The gender pay gap in the UK continues to narrow in 2024. The good news is the pay gap is narrowing at a faster rate since 2017 when Gender Pay Gap Reporting (GPGR) for employers become mandatory. The bad news is women are not progressing up the pay scale and are working longer hours, men today are worse off than their fathers were 20 years ago and the smaller pay gap is simply the by-product of wage compression induced by above inflation rises in the minimum wage. This is a sobering picture which tells me on balance, a smaller pay gap is not good news.
This article is part A of a 2-part blog. Part B will be published at a later date.
5 Observations I will make using 6 Charts
When I look at gross annual pay for the median man and the median woman in the UK between 1999 & 2024, I observe –
- The gender pay gap is closing at a faster rate today than it was before 2017.
- The gender paid hours gap has narrowed by at least 2 hours per week over the last 10 years with women working more hours and men working the same or fewer hours.
- For the last 20 years, the median man has been paid £10,000 to £11,000 more per year than the median woman and the median woman has been paid £4,000 to £5,000 more per year than the annualised minimum wage.
- Between 2009 & 2024, the median man’s pay increased by 40%, the median’s woman’s pay increased by 65%, the annualised minimum wage increased by 91% and the consumer price index increased by 51%.
- When adjusted for inflation, the median man of 2024 is paid £2,000 less than the median man of 2004 whilst the median woman of 2024 is paid £6,000 more than the median woman of 2004.
These 5 observations come from 6 charts which I present and explain in this article.
Data used in my 6 Charts
I am using UK gender pay gap data as measured by the Office of National Statistics (ONS). ONS use their ASHE (Annual Survey of Hours and Earnings) survey to estimate pay by sex (and thus the pay gap) as of April 5th of each year. For more details on ASHE and links to the ONS website, please read my article “Are we there yet?”
ONS publish two data sets at the end of October of each year in two different places and it’s important to understand the distinction. Together, they allow you to calculate 30 different gender pay gap statistics for the UK as explained in my article “When is Equal Pay Day in 2024” –
- Gender Pay Gap in the UK – this is an annual report showing pay gaps broken down by a variety of categories. However, the main data download here only shows the pay gap, not the pay figures by sex used to calculate the pay gap.
- Pay & Hours Data by Sex – here you can download a zipped file of spreadsheets containing the pay figures by sex used to calculate UK pay gaps. However, this only shows data for 2023 & 2024. To get time series data going back to 1997 in some cases, you will need to download this file as well.
I will be using Median Gross Annual Pay for All Employees throughout this article. I now take the view pay gap discussions should begin with total annual pay since it encompasses all the differences between men and women such as pay rates, hours worked, permanent or temporary, etc. That does not make the other 29 statistics worthless, they still have their place depending on where pay gap discussions lead you to.
The Gender Pay Gap 1999-2024 – Median Gross Annual Pay
For every £1 paid per year to the median man in 2024, the median woman was paid 71.7p. When ONS began publishing gender pay gaps in 1999, the median woman was being paid 54.8p and by 2017, when mandatory employer GPGR began, the median woman was paid 63.3p. On average, for every £1 paid per year to the median man, the median’s woman’s pay increased by 0.5p per year before 2017 and by 1.2p per year since 2017.
On the surface, the rate at which the median gross annual pay gap is closing has accelerated. Correlation is of course not causation but it is reasonable to hypothesise mandatory employer GPGR has contributed to this. Before we can test this hypothesis, we need to be confident the observed acceleration is not the result of chance.
There are many ways of checking this and Chart 1 here shows one such method. If I fit a straight line through the data for 1999 to 2017, I can extrapolate it into the years after 2017 as shown by the dashed brown line. This provides a reference point for what would be expected if the trend since 2017 was the same as the trend before 2017. For 2024, the reference point suggested by the dashed line for median woman’s pay is 68.1p. If I now allow for the typical year on year changes in median’s woman’s pay which could be expected by chance, I end up with the two solid curved brown lines either side of the dashed brown line in Chart 1.
