Transcript The minimum wage and minority groups LPC Retreat

The Minimum Wage
and Gender Equality
ESRC GeNet Conference on
The Credit Crunch: Gender Equality in
Hard Times
6th March 2009
William Brown
with warm thanks to Low Pay Commission staff
1
Women in the labour market
• Rising proportion in employment: - women in workplaces of 25 or
more rose 38% to 48% between 1980 and 2004
• 40% of women work part-time
• Three-quarters of part-time workers are female
• Women’s membership of trade unions is now same as for men
• Activity rates (16-59/64, 2008iv): women
men
– Employment rate
70%
78%
– Unemployment rate
5.7%
6.9%
– Economic inactivity rate 26%
16%
• 29% of women compared to 13% of men are employed in the public
sector (2006)
• Two-thirds of employees in low-paying occupations are women
2
Men
Women
Source: LPC estimates of LFS Microdata, data not seasonally adjusted, calendar quarter, Q2 2008
All occupations
Other
Occupations
Low-paying
occupations
Childcare
Hairdressing
Office work
Social Care
Textiles
Retail
Cleaning
Hospitality
Leisure
Food processing
Agriculture
Security
Proportion of male and female employees (per cent)
Gender segregation tends to be higher in lowpaying occupations
100
90
80
70
60
50
40
30
20
10
0
Low-paying occupations
3
What has happened to the gender pay gap?
• Gender pay ratio = women’s earnings as a percentage of
men’s (e.g. 85%)
• Gender pay gap = percentage difference between
women’s and men’s earnings i.e. 100% minus gender
pay ratio (e.g. 15%)
• Annual gender pay gap > weekly > hourly
– Difference in working hours and additional payments
• Mean pay gap
– Used for international comparisons
– But includes extreme earnings
– Less stable
Used here: median gross hourly pay excluding
overtime for full-timers, aged 18 and above
4
The gender pay gap 1997-2008
lowest decile and median declining; upper static
£ per hour
Year
Men
1997
1998
1999
2000
2001
2002
2003
2004
2004
2005
2006
2006
2007
2008
Lowest
decile
4.44
4.62
4.85
4.94
5.15
5.40
5.63
5.81
5.76
6.00
6.24
6.20
6.50
6.73
Median
8.19
8.54
8.85
8.87
9.32
9.72
10.03
10.48
10.36
10.80
11.22
11.14
11.61
12.16
Per cent
Pay gap
Women
Upper
decile
17.24
18.10
18.89
19.45
20.84
21.94
22.53
23.44
23.02
24.24
25.38
25.25
26.25
27.27
Lowest
decile
3.87
4.08
4.29
4.41
4.65
4.88
5.11
5.36
5.33
5.60
5.84
5.75
6.08
6.25
Median
6.87
7.14
7.46
7.65
8.02
8.41
8.75
9.21
9.10
9.60
10.00
9.86
10.34
10.74
Upper
decile
13.83
14.44
15.22
15.67
16.54
17.43
18.00
18.94
18.75
19.76
20.28
20.12
20.87
22.16
Lowest
decile
12.9
11.6
11.5
10.8
9.7
9.6
9.1
7.6
7.5
6.7
6.4
7.3
6.5
7.1
Median
16.1
16.4
15.7
13.8
14.0
13.5
12.7
12.1
12.2
11.1
10.9
11.5
11.0
11.6
Upper
decile
19.7
20.2
19.4
19.4
20.6
20.6
20.1
19.2
18.6
18.5
20.1
20.3
20.5
18.7
NB: ONS figures are higher than ASHE figures as they only included workers on adult rates
Source: LPC estimates based on ASHE without supplementary information, 1997-2004, ASHE with supplementary information, 2004-2006
and ASHE with supplementary information new methodology, 2006–2008, normal weights, UK.
Note: Care should be taken when comparing ASHE series. 18+, full time workers.
