Gender Pay Gap Widest Amongst the Top Jobs in London

Just before the Christmas festivities got into full swing GLA Economics published its analysis of women in London’s labour market. The GLA’s findings include:

1. Women with children are least likely to be in employment in the capital (53%) compared to the rest of the UK (65%);
2. Women in full time work earn 87p for every £1 earned by men (at the median); and
3. The gender pay gap rises to "a staggering 31%" between men and women at the top of the income spectrum (the ninetieth percentile).

I have argued elsewhere (see, for example, ‘2020 Welfare: Life, Work, Locality’) for a local Living Wage – a principle advocated by the Major of London. While a floor level wage not only creates an effective minimum, it also helps to establish a culture in which work is made to pay. Given that children in families where adults are working are more likely to be in poverty in London than elsewhere, the Living Wage policy is particularly pertinent for the capital.

But what about women at the top end of the income distribution, for whom regulation by a Living Wage doesn’t apply? In London, females employed in the private sector receive just two thirds of their male counterparts. Astonishingly, the pay gap rises with the level of qualification achieved. This is not just poorly educated women failing to assert their right to equal pay. If they get there (only 5.5 per cent of all executive directors in the FTSE 100, for example, are female) the most articulate and highly qualified women in London’s top jobs are earning significantly less. The GLA show that the picture is worse in London than the rest of the UK and hasn’t changed in the last decade.

Does this mean that we should sit back and wait for norms and behaviours to change? What policy levers might accelerate the current crawl towards greater gender pay equality across the whole of the income spectrum? Two approaches are frequently proposed:

1. Legislation has proved to be only marginally successfully, having slightly narrowed inequalities between male and female pay in the public sector (subject to certain duties by the Equalities Act 2006). Nevertheless, the gender pay gap persists (averaging 16% compared to 21% in the private sector) and the ways in which public sector regulation can influence norms and cultures of the private sector are not clear. Legislative policy levers also take time to change the culture in which they are applied.

2. Greater transparency of comparative salaries between and within organisations might help to speed this process up. Sweden has shown that a policy of open tax returns can work. But the traditional British sense of squeamishness over ‘vulgar’ of talk of money could bolster the privacy lobby.

Set within a wider debate ranging from positive discrimination to Open Government, solving the gender pay gap seems doesn’t seem within our grasp in the short term. Some argue that the recession has delayed progress further. The Equality and Human Rights Commission recently concluded that efforts against the gender pay gap are ‘grinding to a halt’. To kick-start progress, we need a new source of insight. Work by Volterra on the spread of social norms, values and network effects (see N Squared, RSA 2010) offers an alternative approach which could help to combat gender based inequalities that cost our economy much, and our society more.

Posted by Charlotte Alldritt, Senior Consultant Volterra Consulting