If the actual median woman’s pay (brown circles in Chart 1) remain within the solid curved brown lines, then there is a lack of evidence to say the trend is changing. However, in 2023 and 2024, the median women’s pay rose above the upper brown line. I conclude the trend in median’s woman’s pay has changed since 2017 and in this instance the change in trend is an acceleration. This is the basis for my first observation of the five I will be making.
OBSERVATION 1 – The UK gender pay gap for median gross annual pay is narrowing at a faster rate today than it was before 2017.
Median Gross Annual Pay by Sex – 1999 to 2024
In 2024, ONS estimate the median man was paid £37,143 per year gross before tax compared to £26,628 per year paid to the median woman. Chart 2 plots these estimates for every year since 1999 and from this data, I can calculate two statistics relevant to discussions about gender pay gaps –
- The Gender Pay Differential is the difference between the median man’s pay and the median woman’s pay. In 2024, this was £37,143 – £26,628 = +£10,515. I will plot the gender pay differential later on in Chart 5 but you should be able to anticipate what it will show from Chart 2.
- The Gender Pay Ratio is the ratio of the median woman’s pay to the median man’s pay. This is what I plotted in Chart 1 and is repeated in Chart 2 in the purple labels. In 2024, this was £26,628 / £37,143 = 0.717 or as I expressed it in the previous section, for every £1 paid per year to the median man, the median woman was paid 71.7p.
For context, I also plot in Chart 2 the annualised National Minimum Wage. The minimum wage is set by the government for hourly pay only and not for annual pay so how did I arrive at the Annualised Minimum Wage shown by the black line in Chart 2? I ended up using a simple calculation whereby I multiply the hourly minimum wage by 1924 which is equal to 37 hours per week multiplied by 52 weeks in a year.
The official minimum wage per hour for adults aged 21 or older is plotted in Chart 3 for every year since its introduction in 1999. The labels show the hourly rate along with the year on year percentage change. In 2024, the minimum wage was £11.44 per hour (up 9.8% on 2023) so when I multiply this by 1924, I end up with the annualised minimum wage of £22,011 shown in Chart 2.
Why did I use 37 hours per week?
Chart 4 shows both median and average weekly paid hours for all employees and separately for men and women. The median weekly paid hours for all employees has been 37 hours per week for every year between 1999 and 2024 which is why I used 37 hours for my annualised minimum wage calculation in the previous section.
What I find more interesting are the differing trends for men and women. For both, weekly paid hours fell between 1999 and 2012 for both the medians and averages. Around 2014, the trends for men and women start to diverge. For men, average weekly paid hours continued to fall, going from around 37.5 hours to just above 36 hours, whilst the median weekly paid hours remained steady at 37.5 hours. For women, average weekly paid hours rose from 29 hours to 30 hours (same as 1999) and median weekly paid hours rose from just under 33 hours to 35 hours, again returning to where women were in 1999.
I use the term Gender Paid Hours Gap to describe the difference in median weekly paid hours between men and women. This is the basis for my second observation of five.
OBSERVATION 2 – The gender paid hours gap has narrowed by 2 hours per week over the last 10 years from 4.5 hours to 2.5 hours with women working more hours and men working the same or fewer hours.
How has the pay gap narrowed – Median Gross Annual Pay
When I talk about the gender pay gap, I have not been using the formal definition of a pay gap as used by ONS. Their formulation can be expressed in two different ways as shown below but in this section I will focus on the first formulation –
- Gender Pay Gap = Gender Pay Differential / Median Man’s Pay
- Gender Pay Gap = 1 – Gender Pay Ratio. This formulation shows the pay gap and pay ratio are measuring the same thing but I have always preferred the pay ratio formulation because experiments show the public understands this better.
In 2024, the gender pay differential for median gross annual pay was +£10,515 so when divided by the median man’s pay of £37,143, I end up with +0.283 or +28.3% i.e. the median woman is paid 28.3% less than the median man when comparing their gross annual pay.
