38 5.84 10.00 20.28 6.4 10.9 20.12006 6.20 11.14 25.25 5.75 9.86 20.12 7.3 11.5 20.32007 6.50 11.61 26.25 6.08 10.34 20.87 6.5 11.0 20.52008 6.73 12.16 27.27 6.25 10.74 22.16 7.1 11.6 18.7
MenPer cent£ per hour
Women Pay gap
NB: ONS figures are higher than ASHE figures as they only included workers on adult rates
6
The gender pay gap by percentiles: 1998 - 2008gap increases with the earnings distribution - but has narrowed at lower levels
Source: LPC estimates based on ASHE without supplementary information, 1998, ASHE with supplementary information, 2004 and ASHE with supplementary information new methodology, 2006–2007, low-pay weights, UK.
Note: Care should be taken when comparing ASHE series.
0
5
10
15
20
25
30
35
40
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95
Percentile point of hourly earnings distribution
Ge
nd
er p
ay g
ap
(pe
r ce
nt)
for
full-
time
em
plo
yee
s a
ged
18
an
d o
ver
(pe
r ce
nt)
0
5
10
15
20
25
30
35
40
1998 2006 2007 2008
7
The gender pay gap varies by age…
Source: LPC estimates based on ASHE without supplementary information, 1998-2002 and ASHE with supplementary information new methodology, 2006–2007, low-pay weights, UK.Note: Care should be taken when comparing ASHE series.
-15
-10
-5
0
5
10
15
20
25
16-17 18-21 22-29 30-39 40-49 50-59 60+
Age
Me
dia
n g
en
de
r p
ay
ga
p b
y a
ge
gro
up
, fu
ll-tim
e e
mp
loye
es
(pe
r ce
nt)
1998 (*) 2002 (*) 2006(new) 2007 2008
8
…and by UK country
Source: ASHE with supplementary information, 2004-2005 and ASHE with supplementary information new methodology, 2006–2007, low-pay weights, UK.Note: Care should be taken when comparing ASHE series.
-2
0
2
4
6
8
10
12
14
England Wales Scotland Northern Ireland UK
Gen
der
pay
gap
of m
edia
n gr
oss
hour
ly e
arni
ngs
excl
. ove
rtim
e fo
r fu
ll-tim
e em
ploy
ees
aged
18+
(pe
r ce
nt)
2004 2005 2006 2007 2008
9
Source: LPC estimates, ASHE new methodology, normal weights, UK, April 2008.
From the 30th percentile the gap is larger for low-paying sectors…
0
5
10
15
20
25
10 20 30 40 50 60 70 80 90
Percentile point of the hourly earnings distribution
Gen
der
pay
gap
for
full-
time
empl
oyee
s ag
ed 1
8 an
d ov
er
(per
cen
t)
Low-paying sectors Non Low-paying sectors
10
…but is smaller for low-paying occupations.
Source: LPC estimates, ASHE new methodology, low-pay weights, UK, April 2006.
0
2
4
6
8
10
12
14
16
18
20
10 20 30 40 50 60 70 80 90
Percentile point of the hourly earnings distribution
Ge
nd
er
pa
y g
ap
fo
r fu
ll-tim
e e
mp
loye
es
ag
ed
18
+ a
nd
ove
r (p
er
cen
t)
Low-paying occupations Non Low-paying occupations
11
…for part-time work, women earn more than men
Source: LPC estimates based on ASHE without supplementary information, 1997-2004, ASHE with supplementary information, 2004-2006 and ASHE with supplementary information new methodology, 2006–2008, low-pay weights, UK.Note: Care should be taken when comparing ASHE series.
