Gender pay gap narrows, but motherhood pay penalty remains a problem

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Despite improvement, there’s still a long way to go.

That’s the takeaway from a recently released study by the Resolution Foundation that tracked the hourly pay of different generations throughout their careers. The study found that the gender pay gap widens dramatically for women in their 30s and 40s and demonstrates that companies hoping to narrow their gender pay gap (and thus attract and retain the best possible staff) still have a long way to go to address what some call the ‘motherhood pay gap’.

This issue will be especially important starting in April 2017 when UK companies will be required, for the first time ever, to publicly report on their gender pay gap. EEF’s HR and employment law experts are hosting a seminar on “Gender Pay Reporting: How to comply” at locations across the UK in early 2017. Book your place now.

The pay gap for women in generation X stood at 10 per cent at age 30, increasing to 25 per cent by the time they reached age 40. For millennial women, the gender pay gap escalates to 9 per cent at age 30, i.e. around the time they start having children, indicating that the pay penalty traditionally associated with motherhood remains an issue. And as more and more people work into their 70s, what begins as a small hourly pay gap can translate into a significant lifetime earnings penalty over the course of a woman’s career.  

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The difference between men’s and women’s pay has narrowed for each successive generation. For example, women of the baby boomer generation (born between 1946 and 1965) typically earned 16 per cent less than men during their 20s, while women in generation X (born between 1966 and 1980) experienced a pay gap of 9 per cent. For millennials (born between 1981 and 2000) the gap was just 5 per cent.

As part of the Government’s commitment to tackling the gender pay gap, from April 2017 gender pay reporting will become mandatory for employers with 250 or more employees.

To keep up to speed with the latest developments, book your seminar place here, or speak to your EEF advisor for more information.

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