5
The gender pay gap by percentiles: 1998 - 2008
Gender pay gap (per cent) for full-time employees aged 18
and over (per cent)
gap increases with the earnings distribution - but has narrowed at lower levels
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
Percentile point of hourly earnings distribution
1998
2006
2007
2008
Source: LPC estimates based on ASHE without supplementary information, 1998, ASHE with supplementary information, 2004 and ASHE
with supplementary information new methodology, 2006–2007, low-pay weights, UK.
Note: Care should be taken when comparing ASHE series.
6
The gender pay gap varies by age…
Median gender pay gap by age group, full-time employees (per
cent)
25
20
15
10
5
0
-5
-10
-15
16-17
18-21
22-29
30-39
40-49
50-59
60+
Age
1998 (*)
2002 (*)
2006(new)
2007
2008
Source: LPC estimates based on ASHE without supplementary information, 1998-2002 and ASHE with supplementary information new
methodology, 2006–2007, low-pay weights, UK.
Note: Care should be taken when comparing ASHE series.
7
Gender pay gap of median gross hourly earnings excl. overtime for full-time employees
aged 18+ (per cent)
…and by UK country
14
12
10
8
6
4
2
0
-2
England
Wales
Scotland
2004
2005
2006
Northern Ireland
2007
UK
2008
Source: ASHE with supplementary information, 2004-2005 and ASHE with supplementary information new methodology, 2006–2007, lowpay weights, UK.
Note: Care should be taken when comparing ASHE series.
8
From the 30th percentile the gap is larger
for low-paying sectors…
Gender pay gap for full-time employees aged 18 and over
(per cent)
25
20
15
10
5
0
10
20
30
40
50
60
70
80
90
Percentile point of the hourly earnings distribution
Low-paying sectors
Non Low-paying sectors
9
Source: LPC estimates, ASHE new methodology, normal weights, UK, April 2008.
…but is smaller for low-paying occupations.
Gender pay gap for full-time employees aged 18+ and over (per
cent)
20
18
16
14
12
10
8
6
4
2
0
10
20
30
40
50
60
70
80
90
Percentile point of the hourly earnings distribution
Low-paying occupations
Non Low-paying occupations
10
Source: LPC estimates, ASHE new methodology, low-pay weights, UK, April 2006.
…for part-time work, women earn more than
men
£ per hour
Men
1997
1998
1999
2000
2001
2002
2003
2004
2004
2005
2006
2006
2007
2008
Per cent
Women
Full-time Part-time Full-time Part-time
8.19
4.81
6.87
4.73
8.54
4.75
7.14
4.87
8.85
5.00
7.46
5.07
8.87
5.00
7.65
5.12
9.32
5.19
8.02
5.36
9.72
5.50
8.41
5.53
10.03
5.84
8.75
5.93
10.48
6.00
9.21
6.18
10.36
6.00
9.10
6.16
10.80
6.50
9.60
6.63
11.22
6.78
10.00
6.90
11.14
6.84
9.86
6.88
11.61
7.16
10.34
7.21
12.16
7.30
10.74
7.48
Pay ratio Pay ratio
female
female
part-time part-time
to male
to male
full-time part-time
57.7
57.0
57.2
57.7
57.5
56.9
59.2
58.9
59.4
61.4
61.5
61.7
62.1
61.5
Pay ratio
female
part-time
to female
full-time
98.3
102.5
101.4
102.4
103.2
100.5
101.6
103.0
102.6
101.9
101.8
100.6
100.7
102.5
Source: LPC estimates based on ASHE without supplementary information, 1997-2004, ASHE with supplementary information, 2004-2006
and ASHE with supplementary information new methodology, 2006–2008, low-pay weights, UK.
Note: Care should be taken when comparing ASHE series.
68.8
68.2
67.9
67.0
66.8
65.7
67.8
67.0
67.7
69.0
69.0
69.7
69.8
69.6
11
What has been the impact of
the minimum wage?
