the times | Monday December 6 2021 39

CommentBusiness

Women have stepped

up their campaigning

efforts for equal pay

Graham Ruddick

A

ccording to David

Solomon, New York

City’s status in the world

is “not guaranteed”. The

Goldman Sachs boss’s

comment at the Financial Times’

Global Banking Summit last week

was the latest in a series of swipes at

the Big Apple. Earlier in the year he

was among several hundred

influential executives who signed a

letter to Andrew Cuomo, then the

governor of New York State,

warning that high corporate and

individual taxes were making the

city less attractive.

Reading Solomon’s comments, it

was tempting to think that any

diminishing of New York would be

beneficial for London as a global

financial centre. However, London,

too, has much to ponder as the

world seeks to emerge from the

Covid pandemic. There is plenty of

evidence to suggest that people who

enjoyed remote working during the

coronavirus outbreak now find

London a less attractive place to

work and live, a problem for the

many businesses who come to the

capital for its talent pool.

Take the latest weekly economic

indicators published by the Office

for National Statistics. Numerous

data points in the release show that

London is lagging other parts of the

country in people going back to the

office. Transactions at Pret a

Manger shops in the City of London

are recovering more slowly than in

the rest of the UK, sitting at 88 per

cent of their January 2020 average

in the week to November 25,

compared with 168 per cent for the

Yorkshire region, 137 per cent in

suburban London shops and 120 per

cent for regional towns. Restaurant

bookings in London are also behind

the national average, as are online

job adverts, the ONS figures showed.

Of course, the whole point of the

government’s levelling-up agenda is

that other parts of the country catch

up with London, but this is not

merely about welcome progress

outside London; it is also London

facing pressure that it was

previously immune to. Take Oxford

Street, supposedly the finest

shopping street in the land and

strong enough to overcome the

online shopping revolution: some of

its biggest shops — Topshop, House

of Fraser, Debenhams — have

closed or will shut their doors.

There are also signs that young

people are no longer prepared to

tolerate sky-high property prices.

The Sunday Times yesterday pointed

to payroll data from the ONS that

showed the number of 25 to 34-year-

olds working in London had fallen

by 41,000 since March 2020, with

the number of 18 to 24-year-olds and

35 to 49-year-olds also down. Linda

Stefanutti, 34, who has moved to

Brighton, said: “In the hard times of

Covid when I was locked in, I

thought, ‘Do I want to walk among

concrete, or do I want to walk on the

beach?’ ”

London is still home to many of

the world’s finest businesses and

remains, according to the words of

Lonely Planet, the travel guide, “one

of the world’s most visited cities”

and “a tireless innovator of art and

culture”. Having left the northwest

of England for London 14 years ago,

I am proud to call it home.

But staying at the top is tough.

European leaders are desperately

trying to take jobs and investment

from London post-Brexit. Like New

York, London’s corporate and

individual taxes are rising under

Boris Johnson’s government and

Sadiq Khan’s local administration.

While the city is about to get a big

transport upgrade thanks to

Crossrail, other parts of the London

Underground face going into

“managed decline” because of

budget constraints, according to

Transport for London. Noel Quinn,

the boss of HSBC, warned last week

that banks and their clients faced an

increase in costs from the City

diverging away from EU rules.

So, while no one of Solomon’s

status is yet talking publicly about

London in the same way that he did

about New York, Johnson and Khan

face a battle to ensure that remains

the case.

Graham Ruddick is Deputy Business

Editor of The Times

London must battle to

remain a world-leading

place to live and work

Transactions at Pret a Manger

100 = Jan 2020 average

Source: ONS

160

120

80

40

0

MAM J J A S ON

100 = Jan 2020 average 20212021

Yorkshire

Manchester

London: City workers

Regional towns

London: Suburban

happen simply because women tend

to earn less before childbirth and

hence couples make the rational

economic decision for the woman to

focus on childcare and for the man

to focus on earning. Even where the

woman in a couple earns more than

the man before giving birth, she is

much more likely to be the one to

give up work or to move to part-time

work. Social attitudes and norms

shape individual preferences and

these are sticky over time.

Attitudes are closely related to

outcomes. One fascinating cross-

country study showed a very close

correlation between people’s views on

the appropriate role of women and

the earnings penalty to having

children. The more people felt that

women with young children should

stay at home, the less mothers earned.

