Chrissie Blair is a summer intern who has been placed at SPICe as part of the Economic Futures programme. Run by the Fraser Allander Institute, this programme offers summer placement opportunities to Economics graduates in Scotland.
Scotland’s gender pay gap has closed faster than the UK’s. In 2023, female employees earned 8.7% less per hour than male employees in Scotland, compared to 14.3% less across the UK. A key driver of this divergence is the different approaches to public sector pay in recent years.
This blog investigates the widening gap in progress towards closing the gender pay gap in Scotland and the UK. It suggests that Scotland and the UK may be further from closing the gender pay gap than some headline figures suggest.
The raw gender pay gap
In 2023, the median female employee wage in Scotland was £1.19 per hour higher than the UK equivalent. The result is a lower raw gender pay gap (the difference in hourly earnings between women and men expressed as a percentage of men’s hourly earnings) in Scotland.
Amongst full-time employees, the gender pay gap is even lower in Scotland, at 1.7%. This is some 6pp lower than the UK. However, as more women work part-time roles than men, taking the hourly earnings of all employees gives a more rounded measure of pay disparity between men and women overall.
It should be noted that these figures are derived from the ONS’ Annual Survey of Hours and Earnings and Annual Population Survey, which do not include data on self-employed earnings.
The role of public sector pay
Public sector pay policy is a direct means that governments can use to reduce the gender pay gap, particularly as women are more likely to be employed in the public sector than men. When comparing Scotland and the UK as a whole, differences between gross hourly wage rises in the public sector explain a significant extent of the different rates at which the gender pay gap is closing for employees.
Over the 3-year period 2021 to 2023, the gap in gross hourly pay between men and women in Scotland’s private sector was 0.1pp lower than across the UK. The equivalent gender pay gap in the public sector was 6.7pp lower in Scotland than UK-wide.
In 2016, the gender pay gap in Scotland’s public sector was lower than in the UK and has closed faster since. Since then, had hourly gross wages for men and women employed in the public sector risen at the same rate in Scotland as they did across the UK, the gender pay gap in Scotland would be 2.8pp higher in 2023. This is a result of women’s public sector hourly gross wages rising faster in Scotland, but also the fact that the public sector is a relatively larger employer in Scotland than across the UK.
In 2022-23, the cost-of-living crisis was met with several large public sector pay increases in Scotland, particularly for lower earners. The Scottish Government’s Public Sector Pay Policy established a wage floor of £10.50 per hour, above the real living wage. The report adds that the policy “helps to reduce overall income inequality” and will “help in positively working towards reducing the gender pay gap within the public sector, as it should increase the overall base levels of pay for those at the lower end where women are overly concentrated”.
The Office for National Statistics explain Scotland’s large earnings growth rate was “affected by the NHS Scotland pay rises and one-off payments which were implemented in April 2023”. The NHS’s Agenda for Change in Scotland agreed on a 6.5% single-year pay uplift in 2023 for most staff, combined with a one-off payment which resulted in a 8.12% total increase for most staff. Low paying roles saw the largest pay increases of up to 12% across 2022 and 2023, an area where women represent the majority of workers therefore contributing to Scotland’s pay gap’s decrease.
Similarly, teachers’ earnings were increased by 7% for 2022-23 and 5% for 2023-24. Women make up 65% of high school and 98% of primary school teachers.
In contrast, the UK Parliament’s briefing on public sector pay 2024 reports a pay freeze since 2020, excluding NHS staff and low-paid earners, with pay increases slowing to 1.5% in 2022. This was implemented to ‘protect jobs’ as public sector employees had been protected by furlough schemes throughout the pandemic.
More progress to be made
However, Scottish charity and advocacy organisation, Close the Gap, describes the headline gender pay gap figure as “somewhat misleading because it does not present the full picture”. First, these figures do not include self-employed earnings. Second, the large public sector pay rises and cost-of living payments that have disproportionately benefited women over the last two years are unlikely to be repeated. Furthermore, public sector pay in other parts of the UK might catch up in the coming years. Historically, trends in public sector pay have been similar across the UK over time.
There are still structural barriers to closing the gender pay gap across the UK. The pay gap is higher for women over 40, largely due to the ‘motherhood penalty’ and societal norms around men and women’s caring roles.
Occupational segregation – where women are over- or under-represented in a given job field – continues to be prominent in most sectors, particularly skilled trades, manufacturing and care sectors. Close the Gap adds that, “despite the narrowing pay gap, women continue to make up the majority of low-paid and part-time workers, are in increasingly precarious work, and female-dominated sectors continue to be undervalued.”
Eliminating the gender pay gap in the long term will require a change in these structural trends in the labour market.
Factor-weighted gender pay gap
There are many observable factors that affect an individual’s wages beyond gender, such as highest qualification level and age. SPICe have followed the International Labour Organisation’s methodology to calculate an estimate of the gender pay gap in the UK that accounts for some of these observable factors. It was not possible to produce a Scottish factor-weighted pay gap figure for comparison, as the sample sizes in the survey data for Scotland is too small to allow for robust calculations.
We group the labour force into 64 different subcategories depending on their age, highest qualification level, whether they work in the public or private sector, and whether they work full-time or part-time.
In a gender-equal labour market, men and women in the same subcategory should earn similar hourly wages. We found that a gender pay gap still exists in most subcategories. Adding these up gives an overall ‘factor-weighted gender pay gap’, which is arguably more meaningful than the headline raw gender pay gap.
Using the median hourly earnings for 2021-2024 the factor-weighted gender pay gap for the UK is 11.3%. That this figure is close to the raw gender pay gap figure reinforces the conclusion that eliminating the gender pay gap will require more structural changes throughout the labour market than can be achieved with public sector pay awards.
Chrissie Blair, Economic Futures Intern, Financial Scrutiny Unit