4 JANUARY 2018

Fat Cat Thursday is when we focus on the highest earners and ask how it is possible that they can earn the equivalent of the average worker’s annual wage by lunch time, 3 working days into the year. But this is not only a story of gross pay inequality between the highest earners and the rest. It’s also a story about the gender pay gap as so few of those highest earners (just 7 of the FTSE 100 CEOs) are women. But I want to focus on the lowest paid. Compare the fact that when the National Living Wage was introduced, 61% of the beneficiaries were women. Or the fact that welfare reform is going to leave single parents £3000 per year worse off by 2020. 92% of single parents are women and as the Women’s Budget Group has found, those hit hardest by welfare reform and spending cuts are black, Asian and minority ethnic women. 

We know that the pay gap between women and men on the lowest pay is negligible. Everyone at that level is badly paid. Many of the jobs at this level are part-time or zero hours contracts. Women are more likely to work part-time and to do so for longer periods of time, usually because they are working alongside caring for children or an older or disabled partner or relative. So they get trapped in it. Men may be migrant workers or students, working while they are studying. The hourly pay for mothers in the workplace 2 years after having their first child is 33% less than their male colleagues.

But the gender pay gap isn’t just a snapshot, it is also a lifetime of pay inequality which grows over time and as we move up the income ladder. When we look at young women entering the labour market we see the pay gap is 5%. Relatively low, but worryingly this figure has grown since last year suggesting that we are going backwards not forwards. As women progress in their working lives their value relative to their male colleagues declines. So the mean average gender pay gap for full-time workers becomes 14.1% and this hasn’t shifted in 3 years. If you are a Pakistani or Bangladeshi woman your pay gap will be 26%. If you are black African woman, it will be 20% and will have hardly shifted for 20 years. So this is also a story of multiple discrimination and disadvantage.

Move up the hierarchy and the number of women starts to dwindle until we get to the very top where just a handful occupy the most senior roles in our top companies. The TUC has found that for the highest earners in the top decile - the pay gap is 54.9%. Yes, those women are exceptionally well paid, but why do we value them so much less than their male colleagues for doing a very similar job? It is the same undervaluing of women that we see throughout our economy.

So what do we do about it? Firstly, as well as curbing the pay excesses of those at the top, we could pay the real living wage instead of the national living wage to those at the bottom, that would disproportionately benefit women. Secondly, we need to address the discrimination and harassment which lies hidden, corroding our workplaces and holding women back. Thirdly, we need pay transparency. Only by talking about pay can we begin to tackle pay inequality. Gender pay gap reporting, which begins for larger employers in April, offers some accountability but won’t bring transparency for individual workers.

Finally, we have to deal with the structures of our labour market and the way we do work. An inflexible working week and a long-hours culture is bad for all of us but certainly bad for many women. Making jobs flexible by default, creating a longer, more generous period of paid leave for fathers. Occupational segregation is inefficient and means we are not maximising the potential of young women at school, channelled away from maths, science and engineering; nor at work as those who do qualify in STEM subjects then drop out before they get into those sectors.

We need to realise that undervaluing women is holding us all back because it holds our economy back. This is what needs to change.


Sam Smethers, CE of FawcettSam is the Chief Executive of The Fawcett Society.