I have already plotted the gender pay ratio in Chart 1 and the median man’s pay in Chart 2 so let’s now look at the gender pay differential in Chart 5. It appears this has been essentially stable for the last 20 years, fluctuating between £10,000 and £11,000.
The second differential shown in the chart is the difference between the median woman’s gross annual pay and the annualised minimum wage. In 2024, the median woman was paid £4,617 more than the annualised minimum wage and this differential has also been essentially stable, fluctuating between £4,000 and £5,000 over the last 20 years.
Taken together, I arrive at my third observation of five.
OBSERVATION 3 – For the last 20 years, the median man has been paid £10,000 to £11,000 more per year than the median woman and the median woman has been paid £4,000 to £5,000 more per year than the annualised minimum wage.
Why is this observation important? Over the last 15 years, the gross annual gender pay gap has narrowed from 39% to 28%. How could this happen if the gender pay differential is essentially unchanged over this timeframe? The answer is the denominator of the gender pay gap formula has increased over time which is what brings the pay gap closer to 0. For example, –
- In 2009, the gender pay differential was +£10,488 and the median man was paid £26,594 (what the median woman is paid in 2024!). The gender pay gap is then 10488/26594 = 0.393 or 39.3%
- In 2017, the gender pay differential was +£10,594 and the median man was paid £28,832. The gender pay is then 10594/28832 = 0.367 or 36.7%.
- In 2024, the gender pay differential was +£10,515 and the median man was paid £37,643. The gender pay is then 10515/37143 = 0.283 or 28.3%.
In all three years shown, the gender pay differential is more or less identical at ~£10,500. The only reason the gender pay gap has got smaller is because the median man’s pay has got larger. Notice also, between 2009 & 2017, the median man’s pay went up by £2,238 and the pay gap narrowed by 2.6% whereas between 2017 & 2024, the median man’s pay went up four times as much by £8,815 and the gender pay gap narrowed four times as much by 8.4%. This is a stark demonstration of the denominator effect on the national gender pay gap.
Nominal Changes in Gross Annual Pay by Sex
The denominator of the pay gap and pay ratio formulas is of course the median gross annual pay for men. By how much has this increased over the last 15 years since the financial crash? The answers are –
- Median Man’s pay has increased by 40%
- Median Woman’s pay has increased by 65%
- Annualised Minimum Wage has increased by 97%
These are the nominal pay growth figures which ignore inflation. ONS used the consumer price index CPIH to adjust pay for inflation. CPIH was 87.5 in 2009 and 132.9 in 2024 which means the index has grown by 51% over the last 15 years. Thus I arrive at my fourth observation of five.
OBSERVATION 4 – Nominal growth in gross annual pay between 2009 and 2024 was +40% for men’s pay, +65% for women’s pay, +97% for minimum wage roles and +51% for the consumer price index CPIH.
Real Changes in Gross Annual Pay by Sex
When I deflate median gross annual pay for men and women using CPIH, I arrive at Chart 6.
Real pay growth peaked for both men and women and minimum wage roles in 2009 following the financial crash and proceeded to fall until 2014. It then resumed growing for women and overtook their 2009 peak in 2020. For men, real annual pay has remained at 2014 levels. In fact, when I look at men’s pay in Chart 6, it actually stalled in 2005 (the year EU free movement was opened up to East Europeans in the UK). This is why I’ve chosen to based my fifth observation of five on a comparison of 2024 with 2004.
Observation 5 – When adjusted for inflation, the median man of 2024 is paid £2,000 less than the median man of 2004 whilst the median woman of 2024 is paid £6,000 more than the median woman of 2004.
5 Observations I’ve made using 6 Charts
After plotting 6 Charts based on gross annual pay for the median man and the median woman in the UK between 1999 & 2024, I observe –
- The gender pay gap is closing at a faster rate today than it was before 2017.
- The gender paid hours gap has narrowed by at least 2 hours per week over the last 10 years with women working more hours and men working the same or fewer hours.
- For the last 20 years, the median man has been paid £10,000 to £11,000 more per year than the median woman and the median woman has been paid £4,000 to £5,000 more per year than the annualised minimum wage.