Where there is hope for progress is

that there appears to be a feedback

loop from policy to attitudes. In

countries where the policy

environment is most supportive of

maternal work, such as those in

Scandinavia, the idea that mothers

should stay at home to care for their

young children has little support. And

attitudes change with experience.

West German mothers in closest

contact with mothers from East

Germany, for whom the rates of

maternal employment were far higher

than in the West, adjusted their work

patterns to almost completely mirror

those of their new peers.

After all this time, it is easy to start

to believe that these gender

differences are fixed. They needn’t be.

An accumulation of policies

consistently supporting a more equal

sharing of responsibilities between

parents, or big policy reforms

challenging gender roles, may help to

build up a change in attitudes that

leads to permanent change in norms.

Irrespective of any weight we might

put on gender inequalities, there are

huge economic costs associated with

the status quo. Even expensive

policies have the potential to pay for

themselves if they successfully ensure

that the talents of both women and

men are put to their

most productive

uses, whether in the

labour market or at

home.

It looks like

progress. Slow, to be

sure, but progress

nonetheless.

Twenty-five years

ago, women’s hourly earnings were on

average about 24 per cent less than

men’s. That gap has fallen to 19 per

cent. If you look at total average

earnings, which takes account of the

fact that women are less likely to

work and that if they do work they

work fewer hours on average, then

the gap in total earnings has fallen

from well over 50 per cent to 40 per

cent. These are still big gaps, but

progress seems tangible. Both the

employment and wage gaps have

narrowed.

Yet even this feeble progress has

stalled. The hourly wage gap has

barely shifted in the past 15 years.

Moreover, virtually all the progress

there has been is related to the huge

strides that women have made in

catching up with, and then

overtaking, men in terms of their

educational attainment.

Those pay and employment gaps

remain despite the fact that women

are now considerably more likely

than men to be graduates. The lack of

progress on hourly wages since the

mid-2000s has occurred despite those

educational gains. If women hadn’t

become better-educated than men,

we might well be looking at pay and

employment gaps barely changed in

the past quarter of a century.

That is one of the deeply

disappointing conclusions of work

being published today by my

colleagues the Institute for Fiscal

Studies, with co-authors at the

London School of Economics, as part

of our review of inequalities led by

Angus Deaton, the Nobel prize-

winner.

The study also

reveals that there

has been a big

social change in

where the worst

of the inequality

lies when it

comes to hourly

wages. It used to

be that gaps in

hourly wages

were most

pronounced for the

least well-educated women, those

whose highest qualifications were

GCSEs or below. With the help of the

national living wage, these more

poorly paid women have closed the

gap on their male equivalents. It may

not have been intended as such, but

probably the most successful policy in

helping to bridge at least one gap

between men and women has been

the introduction of, and continued

increases to, the minimum wage.

The least well-educated women

remain much less likely to be in work

at all. Among those in work, though,

it is now the highest-educated women

who suffer the biggest hourly wage

penalty. Women are missing from the

top of the earnings distribution. Nine

out of ten at the very top (the top

0.1 per cent) are men. A woman

90 per cent of the way up the female

earnings distribution earns about the

same as a man 75 per cent of the way

up the male distribution.

Why are these gaps so persistent?

The Equal Pay Act is 50 years old.

There has been an awareness of these

inequalities for a long time, often

considerable political and media focus

and genuinely substantial public

investment in childcare provision.

Most of the gap is to do with

children. Before the birth of a child,

women are just as likely as men to be

in work and earn only a modest

amount less, on average. That

changes when children come along.

Many give up work altogether, many

others start working part-time or

move to work closer to home. That

causes an immediate drop in

earnings relative to men, but also a

slow burn as they fall further and

further behind in terms of hourly

wages. That slow burn has become

more important as more and more

women have started off in graduate

jobs with high

earnings potential

but have lost out

on the earnings

growth that tends

to come in those

sorts of jobs in

their thirties and

forties. There is

much less in

the way of pay

progression at

this stage in life

for both men and

women with lower

levels of education.

All this doesn’t

“

’’

Paul Johnson is director of the

Institute for Fiscal Studies.

Follow him on @PJTheEconomist

Paul Johnson

The gap between men and women

in work and pay is costing us all