In this blog, Dr. Lisa Wilson, NERI senior economist summarises findings of NERI Working Paper 'How are we unequal? The adjusted gender pay gap in Northern Ireland' which provides evidence to show that Northern Ireland's gender pay gap performance is not as rosy as headline figures suggest.
On International Women’s Day this week, Pricewaterhouse Coopers published a report which detailed the extent of gender differences in pay across different regions of the United Kingdom. In this report, Northern Ireland was shown to have the smallest gap in earnings between males and females, when compared to other regions.
This finding is nothing new, with Northern Ireland outperforming the rest of the United Kingdom for some time now in raw comparisons of gender differences in pay. Indeed, despite the relatively common institutional and policy context, the GPG in Northern Ireland has consistently been found to be far smaller than in the rest of the UK.
This has prompted a nonchalant attitude towards gender differences in pay in Northern Ireland, with the issue often written off as something not worthy of further attention or scrutiny. This is something that has always perplexed me, not least because our smaller relative pay gap is based on one narrow measure of the gender pay gap (median earnings), and so doesn’t reflect the full reality and so has always came across as a convenient way under which local politicians and policy makers could avoid taking the issue of gender inequalities in the labour market seriously.
But also, because surely if politicians in the UK were actually as invested in doing something about the lower pay which women receive as compared to men as they would have you believe, they are on days such as International Women’s Day or Equal Pay Day, then you would have thought that they would have taken a particular interest in Northern Ireland, so to see what they could learn from it?
There has been little analysis, however, which has concerned itself with examining and explaining the nature of the gender pay gap and the role of different factors in driving and reducing gender differences in pay in Northern Ireland. In seeking to fill this gap, this week I published a NERI Working Paper which does just this. The findings I will summarise in this blog.
I should begin first by explaining what the gender pay gap is. The gender pay gap is a metric that tells us about the difference in the earnings of males and females in the labour market and is one of the main mechanisms used to assess the extent of gender inequalities in the labour market.
There are different ways in which we can measure the gender pay gap. At its most basic, we can compare raw differences in pay between males and females. When measured in this way, this is known as the unadjusted gap. It is called the unadjusted gap because crucially, when measured like this, we are not measuring differences in earnings between men and women who have the same job, work in the same sector or work the same hours or the same pattern of work. The gender pay gap also does not include analyses of differences in pay for males and females who have the same family structure or the same other personal characteristics that determine a person’s pay, such as age or educational qualifications. And so, this measure does not necessarily mean that men and women are paid differently for the same job. The unadjusted gender pay gap captures the differential economic returns from paid work rewarded to females as compared to males.
When then we seek to ‘adjust’ or ‘control’ for the fact that men and women have different characteristics or engage in the labour market differently, because they work in different jobs or work different hours or have different levels of experience, we get to understand how these differences impact on gender differences in pay.
When we do this for Northern Ireland, we see that there are gendered differences in how males and females engage in the labour market and we also see that females have superior labour market characteristics compared to males. That is females, on average, have more of those characteristics which drive higher pay for work. For example, they are better educated, and on average, they work in better paid occupations. The impact of this is that it reduces gender differences in pay and is part of the reason why the gender pay gap in Northern Ireland is smaller than it is in the rest of the UK.
And so, at this stage you might be wondering – well then how is it that women continue to earn less than men? The reason for this is because of inequalities in pay between men and women for the same characteristics. The scale of these inequalities mean that if it were not for the superior labour market position of females, our gender pay gap would be almost double what it is.
An example, the gender pay gap is narrowed by the fact those with a degree obtain on average higher wages than those with below degree qualifications and females are more likely to have a degree than males. However, because men earn more for having a degree than women the gender pay gap is widened.
The raw gender pay gap in Northern Ireland is flattered by the fact that women have better characteristics, not because there is only a small gender pay gap problem or anything which could be described as even close to gender pay equality.
And so, it is the interplay between the fact that different characteristics obtain different levels of pay, men and women have different characteristics, and men and women get paid differently for the same characteristics that determines the gender pay gap.
You might think of it like a game of snakes and ladders. The better educational attainment of females, and the better occupational position of females helps in getting them up some ladders, but the fact that the scale of the inequality in pay for these same characteristics is so large means that they always hit the bigger snakes.