12
29.00
28.00
27.00
26.00
25.00
24.00
29.00
28.00
27.00
26.00
25.00
24.00
23.00
22.00
21.00
20.00
19.00
18.00
17.00
16.00
15.00
14.00
13.00
12.00
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
£30 and over
Gross hourly pay excluding overtime (£)
£30 and over
Gross hourly pay excluding overtime - 25 pence pay bands (£)
23.00
22.00
21.00
20.00
19.00
18.00
17.00
16.00
15.00
14.00
13.00
12.00
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Percentage of employee jobs held by those aged 22 and over
Percentage of employee jobs held by those aged 22 and over
The national income distribution had its
lower end sharply compressed between
1997 and 2007
Hourly Earnings Distribution, Adults, 1997
6.0
6.0
5.0
5.0
4.0
4.0
3.0
3.0
2.0
2.0
1.0
1.0
0.0
0.0
Hourly Earnings Distribution, Adults (22 and over), 2007
6.0
6.0
5.0
5.0
4.0
4.0
3.0
3.0
2.0
2.0
1.0
1.0
0.0
0.0
13
The previous collapse of low pay was reversed ….
Percentage increase in percentile earnings minus percentage
increase in median earnings
earnings growth by percentile 1992-97 compared to 1998-2007
60
60
50
50
40
40
30
30
20
20
10
10
0
0
1
6
11
16
21
26
31
36
41
46
51
56
61
66
71
76
81
86
91
96
-10
-10
-20
-20
Percentile of the gross hourly earnings excluding overtime distribution (adults aged 22 and over)
1998–2007
1992–1997
14
Of those affected by the NMW in 2008 – twothirds are women
Full-time Male
21%
Part-time Female
45%
Full-time Female
20%
Part-time Male
14%
Source: Annual Survey of Hours and Earnings (ASHE) including supplementary information new methodology, low pay
weights, 2008.
15
Note: Low-paid defined as adults (aged 22 and over) earning £5.64 or less, youths (aged 18-21) earning £4.70 or less and
16-17 year olds earning £3.48 or less in April 2008.
3.0
Adult NMW 2008
(£5.52)
Adult NMW 2006
(£5.05)
3.5
Gross hourly earnings excluding overtime (£)
Under £4.50
4.50
4.55
4.60
4.65
4.70
4.75
4.80
4.85
4.90
4.95
5.00
5.05
5.10
5.15
5.20
5.25
5.30
5.35
5.40
5.45
5.50
5.55
5.60
5.65
5.70
5.75
5.80
5.85
5.90
5.95
6.00
6.05
6.10
6.15
6.20
6.25
6.30
6.35
6.40
6.45
6.50
6.55
6.60
Percentage of female employee jobs held by those aged 22 year
olds and older
There has been a substantial impact on
women’s earnings…
4.0
4.0
2006
Source: LPC estimates, ASHE new methodology, low-pay weights, UK, April 2006 and 2008.
3.5
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
2008
16
20
90
18
80
16
70
14
60
12
50
10
40
8
30
6
20
4
10
2
0
0
Working age unemployment rate
100
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
Working age employment rate
…but no evidence of an impact on
employment or unemployment.
Year/Quarter
Employment Men (LHS)
Employment Women (LHS)
Unemployment Men (RHS)
Unemployment Women (RHS)
Source: ONS Working age employment rate (MGSV, MGSW) and Working age unemployment rate (YBTJ, YBTK), seasonally adjusted, UK,
1971–1997 and 1998Q1–2008Q3.
17
Why have there been no apparent adverse
employment effects of the NMW?