Full-time Part-time Full-time Part-time1997 8.19 4.81 6.87 4.73 57.7 98.3 68.81998 8.54 4.75 7.14 4.87 57.0 102.5 68.21999 8.85 5.00 7.46 5.07 57.2 101.4 67.92000 8.87 5.00 7.65 5.12 57.7 102.4 67.02001 9.32 5.19 8.02 5.36 57.5 103.2 66.82002 9.72 5.50 8.41 5.53 56.9 100.5 65.72003 10.03 5.84 8.75 5.93 59.2 101.6 67.82004 10.48 6.00 9.21 6.18 58.9 103.0 67.02004 10.36 6.00 9.10 6.16 59.4 102.6 67.72005 10.80 6.50 9.60 6.63 61.4 101.9 69.02006 11.22 6.78 10.00 6.90 61.5 101.8 69.02006 11.14 6.84 9.86 6.88 61.7 100.6 69.72007 11.61 7.16 10.34 7.21 62.1 100.7 69.82008 12.16 7.30 10.74 7.48 61.5 102.5 69.6
Pay ratio female
part-time to male
part-time
Pay ratio female
part-time to female full-time
Per cent£ per hour
Men Women
Pay ratio female
part-time to male full-time
12
What has been the impact of the minimum wage?
13
The national income distribution had its lower end sharply compressed between
1997 and 2007Hourly Earnings Distribution, Adults, 1997
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.0
0
11.0
0
12.0
0
13.0
0
14.0
0
15.0
0
16.0
0
17.0
0
18.0
0
19.0
0
20.0
0
21.0
0
22.0
0
23.0
0
24.0
0
25.0
0
26.0
0
27.0
0
28.0
0
29.0
0
£30
and
over
Gross hourly pay excluding overtime (£)
Per
cen
tag
e o
f em
plo
yee
job
s h
eld
by
tho
se a
ged
22
and
ove
r
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Hourly Earnings Distribution, Adults (22 and over), 2007
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.0
0
11.0
0
12.0
0
13.0
0
14.0
0
15.0
0
16.0
0
17.0
0
18.0
0
19.0
0
20.0
0
21.0
0
22.0
0
23.0
0
24.0
0
25.0
0
26.0
0
27.0
0
28.0
0
29.0
0
£30
and
over
Gross hourly pay excluding overtime - 25 pence pay bands (£)
Per
cen
tag
e o
f em
plo
yee
job
s h
eld
by
tho
se a
ged
22
and
ove
r
0.0
1.0
2.0
3.0
4.0
5.0
6.0
14
The previous collapse of low pay was reversed …. earnings growth by percentile 1992-97 compared to 1998-2007
-20
-10
0
10
20
30
40
50
60
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96
Percentile of the gross hourly earnings excluding overtime distribution (adults aged 22 and over)
Pe
rce
nta
ge
incr
ea
se in
pe
rce
ntil
e e
arn
ing
s m
inu
s p
erc
en
tag
e
incr
ea
se in
me
dia
n e
arn
ing
s
-20
-10
0
10
20
30
40
50
60
1998–2007 1992–1997
15
Of those affected by the NMW in 2008 – two-thirds are women
Source: Annual Survey of Hours and Earnings (ASHE) including supplementary information new methodology, low pay weights, 2008.Note: Low-paid defined as adults (aged 22 and over) earning £5.64 or less, youths (aged 18-21) earning £4.70 or less and 16-17 year olds earning £3.48 or less in April 2008.
Full-time Male21%
Full-time Female20%
Part-time Female45%
Part-time Male14%
16
There has been a substantial impact on women’s earnings…
Source: LPC estimates, ASHE new methodology, low-pay weights, UK, April 2006 and 2008.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Un
der
£4.
50 4
.50
4
.55
4
.60
4
.65
4
.70
4
.75
4
.80
4
.85
4
.90
4
.95
5
.00
5
.05
5
.10
5
.15
5
.20
5
.25
5
.30
5
.35
5
.40
5
.45
5
.50
5
.55
5
.60
5
.65
5
.70
5
.75
5
.80
5
.85
5
.90
5
.95
6
.00
6
.05
6
.10
6
.15
6
.20
6
.25
6
.30
6
.35
6
.40
6
.45
6
.50
6
.55
6
.60
Gross hourly earnings excluding overtime (£)
Pe
rcen
tage
of
fem
ale
em
plo
yee
job
s h
eld
by
tho
se a
ge
d 2
2 y
ea
r o
lds
and
old
er
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2006 2008
Ad
ult
NM
W 2
006
(£5.
