Thought leadership

Women who return to work part-time after having a baby continue to earn less than men for many years afterwards, says a report by the Institute for Fiscal Studies.

The wage gap between men and women becomes steadily wider in the years after babies are born, the IFS says. Women miss out on promotions and accrue less experience than men, which holds back their earning power, it adds.

Over the subsequent 12 years, women’s hourly pay rate falls 33% behind men’s.

Robert Joyce, one of the IFS report’s authors, said women did not see an immediate cut in their hourly wages when they reduce their hours.

“Rather, women who work half-time lose out on subsequent wage progression, meaning that the hourly wages of men (and of women in full-time work) pull further and further ahead.

“In addition, women who take time out of paid work altogether and then return to the labour market miss out on wage growth,” he added.

Men are 40% more likely than women to be promoted into management roles, separate research showed.

A report by the Chartered Management Institute and XpertHR found that the difference in promotion rates is one of the main causes of the gender pay gap.

Mark Crail, content director at XpertHR, said: “The gender pay gap is not primarily about men and women being paid differently for doing the same job.

“It’s much more about men being present in greater numbers than women the higher up the organisation you go. Our research shows that this gap begins to open up at relatively junior levels and widens – primarily because men are more likely to be promoted.”

On average, women earn 18% less per hour than men, according to the IFS research.

After returning to work following the birth of a first child, that wage difference per hour rises steadily.

The TUC general secretary Frances O’Grady said: “It is scandalous that millions of women still suffer a motherhood pay penalty.”

“Many are forced to leave better-paid jobs due to the pressure of caring responsibilities and the lack of flexible working.”

The starting pay gap of 18% between men and women is in fact much smaller than before. Back in 1993, it was 28% and in 2003 it stood at 23%.

Once children are born, many women return to work only part-time or stop working altogether. The IFS found that in the 20 years following the arrival of a first child, the average woman had worked for four years fewer than men.

And men had spent nine years more than women working for 20 hours a week or more.

“Comparing women who had the same hourly wage before leaving paid work, wages when they return are on average 2% lower for each year spent out of paid work in the interim,” the IFS found.

“This apparent wage penalty for taking time out of paid work is greater for more highly educated women, at 4% for each year out of paid work.

“The lowest-educated women (who actually take more time out of paid work after childbirth) do not seem to pay this particular penalty, probably because they have less wage progression to miss out on,” the IFS explained.

Earlier this year the government announced plans, to start in 2017, under which 8,000 employers with more than 250 staff will have to reveal the number of men and women in each pay range, and show where the pay gaps are at their widest.

A government spokeswoman said: “The gender pay gap is the lowest on record but we know we need to make more progress and faster.”

“That’s why we are pushing ahead with plans to force businesses to publish their gender pay and gender bonus gap – shining a light on the barriers preventing women from reaching the top.”

Commenting on the gender pay gap report Tom Castley, Vice President of Xactly EMEA:

“Although the gender pay gap has been reduced in the past two decades, the 18% gulf is too high. It’s 2016 – the gap should be zero and we need to stop making excuses for why that’s not the case. The fact that the IFS research has also found that the gap ‘balloons’ after women have children is simply embarrassing for businesses because that shouldn’t be a variable.

“Research has found that businesses with more than 10% of women at the helm have higher profits than those that aren’t gender balanced. If we are to combat the gender pay gap, businesses themselves need to take a good hard look at where their pay gaps lie and how they can address them. The issue here is that many organisations are not able to access this data or analyse it properly. With the right tools in place however, businesses can track and analyse employee performance against total compensation, to highlight where gender pay gaps in the business may lie and how they can be bridged.

“By making a fair and accurate plan, organisations ensure that the workforce is fully engaged and enabled to drive the businesses to success. This not only creates a culture of productive employees, but can reduce the gender pay gap and hopefully bring us closer to workplace equality that bit sooner.”

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