• 90% of NMW jobs are in service sectors: few face
international competition; many with low price elasticity
• Prices in some of these sectors rose as a result of NMW
• Major low paying service sectors (retail, hospitality,
cleaning, care etc) saw growing demand
• Evidence of improved productivity arising from improved
management in response to more expensive labour
• …and of shift of employment to better managed firms
• …and increased concentration of ownership
• The NMW has been raised very gradually relative to
average earnings
18
Three phases of NMW growth: very cautious to 2001, faster
than average earnings to 2007, cautious subsequently
Cumulative percentage increase since April 1999
70
60
60
50
50
40
40
30
30
20
20
10
10
2008 August
2008 April
2007 December
2007 August
2007 April
2006 December
2006 August
2006 April
2005 December
2005 August
2005 April
2004 December
2004 August
2004 April
2003 December
2003 August
2003 April
2002 December
2002 August
2002 April
2001 December
2001 August
2001 April
2000 December
2000 August
2000 April
1999 December
1999 August
0
1999 April
0
Month
Adult NMW
AEI including bonuses
CPI
RPI
RPIX
Source: LPC estimates based on ONS data, AEI including bonuses (ONS code LNMQ), RPIX (ONS code CHMK), RPI (ONS code CHAW) and
CPI (ONS code D7BT), monthly, seasonally adjusted (not seasonally adjusted for RPIX, RPI and CPI), GB (UK for RPIX, RPI AND CPI), 19992008
19
The NMW has had a substantial effect on the
gender pay gap, without evident adverse effects
What might be the consequences of a
major recession?
20
1998 January
1998 April
1998 July
1998 October
1999 January
1999 April
1999 July
1999 October
2000 January
2000 April
2000 July
2000 October
2001 January
2001 April
2001 July
2001 October
2002 January
2002 April
2002 July
2002 October
2003 January
2003 April
2003 July
2003 October
2004 January
2004 April
2004 July
2004 October
2005 January
2005 April
2005 July
2005 October
2006 January
2006 April
2006 July
2006 October
2007 January
2007 April
2007 July
2007 October
2008 January
2008 April
2008 July
2008 October
2009 January
Change in employment on a year earlier (thousands)
400
1,600
350
1,500
300
1,400
250
1,300
200
1,200
150
1,100
100
1,000
50
900
0
800
-50
700
-100
600
-150
500
Change in employment (LHS)
Claimant Count level (thousands)
Employment growth has slowed since 2008, while
unemployment increased sharply
Claimant count level (RHS)
21BCJD)
Source: LPC estimates based on LFS working age employment levels (ONS code YBSE) and total claimant count (ONS code
monthly, seasonally adjusted, UK, 1998–2008
2001 June
2001 August
2001 October
2001 December
2002 February
2002 April
2002 June
2002 August
2002 October
2002 December
2003 February
2003 April
2003 June
2003 August
2003 October
2003 December
2004 February
2004 April
2004 June
2004 August
2004 October
2004 December
2005 February
2005 April
2005 June
2005 August
2005 October
2005 December
2006 February
2006 April
2006 June
2006 August
2006 October
2006 December
2007 February
2007 April
2007 June
2007 August
2007 October
2007 December
2008 February
2008 April
2008 June
2008 August
2008 October
2008 December
Redundancies (thousands)
400
700
380
680
360
660
340
640
320
620
300
600
280
580
260
560
240
540
220
520
200
500
180
480
160
460
140
440
120
420
100
400
Redundancies (LHS)
Vacancies (RHS)
22
Source: ONS data (codes BEAO and AP2Y), seasonally adjusted, UK, 2001–2008
Job vacancies (thousands)
Vacancies have fallen sharply since April
2008 as redundancies have risen
1999 March
1999 June
1999 September
1999 December
2000 March
2000 June
2000 September
2000 December
2001 March
2001 June
2001 September
2001 December
2002 March
2002 June
2002 September
2002 December
2003 March
2003 June
2003 September
2003 December
2004 March
2004 June
2004 September
2004 December
2005 March
2005 June
2005 September
2005 December
2006 March
2006 June
2006 September
2006 December
2007 March
2007 June
2007 September
2007 December
2008 March
2008 June
Change on a year earlier (per cent)
Number of jobs in low-paying sectors has
been increasing faster than whole economy
Change in Employee Jobs, GB
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
All low-paying sectors
Source: ONS, Employee Jobs, GB, 1999-2008
Whole economy
23
Some low-paying sectors continued to
perform well up to September 2008
Levels (thousands)
All sectors
All low-paying
Retail
Retail (excluding motor)
Hospitality
Social care
Cleaning
Agriculture
Security
Textiles, clothing
Food processing
Leisure, Travel and Sport
Hairdressing
Change on
Annual growth Change on
September September since September September
2008
2007
2007
2006
26,400
8,400
3,298
2,759
1,775
1,185
495
264
176
90
350
641
127
-8
38
-2
3
-9
23
7
19
5
-3
-6
1
5
-0.0%
0.5%
-0.1%
0.1%
-0.5%
2.0%
1.4%
7.5%
2.6%
-3.5%
-1.7%
0.2%
4.0%
216
45
-16
-8
-6
49
1
18
10
-8
-6
1
4
• Recent
growth
concentrated
in social
care and
agriculture
• Retail was
stable but
hospitality in
decline.
