Frances Ball 4 Apr 2019 01:23pm

More women work in lower-paying businesses

More women tend to work for less productive – and therefore lower-paying – companies than their male counterparts do, the Institute for Fiscal Studies (IFS) says

A recent study by the IFS found that women tend to move to lower-productivity businesses around the time that they have their first child, and might need to work part-time or closer to home.

A smaller range of possible locations reduces their job options, and the wage gap gets wider as their choices narrow.

These findings are in line with those in a previous study into the ‘gender commuting gap’, published by IFS in November 2018.

Its latest research calculated the imbalance of women in low-productivity firms using a proxy for company productivity – ‘gross value added per worker’. In the private sector, it found that on average women worked for companies with a gross value added per worker that was 22% lower than those that men usually worked for.

Women are also “about a third less likely to work for one of the top fifth most-productive firms” (21% versus 33%). Given that those businesses pay better, the IFS argues that a connection between company productivity and the gender pay gap is clear.

By their mid-thirties, women are less likely to work for one of the businesses in the top fifth than they were up until that age. Between 18-34, women are roughly 5% less likely than men to work for one of those businesses. The difference grows over the next decade and levels at roughly age 44 and over, when women are between 15-20% less likely to work there.

By researching the factors that may constrain women to working at lower-paying businesses, the IFS hopes it can shed more light on the causes of the gender pay gap in the UK.

Today is the deadline for private sector businesses with more than 250 employees to report their gender pay gap data.