Why Has the Equal Pay (and Amendment) Act Not Resulted in Equal Pay in the Uk?

Why has the Equal Pay (and Amendment) Act not resulted in equal pay in the UK?

15th January 2007

WORD COUNT: 1497

1.0 Introduction

The Equal Pay Act of 1970 was originally formulated in response to Article 141 of the EU treaty which stated that 'Each member state shall ensure that the principle of equal pay for male and female workers for work of equal value is applied.' This piece of legislation, which was later amended in 1983, was intended to remedy the vast gender pay difference, allowing an individual right to the same contractual pay, benefits and conditions of employment to that of the opposite sex. This is based upon a man and a woman doing like work, work rated as equivalent or work of equal value under the same employer (Torrington, Hall and Taylor 2005).

At the time of implementation in 1975, women in the UK were found to be earning 63% of what men were earning, which subsequently has been further reduced, more predominately in the following two decades by 20%. Regardless of any pattern of convergence the gender pay gap has remained at around this level and in 2004 an Office for National Statistics calculated the difference to be 19%.

Furthermore, research conducted by Payfinder.com, a company which compares salaries found that the difference in pay between the sexes was particularly vast in the South East with a 30% difference, 29% in Scotland, 23% in Wales and 26% in the eastern parts of England.

2.0 Factors causing an unequal gender pay gap in the UK

Human Capital

According to research findings into the gender pay gap by the Equal Opportunities Commission (EOC), the argument of many economists as to why there is still a substantial pay gap between the genders is that of an individual's acquired human capital; 'the individual differences (made) in the choice of investment in education and training, type of occupation, sector of employment and employment status.'

As a generalisation women tend to be employed mainly in the five C's; catering, cleaning, cashiering, clerical work and caring, work associated with being poorly paid, lacking career prospects and needing little training. It is perceived that this is due to a woman's acquired human capital being smaller compared to that of her male counterparts, based upon various decisions made in life.

This view undoubtedly has its limitations. Firstly women may have less variation in choices of employment due to physical constraints, rather than lack of training or type of education. Biology certainly plays a part in employment decisions more predominantly in a female's life compared to a male's; time may need to be taken off for reasons such as childbirth and domestic obligations. For these reasons women tend to chose jobs that can be more tailored to their lifestyles e.g. those needing less commitment and more flexibility.

Secondly, pay may be based in correlation to the changing nature of the industry rather than determined by gender which seems to be a common misconception.

Part-Time Work

As previously mentioned the need for flexible hours and less commitment often equates to women being employed on a part-time basis, thus accounting for 44% of all women in the UK (EOC 1999).Unfortunately this also correlates to an inferior wage to those employed in full-time occupations.

Research suggests that part-time employees tend to be insignificant to their employers in terms of the workforce, often being referred to as part of a secondary labour market (Torrington, Hall and Taylor 2006) and therefore are less likely to receive the same standard of entitlements such as access to training, benefits and career enhancing prospects as full-time employees.

Marginalising the part-time work force also means that systems of reviewing and payment are often overlooked.

Pay Systems and Equal Pay Reviews

According to an EOC report into monitoring progress towards pay equality, many employers 'felt it was sufficient that pay was linked to the job, responsibilities or performance rather than gender.' However they were unable to prove that this was so, as in total it was recorded that by the end of 2003 only 36% of large organisations had either participated in an equal pay review or had planned to do so, poor considering equality in pay should have been monitored and practised since the legislation was passed in the mid 70's.

Payment systems are also subject to criticism when reviewing equal pay in the UK, as many have 'unintentional consequences which prove to be a barrier to equal pay' (Torrington, Hall and Taylor 2006), such as differences in starting pay, market allowances and broadbanding.

In particular payment systems such as the Performance Related Pay System, which may in essence have plausible objectives; 'sensitive and responsive to a company's and employees' needs' (Brading and Wright 1990), in reality (with relation to equal pay), undermine whether those employed to do work rated as equivalent are actually paid an equivalent amount.

Sex discrimination

It can also be argued that women are victims in the workplace, rather than unable to cope with work that demands commitment, prior training and experience. In the EOC's research findings of modelling gender pay gaps; 38% of the pay gap is due to factors related to being of the female gender such as direct discrimination, male preference and different labour market motivations.

Current Trends

In terms of trends affecting the gender pay gap there is continuing concern that the fragmentation of the public sector, by means of sub-contracting and the continuation of privatisation is having an adverse affect. This is due to the public sector traditionally being seen as responsible for providing women 'with both career opportunities and an integrated and regulated pay system'