Calculating the gender pay gap

A note on our maths

On Monday 9th November, we marked Equal Pay Day. The date is calculated using the full-time mean pay gap.

Different organisations use different measures of the gap so it’s worth taking some time to unpick how the figures are calculated and what the gender pay gap is really telling us.

Fawcett calculates the pay gap using the mean average male and female hourly earnings. The mean average is calculated by adding up the hourly pay of all men or women and dividing it by the number of men or women included in the data. If you were asked to work out the average cost of t-shirts sold on the Fawcett shop right now, it’s probably the method you’d use: adding up the cost of all the t-shirts on sale and dividing the total by the number of t-shirts.

This is the measure used by Fawcett but also the Equality and Human Rights Commission and the Trades Union Congress (TUC).

However, the government and the Office for National Statistics (ONS) use a different measure – the median. This is the value you would get if you lined up all male or female workers up in a row in order from the lowest hourly pay to the highest hourly pay.  The hourly pay of the person right in the middle of the row is the median average.

Both of these have merit as ways to calculate the average. The median can be seen as more representative of most people’s experiences, it is less affected by having a small number of people at the extremes with very high hourly rates of pay.

However, as far as we’re concerned, in the case of the gender pay gap this is precisely the point: an important part of the gender pay gap is that women are less likely to be in the highest paid and most senior positions. We think that this inequality matters and should be measured in the pay gap statistics.

Some people have objected that the pay gap (either mean or median) is not comparing like with like. Women are more likely to be in low skilled low paid jobs, so naturally it is argued they earn less than men who are concentrated in higher skills and better paid jobs.

Fawcett thinks this objection confuses illegal pay discrimination with the wider issue of the pay gap. It is still the case today that some women doing exactly the same job are paid less than men for doing it. But this is only one cause of the gender pay gap. Another important factor is our highly segregated labour market, where it is difficult for women to access the best paid jobs, and where we undervalue feminised sectors such a care. We know that male achievements are more likely to be recognised through their pay – for instance, they are more likely to receive a bonus, or when women do get bonuses they are lower then those of their male colleagues.

Evidence from the EHRC has recently highlighted that high numbers of women experience pregnancy discrimination, and that many find themselves demoted or denied development opportunities on their return to work.  But fees of £1200 to bring a claim have resulted in an 80% drop in tribunal claims, so a lot of discrimination (including pay discrimination) is going unchallenged and unchecked.

Inequality is complicated. The pay gap is an indicator of the ways that women are repeatedly disadvantaged in our workforce. The fact that the experiences of men and women at work are not the same is precisely what we are concerned about, and what the gender pay gap helps us to measure.

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