05)
Ad
ult
NM
W 2
008
(£5.
52)
17Source: ONS Working age employment rate (MGSV, MGSW) and Working age unemployment rate (YBTJ, YBTK), seasonally
adjusted, UK, 1971–1997 and 1998Q1–2008Q3.
…but no evidence of an impact on employment or unemployment.
0
10
20
30
40
50
60
70
80
90
100
197
1
197
3
197
5
197
7
197
9
198
1
198
3
198
5
198
7
198
9
199
1
199
3
199
5
199
7
199
8 Q
1
199
8 Q
3
199
9 Q
1
199
9 Q
3
200
0 Q
1
200
0 Q
3
200
1 Q
1
200
1 Q
3
200
2 Q
1
200
2 Q
3
200
3 Q
1
200
3 Q
3
200
4 Q
1
200
4 Q
3
200
5 Q
1
200
5 Q
3
200
6 Q
1
200
6 Q
3
200
7 Q
1
200
7 Q
3
200
8 Q
1
200
8 Q
3
Year/Quarter
Wo
rkin
g a
ge e
mp
loym
ent
ra
te
0
2
4
6
8
10
12
14
16
18
20
Wo
rkin
g a
ge u
nem
plo
yme
nt
rate
Employment Men (LHS) Employment Women (LHS)
Unemployment Men (RHS) Unemployment Women (RHS)
18
Why have there been no apparent adverse employment effects of the NMW?
• 90% of NMW jobs are in service sectors: few face international competition; many with low price elasticity
• Prices in some of these sectors rose as a result of NMW• Major low paying service sectors (retail, hospitality,
cleaning, care etc) saw growing demand• Evidence of improved productivity arising from improved
management in response to more expensive labour• …and of shift of employment to better managed firms• …and increased concentration of ownership• The NMW has been raised very gradually relative to
average earnings
19
Three phases of NMW growth: very cautious to 2001, faster than average earnings to 2007, cautious subsequently
Source: LPC estimates based on ONS data, AEI including bonuses (ONS code LNMQ), RPIX (ONS code CHMK), RPI (ONS code CHAW) and CPI (ONS code D7BT), monthly, seasonally adjusted (not seasonally adjusted for RPIX, RPI and CPI), GB (UK for RPIX, RPI AND CPI), 1999-2008
0
10
20
30
40
50
60
70
1999
Apr
il
1999
Aug
ust
1999
Dec
embe
r
2000
Apr
il
2000
Aug
ust
2000
Dec
embe
r
2001
Apr
il
2001
Aug
ust
2001
Dec
embe
r
2002
Apr
il
2002
Aug
ust
2002
Dec
embe
r
2003
Apr
il
2003
Aug
ust
2003
Dec
embe
r
2004
Apr
il
2004
Aug
ust
2004
Dec
embe
r
2005
Apr
il
2005
Aug
ust
2005
Dec
embe
r
2006
Apr
il
2006
Aug
ust
2006
Dec
embe
r
2007
Apr
il
2007
Aug
ust
2007
Dec
embe
r
2008
Apr
il
2008
Aug
ust
Month
Cum
ulat
ive
perc
enta
ge in
crea
se s
ince
Apr
il 19
99
0
10
20
30
40
50
60
Adult NMW AEI including bonuses CPI RPI RPIX
20
The NMW has had a substantial effect on the gender pay gap, without evident adverse effects
What might be the consequences of a major recession?