- Between 2009 & 2024, the median man’s pay increased by 40%, the median’s woman’s pay increased by 65%, the annualised minimum wage increased by 91% and the consumer price index increased by 51%.
- When adjusted for inflation, the median man of 2024 is paid £2,000 less than the median man of 2004 whilst the median woman of 2024 is paid £6,000 more than the median woman of 2004.
What do my 5 Observations from 6 Charts tell me?
Let’s start with how the gender pay gap is closing over time. Recall ONS calculate the gender pay gap as the gender pay differential divided by the median man’s pay. Observation 3 states the gender pay differential has been stable so the narrowing pay gap is a result of a larger denominator i.e. the rise in median man’s pay. But the rise in median’s man’s pay is actually the result of increases in the minimum wage as is apparent from the formula below –
Median Man’s Pay = Minimum Wage + Differential between Median Woman’s Pay & Minimum Wage + Gender Pay Differential
Observation 3 states both differentials in this formula have been essentially stable over the last 20 years so without the rises in the minimum wage, the median man’s pay would also have been stable.
What explains Observation 1 then which noted the acceleration in the narrowing of the pay gap since 2017 if the pay gap is only closing due to increases in the minimum wage? The answer is because the government has increased the minimum wage since 2017 at a faster rate (6% per year on average) than before 2017 (3.2% per year on average).
Will the gender pay gap continue to close at this accelerated rate? My opinion is the accelerated rate will not be sustained for two reasons –
- Unless the gender pay differential (+£10,515 in 2024) starts to get smaller, the pay gap will never reach zero since the numerator of the ONS gender pay gap formula will always be greater than zero. Current trends in the gender pay differential shown in chart 5 show no signs of a downward trend.
- The large recent rises in the minimum wage were mainly driven by the high inflation which followed the COVID19 pandemic. If the current lower rate of inflation persists, then it is likely future rises in the minimum wage will be smaller. That means the denominator of the gender pay gap (& pay ratio) formulas will not grow by as much as it has been in recent years.
Why have the two pay differentials noted in Observation 3 remained stable over last 20 years? This is the biggest surprise for me from my research for this article. On the surface, it tells me national pay scales have been compressed over the last two decades. It also tells me the median woman has not progressed up the pay scale set by the annualised minimum wage at the bottom and the median man’s pay at the top.
The outcome of the wage compression as measured by the stable pay differentials is that percentage growth in median man’s pay has lagged behind the percentage growth in median woman’s pay as noted in Observation 4. For the gender pay gap to close, the growth in men’s pay will have to lag that of women. However, provided men still feel like they are better off, I doubt there would be a backlash against drives for gender equality. Unfortunately Observation 5 states that the median man is worse off in real terms than the median man was 20 years.
Before I continue, let’s be clear on what Observation 5 is not saying. It is not saying all men are worse off than they were 20 years ago. By definition, the median man is the man in the middle of a line when men stand in order of a quantity like pay. All Observation 5 is saying is the man in the middle of the line 20 years ago is better off in real terms than the man in the middle of the line today. However, the median is generally accepted as a reasonable measure of a “typical man” so another way of expressing Observation 5 is that the typical man today is worse off in real terms than the typical man 20 years who could be his father.
If closing the gender pay gap is your definition of gender equality, then one of the best ways to undermine this goal is for it to become a zero sum game. In other words, the gains women make come at the expense of men. In my opinion, such a state of affairs will only encourage a backlash and Observation 5 suggests this has been the reality. As I’ve explained above, the true picture is one of overall wage compression and unfortunately wage compression in the inflation environment of that time has left the median man worse off and the median woman better off even though the gender pay differential is stable.
This is why I said at the beginning the picture behind the accelerated narrowing of the gender pay gap is a sobering one. One could almost say it is the worse possible picture. In short, women are not progressing up the pay scale and are working longer hours, men today are worse off than their fathers were 20 years ago and the smaller pay gap is solely the result of wage compression driven by above inflation increases in the minimum wage. I see no signs this state of affairs will change quickly.
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