Source: ONS Employee Jobs, not seasonally adjusted, Great Britain, 1998–2008.
Notes: 1) As a result of the break in the employee jobs series between December 2005 and September 2006, changes
between periods prior to December 2005 and after September 2006 cannot be estimated.
24
2) The social care and leisure, travel and sport sectors do not align exactly to the LPC's specification of the low-paying
sectors due to the breakdowns of employee jobs provided by the ONS.
2000 Q1
2000 Q2
2000 Q3
2000 Q4
2001 Q1
2001 Q2
2001 Q3
2001 Q4
2002 Q1
2002 Q2
2002 Q3
2002 Q4
2003 Q1
2003 Q2
2003 Q3
2003 Q4
2004 Q1
2004 Q2
2004 Q3
2004 Q4
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
Change in employment on a year earlier (thousabds)
Public sector employment has been falling – adversely
affecting women
500
450
400
350
300
250
200
150
100
50
0
-50
-100
Public Sector
Private Sector
Source: ONS, LFS and estimates from public sector organisations, not seasonally adjusted, UK, 2000-2008
25
Bank of England GDP Forecast (February 2009)
- probably still highly optimistic
• This is much more
pessimistic than the
November Inflation
Report.
• The recession is
now forecast to be
much deeper and
longer.
• It is now forecast
to last until Q1 2010
with GDP falling by
over 3% in the year
to Q1 and Q2 2009.
The fan chart depicts the probability of various outcomes for GDP growth. To the left of the first vertical dashed line, the distribution reflects the likelihood of revisions to the data over the past;
to the right, it reflects uncertainty over the evolution of GDP growth in the future. If economic circumstances identical to today’s were to prevail on 100 occasions, the MPC’s best collective
judgement is that the mature estimate of GDP would lie within the darkest central band on only 10 of those occasions. The fan chart is constructed so that outturns are also expected to lie
within each pair of the lighter green areas on 10 occasions. Consequently, GDP growth is expected to lie somewhere within the entire fan on 90 out of 100 occasions. The bands widen as the
time horizon is extended, indicating the increasing uncertainty about outcomes. See the box on page 39 of the November 2007 Inflation Report for a fuller description of the fan chart and what
it represents. The second dashed line is drawn at the two-year point of the projection.
26
What implications of the recession for
gender equality?
• Adverse implications for women from:
– Recessions hit less skilled more than more skilled in terms of
both employment and wages
– Weakening of employment in public sector
– High proportion in part-time employment
• But, against this:
– Past recessions hit consumer durables more than services
– Employment in low-paid sectors has so far been more resilient
– High proportion of women in public sector
• National Minimum Wage should provide effective support
for low wages and for the gender pay gap
– Will the NMW be allowed to keep up with average earnings in
the recession?
27