Closing the Gap: What Will it Take for the UK to be a “Double X” Economy After the Pandemic?

UK Economy

By Christina Palmou

The pandemic has brought into sharper focus the unequal opportunities at work for men and women. Policy, management practices and a structural under-provision of affordable care are key drivers of gender pay and participation gaps. These gaps have long term consequences for living standards and are out of pace with contemporary British values.

The pandemic was not good news for gender equality at work in the UK. While the suspension of economic activity resulted in economy wide losses in hours and earnings, the beginning of the pandemic saw women four percentage points more likely to have lost their jobs than men[i], a gap left unexplained by differences in education and type of work[ii], widening to 10 percentage points for women with young children[iii].

Mothers’ employment was hit particularly hard. As lockdown was dismantling informal care provisions and shutting down schools and care providers, women spent substantially longer doing additional childcare and housework than their partners. During the first lockdown women took on more than 60% of additional care and domestic work[iv], enjoying less uninterrupted working time, irrespective of whether they were the better paid part of the couple[v]. The Women’s Budget Group found that 46% of mothers who were made redundant during the pandemic cited lack of adequate childcare provisions as the cause[vi].

Policy in response to the pandemic, management practices and the chronic unavailability and unaffordability of care services are at the heart of these imbalances. While the pandemic has brought these into sharper focus, the struggle to balance family and a healthy working life for women, pre-date the pandemic. The 1942 Beveridge Report, the foundation of the British welfare state, assumed that care would be unpaid, domestic women’s work[vii]. The consequences of this chronic gap in childcare infrastructure has long been apparent. In the UK, the average employment and hours of men barely changed after they became fathers, while the employment of women fell sharply from above 90% to below 75%, even for women that had higher wages than their male partners[viii]. Amongst the women who remained in paid work after childbirth, hours fell from around 40 to less than 30[ix].

The choices of women at work are constrained by care in other, less obvious ways. Following childbirth, women tend to switch to less productive, lower paying firms than men[x] prioritising working closer to home to attend to care responsibilities over pay. Women’s commuting times fall significantly after the birth of their first child. If women take work according to proximity they are less likely to work in jobs that match as well their skills or for high productivity employers[xi]. As a result, the gender wage gap widens by two percentage points every year following childbirth, plateauing at 30% after 15 years[xii]. On average, across the UK economy, women are paid nearly 20 percent less per hour[xiii]. This is the fourth largest gender pay gap in Europe[xiv] and has changed little in the last decade[xv]”.

The pay gap is costing women and the economy dearly. Estimates suggest the cost and unavailability of childcare prevents 1.7 million women from taking on more hours of paid work resulting in £28.2 billion economic output lost every year[xvi]. Differences in hours and earnings become inequalities in wealth and pension income[xvii] affecting living standards in later life. The gap in hours, earnings and years of tenure as well as the design of the UK pensions system mean that at the brink of retirement “the median pension wealth of women is half that of their male counterparts[xviii] [xix]”.

Management practices and office norms have a lot to answer for too. Even when flexibility is allowed for working life to flex around care, in appraisals, the perfect employee is still someone delivering as if “unencumbered by any other problem other than their job”[xx]. This amplifies at work these gendered biases in sharing of labour at home. The impassiveness of office norms to the interplay between gender, work and care played its role in the gendered effects of the pandemic too. 70% of women with caring responsibilities who requested furlough following school closures in 2021 had their requests denied. Half report being worried about negative treatment from an employer because of childcare responsibilities[xxi].

These inequalities are not only a testament to an unfair plane field that does not afford the same choices for women, it is also out of pace with contemporary values. 72% of Brits disagree with the view that a man’s job is to be the main breadwinner and a woman’s to look after the home and family. Views on how parental paid leave should be shared are shifting: in 2018 34% of individuals said leave should be shared equally, 12 percentage points higher than 2012[xxii]. The shift in preferences is driven largely by younger generations, who would be the primary beneficiaries of changes in policy. 42% of 18-34s believe the mother and father should each take half of the paid parental leave compared to only 27% of the over 55s[xxiii].

So what can be done? Childcare and leave policy and management practices are going to be key to move forward and reduce these inequalities. Management practices need to go further than flexibility. In a world where flexibility at work is a core part of the new normal, management should be accountable for the impact new ways of working have on the progress and wellbeing of parents. and women.

Childcare should be treated as essential economic infrastructure. In the US, the Biden administration is treating childcare as essential for getting to work as roads, telecommunications and energy. In the UK, by contrast, there has been no attempt to increase spending on childcare more than the current 0.1% of GDP[xxiv]. Now is the time for the Treasury to go big on early years investments. Evidence on the responsiveness of maternal labour supply suggests universal preschool provision is likely to be more effective when maternal employment is low, there is sufficient labour demand for women and the cost and availability of formal and informal childcare is a binding constraint[xxv].  Faster growth in female employment relative to what was expected at the beginning of the pandemic (driven by an increase in employment in public administration, education and health and social work)[xxvi] suggests there is sufficient labour demand. And there is still scope for female employment rates to increase further. In March 2021 women who were in work before the crisis were more likely to be out of work, furloughed or on reduced hours than men. In March mothers and fathers were still working about 7% fewer hours than pre-pandemic, but mothers had also experienced a larger hit in their hours throughout the last 12 months compared to other groups[xxvii].

Even more, childcare in the UK is both unaffordable and at risk of not matching post pandemic demand. Childcare costs about a third of median incomes[xxviii], amongst the most expensive in the OECD[xxix] and growing fast: for parents with a one-year old child, the cost of the child’s nursery grew four times faster than their wages (seven times faster in London) between 2008 and 2017[xxx]. The pandemic has put into question not only affordability but availability as well. Due to long-term underfunding only half (56%) of local authorities in England reported they had enough childcare for the children of parents who work full-time even before the pandemic and less than a fifth (18%) for parents who work atypical hours[xxxi]. A temporary reduction in demand during the pandemic has limited the ability of providers to cross-subsidise the underfunded free hours entitlement[xxxii] meaning 41% of the nurseries have gone into deficit, 26% have taken on debt and others have used reserves to compensate for losses[xxxiii]. By July 2021 more than 11,000 childcare places were lost due to nursery closures.[xxxiv]

For parental leave and care to be shared eligibility for childcare and leave should reflect the flexibility of the future of work. In the UK narrow definitions of what consist of “eligible” forms of employment for the receipt of family benefits, that do not include self-employment, are locking many out of the support that is available[xxxv]. The design of leave is also important . Even though sharing of leave is related to better outcomes for women and children, the UK has one of the least generous paternity leave policies in the OECD[xxxvi]. Even in countries where paternity leave is better paid and can be flexibly shared between parents, take up by fathers is often low. The UK should learn from the “use it or lose it” scheme in Nordic countries or policies in Western Europe allocating bonus payments to households with more equal leave take-up which are known to reduce gender wage gaps[xxxvii].

Policies that we know work did make their way to public debates in the last election but closing gender inequalities in the UK is going to take much greater political momentum. Recovering from a global pandemic may create just the fertile ground needed.


About the Author

Christina PalmouChristina Palmou is a Senior Economist at the Renewing the Centre team at the Tony Blair Institute focusing on issues around work, income, the welfare state and inequality. She was previously a Senior Econometrician at Oxford Economics and holds an MPhil in Economics from the University of Oxford.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.