Five years in a job is enough to create a gender pay gap, say official figures

19 Jan 2018 By Marianne Calnan

Most of the UK’s gap is ‘unexplained’ – but each woman loses around £9,000 salary per year because of gender

Women begin earning less than men on average after just five years in a role, according to official figures published this week by the Office for National Statistics (ONS), which attempt to offer context to the ongoing discussion around gender pay in the UK.

In Understanding the gender pay gap in the UK, the ONS examined data from its latest annual survey of hours and earnings, published in October 2017 and regarded as the largest and most authoritative data set of salaries and working conditions.

It found that although women are paid 3.8 per cent more than men on average when they are in a job for less than a year, by the time they have worked five years, a significant gender pay gap in favour of men has opened that continues throughout their careers.

A man who works in the same organisation can expect to earn a 20.8 per cent rise over that period, when other factors such as role are discounted, with the equivalent figure for women standing at 17.5 per cent.

Full-time men earn more than full-time women on average across every occupation. But the positive news is that the gender pay gap has marginally improved over the past six years, said the ONS. The median gender pay gap for full-time employees was 10.5 per cent in 2011 but stood at 9.1 per cent in 2017. Women’s pay grew by 12 per cent from £11.75 an hour to £13.16 over this period.

Denise Keating, chief executive of the Employers Network for Equality & Inclusion, said she expected the gender pay gap to continue to narrow because the increased attention being paid to the issue as businesses prepare their figures to meet the deadlines for reporting over the coming months. 

“There is more attention paid to gender equality, which has certainly had an impact and has focused the efforts of employers eager to avoid negative publicity,” she told People Management. “But I don’t believe the gender pay gap can be completely eliminated unless there is a drastic change in society’s attitude to childcare and caring responsibilities.”

The ONS study suggested that job type has the largest impact on the pay gap, closely followed by age. The gap widens dramatically from the age of 40 – which correlates with the time women typically return to work after raising children – and peaks between 50 and 59, which aligns with the age they often step back from work to care for ageing parents, according to Keating.

Close to two-thirds of the UK’s overall gender pay gap, however, was ‘unexplained’, said the report, meaning it was not obviously affected by occupation, tenure, sector or other typical mitigating factors. 

Organisations with 250 or more employees are required to publish their gender pay gap figures on their website and a government website. They must demonstrate the difference in average pay between full-time men and women in their workforces – covering mean and median hourly pay and bonuses, as well as the proportion of male and female employees in the lower, lower middle, upper middle and upper quartile pay bands. 

The deadline for private sector companies to publish data is 4 April 2018, while public sector organisations have until 30 March 2018. As of today (19 January), just 619 of an estimated 9,000 eligible employers have published their figures.

The BBC, the highest-profile reportee to date, has faced a significant backlash after its highest-paid onscreen presenter, Chris Evans, was found to be earning between £2.2m and £2.25m compared to highest-paid female presenter Claudia Winkleman, who earned between £450,000 and £500,000 in 2017. 

This discrepancy led a group of more than 40 female BBC employees to publish an open letter to BBC director general Lord Tony Hall imploring him to ensure “future generations of women do not face this kind of discrimination”.

The broadcaster revealed plans to cut its highest-paid male presenters’ salaries as part of its agenda to close its overall 9.3 per cent pay gap in that same period. This month, China editor Carrie Gracie resigned from her post after discovering that male international editors were paid more than her. She too published an open letter, citing the BBC’s “secretive and illegal” pay culture as the reason for stepping down.

The ONS found that even among the highest-paid roles, women earned less than their male counterparts. Male and female chief executive and senior officials earned a median hourly salary of £48.53 and £36.54 respectively last year, it said. 

The report provided additional context to gender equality in workplaces and the gender pay gap, which could help employers gain a better understanding of their own gender pay gap data, according to Kerri Constable, senior HR consultant at audit, tax and consulting services provider RSM UK. “It could prove useful to employers trying to finalise their narrative and develop action plans designed to close the gap,” she said. 

Charles Cotton, performance and reward adviser at the CIPD, said he expected to see greater understanding from employers and society as a whole about the causes of gender inequality and the gender pay gap as time goes on. He told People Management that employers should offer flexible working arrangements and enhanced shared parental leave as immediate steps to help tackle the causes of inequality inside organisations. 

Meanwhile, separate data from the Young Women’s Trust found that women lose out on almost £138bn, or £9,112 each a year, because of the gender pay gap. It said the average male employee earns £39,003 a year, compared to women’s average full-time wage of £29,891.

A very different pay gap picture is painted for freelancers and the self-employed, however. Research by online services marketplace found the gender pay gap to be ‘virtually extinct’ among this group of workers.

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