IEA - Equal Pay Day calculation is fundamentally misleading
IEA release a new briefing on the gender pay gap
Today’s Equal Pay Day (EPD) campaign is fundamentally misleading, and fails to prove any gender pay gap between men and women in similar roles.
The EPD campaign, run by the Fawcett Society, promotes a pay gap figure that is five percentage points higher than the official figure, only achieved by including outlier salaries of high earners and therefore misrepresenting the size of the gender pay gap.
The official gender pay gap, based on data from the Office for National Statistics, is 9.1% for full-time workers in favour of men, and -5.1% for part-time workers in favour of women. These figures are calculated by using the median hourly earnings of full-time and part-time workers, excluding overtime. The Fawcett Society uses the mean calculation of ONS data to inflate their figure to 14.1%; this moves away from like-for-like comparisons between workers.
The EPD briefing also excludes the only region with a negative gender pay gap, Northern Ireland, from its table.
A new briefing from the Institute of Economic Affairs presents a more accurate representation of the gender pay gap in the UK and argues that the pay cap is explained by a series of complex factors, including women taking time out of work and different career choices; not because of employer discrimination.
For full-time workers the gender pay gap is 9.1% in favour of men
For part-time workers this figure is -5.1%; a negative pay gap in favour of women
Breaking down the 9.1%, the pay gap for women aged 22-39 is negligible:
- The pay gap for women aged 22-39 fluctuated between -0.8% and 2.2% between 2015-2017
- The pay gap for women aged 30-39 fluctuated between 0.6% and 2.0% between 2015-2017
- These ONS calculations do not show differences in rates of pay for comparable jobs; they do not prove that women receive unequal pay for equal work.
The Equal Pay Day Myth
The Equal Pay Day campaign’s calculation of the pay gap cannot be used to gauge whether women are receiving equal pay for equal work, as the method used skews the result away from like-for-like comparisons.
Furthermore, Northern Ireland is the only region left off the table at the end of the Equal Pay Day report. Notably, Northern Ireland is also the only region with a negative gender pay gap: -3.4% when measured as a median. Even when measured as a mean, the pay gap is 2.9%, a clear outlier amongst the other, included figures.
The problem with gender pay gap reporting
- Forcing businesses to publish their pay gaps will likely cause confusion about wage differentials
- It may have perverse consequences for employers, making them reluctant to hire female graduates into junior roles
- It may also reduce women’s bargaining power at work
Commenting on the briefing, author Kate Andrews, News Editor at the Institute of Economic Affairs, said:
“The Equal Pay Day campaign does nothing to advance women in the workforce; even worse, it seems to be covering up the major successes that women have had, particularly in Northern Ireland. Omitting the one region with a negative gender pay gap from its table tells us everything we need to know about the aims of this campaign – it is perpetuating a victim-hood narrative, deliberately leaving out information that should be cause for celebration.
“Evidence we have suggests young women entering the workforce have every reason to believe that they will receive equal pay for equal work. Yet they are bombarded with inflated and manipulated statistics, designed to make them feel helpless – at the mercy of Big Brother’s protections. This is the polar opposite of empowerment. Working women are doing far too well in Britain to be held back by this kind of outdated campaigning.”
Notes to editors:
For media enquiries please contact Nerissa Chesterfield, Communications Officer: firstname.lastname@example.org or 020 7799 8920 or 07791 390268
To download a copy of ‘The Gender Pay Gap: A briefing’ please click here.
In August 2016 the IEA published ‘And how much do you earn? Public pressure for regulation of pay’. Click here to download a copy.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
The IEA is a registered educational charity and independent of all political parties.
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