21
Employment growth has slowed since 2008, while
unemployment increased sharply
Source: LPC estimates based on LFS working age employment levels (ONS code YBSE) and total claimant count (ONS code BCJD) monthly, seasonally adjusted, UK, 1998–2008
-150
-100
-50
0
50
100
150
200
250
300
350
400
1998
Jan
uar
y19
98 A
pril
1998
Jul
y19
98 O
cto
ber
1999
Jan
uar
y19
99 A
pril
1999
Jul
y19
99 O
cto
ber
2000
Jan
uar
y20
00 A
pril
2000
Jul
y20
00 O
cto
ber
2001
Jan
uar
y20
01 A
pril
2001
Jul
y20
01 O
cto
ber
2002
Jan
uar
y20
02 A
pril
2002
Jul
y20
02 O
cto
ber
2003
Jan
uar
y20
03 A
pril
2003
Jul
y20
03 O
cto
ber
2004
Jan
uar
y20
04 A
pril
2004
Jul
y20
04 O
cto
ber
2005
Jan
uar
y20
05 A
pril
2005
Jul
y20
05 O
cto
ber
2006
Jan
uar
y20
06 A
pril
2006
Jul
y20
06 O
cto
ber
2007
Jan
uar
y20
07 A
pril
2007
Jul
y20
07 O
cto
ber
2008
Jan
uar
y20
08 A
pril
2008
Jul
y20
08 O
cto
ber
2009
Jan
uar
y
Ch
ang
e in
em
plo
ymen
t on
a ye
ar e
arli
er
(tho
usa
nds)
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
Cla
iman
t Cou
nt l
evel
(th
ousa
nds)
Change in employment (LHS) Claimant count level (RHS)
22
Vacancies have fallen sharply since April 2008 as redundancies have risen
Source: ONS data (codes BEAO and AP2Y), seasonally adjusted, UK, 2001–2008
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
400
200
1 J
une
200
1 A
ugu
st2
001
Oct
ob
er
200
1 D
ece
mb
er
200
2 F
ebru
ary
200
2 A
pril
200
2 J
une
200
2 A
ugu
st2
002
Oct
ob
er
200
2 D
ece
mb
er
200
3 F
ebru
ary
200
3 A
pril
200
3 J
une
200
3 A
ugu
st2
003
Oct
ob
er
200
3 D
ece
mb
er
200
4 F
ebru
ary
200
4 A
pril
200
4 J
une
200
4 A
ugu
st2
004
Oct
ob
er
200
4 D
ece
mb
er
200
5 F
ebru
ary
200
5 A
pril
200
5 J
une
200
5 A
ugu
st2
005
Oct
ob
er
200
5 D
ece
mb
er
200
6 F
ebru
ary
200
6 A
pril
200
6 J
une
200
6 A
ugu
st2
006
Oct
ob
er
200
6 D
ece
mb
er
200
7 F
ebru
ary
2
007
Ap
ril2
007
Ju
ne2
007
Au
gust
200
7 O
cto
be
r2
007
De
cem
be
r2
008
Feb
rua
ry
200
8 A
pril
200
8 J
une
200
8 A
ugu
st2
008
Oct
ob
er
200
8 D
ece
mb
er
Re
dun
dan
cie
s (t
ho
usa
nds
)
400
420
440
460
480
500
520
540
560
580
600
620
640
660
680
700
Job
va
canc
ies
(tho
usa
nds)
Redundancies (LHS) Vacancies (RHS)
23
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
1999
Ma
rch
1999
Ju
ne19
99 S
epte
mb
er19
99 D
ece
mb
er20
00 M
arc
h20
00 J
une
2000
Sep
tem
ber
2000
De
cem
ber
2001
Ma
rch
2001
Ju
ne20
01 S
epte
mb
er20
01 D
ece
mb
er20
02 M
arc
h20
02 J
une
2002
Sep
tem
ber
2002
De
cem
ber
2003
Ma
rch
2003
Ju
ne20
03 S
epte
mb
er20
03 D
ece
mb
er20
04 M
arc
h20
04 J
une
2004
Sep
tem
ber
2004
De
cem
ber
2005
Ma
rch
2005
Ju
ne20
05 S
epte
mb
er20
05 D
ece
mb
er20
06 M
arc
h20
06 J
une
2006
Sep
tem
ber
2006
De
cem
ber
2007
Ma
rch
2007
Ju
ne20
07 S
epte
mb
er20
07 D
ece
mb
er20
08 M
arc
h20
08 J
une
Cha
nge
on
a ye
ar
earli
er (
per
cen
t)
All low-paying sectors Whole economy
Number of jobs in low-paying sectors has been increasing faster than whole economy
Source: ONS, Employee Jobs, GB, 1999-2008
Change in Employee Jobs, GB
24
Some low-paying sectors continued to perform well up to September 2008
Source: ONS Employee Jobs, not seasonally adjusted, Great Britain, 1998–2008.Notes: 1) As a result of the break in the employee jobs series between December 2005 and September 2006, changes between periods prior to December 2005 and after September 2006 cannot be estimated.2) The social care and leisure, travel and sport sectors do not align exactly to the LPC's specification of the low-paying sectors due to the breakdowns of employee jobs provided by the ONS.
Levels (thousands)September
2008
Change on September
2007
Annual growth since September
2007
Change on September
2006
All sectors 26,400 -8 -0.0% 216
All low-paying 8,400 38 0.5% 45
Retail 3,298 -2 -0.1% -16
Retail (excluding motor) 2,759 3 0.1% -8
Hospitality 1,775 -9 -0.5% -6
Social care 1,185 23 2.0% 49
Cleaning 495 7 1.4% 1
Agriculture 264 19 7.5% 18
Security 176 5 2.6% 10
Textiles, clothing 90 -3 -3.5% -8
Food processing 350 -6 -1.7% -6
Leisure, Travel and Sport 641 1 0.2% 1
Hairdressing 127 5 4.0% 4
• Recent growth concentrated in social care and agriculture
• Retail was stable but hospitality in decline.
25
-100
-50
0
50
100
150
200
250
300
350
400
450
50020
00 Q
120
00 Q
220
00 Q
320
00 Q
420
01 Q
120
01 Q
220
01 Q
320
01 Q
420
02 Q
120
02 Q
220
02 Q
320
02 Q
420
03 Q
120
03 Q
220
03 Q
320
03 Q
420
04 Q
120
04 Q
220
04 Q
320
04 Q
420
05 Q
120
05 Q
220
05 Q
320
05 Q
420
06 Q
120
06 Q
220
06 Q
320
06 Q
420
07 Q
120
07 Q
220
07 Q
320
07 Q
420
08 Q
120
08 Q
2
Cha
nge
in e
mpl
oym
ent
on a
yea
r ea
rlier
(th
ousa
bds)
Public Sector Private Sector
Public sector employment has been falling – adversely affecting women
Source: ONS, LFS and estimates from public sector organisations, not seasonally adjusted, UK, 2000-2008
26
Bank of England GDP Forecast (February 2009) - probably still highly optimistic
The fan chart depicts the probability of various outcomes for GDP growth. To the left of the first vertical dashed line, the distribution reflects the likelihood of revisions to the data over the past; to the right, it reflects uncertainty over the evolution of GDP growth in the future. If economic circumstances identical to today’s were to prevail on 100 occasions, the MPC’s best collective judgement is that the mature estimate of GDP would lie within the darkest central band on only 10 of those occasions. The fan chart is constructed so that outturns are also expected to lie within each pair of the lighter green areas on 10 occasions. Consequently, GDP growth is expected to lie somewhere within the entire fan on 90 out of 100 occasions. The bands widen as the time horizon is extended, indicating the increasing uncertainty about outcomes. See the box on page 39 of the November 2007 Inflation Report for a fuller description of the fan chart and what it represents. The second dashed line is drawn at the two-year point of the projection.
• This is much more pessimistic than the November Inflation Report.
• The recession is now forecast to be much deeper and longer.
• It is now forecast to last until Q1 2010 with GDP falling by over 3% in the year to Q1 and Q2 2009.
27
What implications of the recession for gender equality?
• Adverse implications for women from:– Recessions hit less skilled more than more skilled in terms of
both employment and wages – Weakening of employment in public sector – High proportion in part-time employment
• But, against this:– Past recessions hit consumer durables more than services– Employment in low-paid sectors has so far been more resilient– High proportion of women in public sector
• National Minimum Wage should provide effective support for low wages and for the gender pay gap– Will the NMW be allowed to keep up with average earnings in
the recession?
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