Economics explains discrimination in the labour market
Economics explains discrimination in the labour market

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Economics explains discrimination in the labour market

3 Labour market disadvantage

3.1 Gender-based disadvantage

The post-war period has seen a significant increase in the participation of women in the labour market, with women now making up around 45 per cent of the UK workforce. Although women still undertake the major share of family responsibilities and domestic activities, an increasing number of women are entering the labour market. This increase is evident in many countries and has been associated with an improvement in the relative earnings of women. This trend towards greater equality is evident in Table 1, which shows the ratio of female to male earnings in a number of countries over the period 1960–1980.

Table 1: The ratio of female to male hourly earnings in selected countries, 1960–1980

196019701980
Australia0.590.590.75
France0.640.670.71
Germany0.650.690.72
Italy0.730.740.83
Japan0.460.540.54
Netherlands0.600.71
Sweden0.720.840.90
UK0.610.590.75
USA0.660.650.66
USSR0.700.700.70
Source: Mincer, 1985

Activity 1

For the period 1960–80, identify:

  1. the country with the largest reduction in inequality

  2. the smallest reduction (or no reduction at all).

Answer

Sweden underwent the biggest reduction in inequality with the ratio of female to male wages increasing from 0.72 to 0.90. Both the USA and the USSR had no change in relative wages.

The labour market is complex and the two observations that more women now participate in the labour market and that there has been a narrowing of relative wage differentials reflect a number of possible relationships. On the one hand, it may be the case that more women participate because female wages have increased over time. On the other hand, the stronger commitment of women to the labour market could, in itself, increase female wages and narrow the earnings differential. Thus, if higher wages and higher participation are statistically associated, there are various views on causation which the labour economist must disentangle.

Despite the improvements that have taken place overtime, however, it would be misleading to overemphasise the advances that have occurred in the relative position of women in the labour market. Nearly 45% of working women in the UK, for example, are employed part-time, at pro-rata wages well below those of full-time workers. According to People Management, ‘Women working on a part-time basis earn only 58% of male full-time workers' pay rates’ (6 February 1997, p. 8).

Data from the New Earnings Survey (1995) reveal that the earnings of women working full-time are also significantly below those of men in comparable jobs. As Table 2 shows, the average weekly earnings of women managers in 1995 was 68 per cent that of men. This ratio, earnings of women to men, of about two-thirds, was reported in six out of nine occupational groups.

Table 2: Average weekly earnings by occupation 1995 (£)

Men (£)Women (£)Ratio: women/men %
Managers537.00367.800.68
Professionals499.70407.900.82
Associate professionals442.90333.300.75
Clerical and secretarial269.90230.400.85
Skilled manual318.30191.200.60
Personal services296.10198.700.67
Sales310.30199.900.64
Plant and machine operators293.70201.500.69
Other250.50170.800.68
Source: New Earnings Survey, 1995

Women may have to wait many years before they achieve equal pay with men. People Management state that, ‘… the average earning discrepancy between men and women remains at around 20 per cent. At the current rate of improvement, women will have to wait until 2040 before they achieve parity’ (6 February 1997, p.16). Also, according to People Management, ‘… surprisingly, the gap remains widest of all in professional occupations. For example, women bank and building society managers earn 36 per cent less than men in similar posts’ (ibid).

That women are paid less within even narrow occupational categories can arise for a number of reasons and does not necessarily involve women being paid less than men for doing the same job. It may reflect the nature of the organisations that employ women or the fact that women are typically employed at lower grades within occupational categories. For example, there is evidence that women academics are appointed at lower points on the university lecturer scale than comparable men and that they are less likely to become senior lecturers, readers and professors (McNabb and Wass, 1997). The failure of women to make significant progress in the professions and in senior management and administrative posts has led to the idea that there is a ‘glass ceiling’ which means that women are under-represented in positions of responsibility and influence.

In addition to this disparity in pay across all occupations, women tend to be heavily concentrated in occupations and industries that are characteristically low paying. The 1991 Population Census (OPCS, 1992) recorded that just over 28% of women were employed in clerical and secretarial jobs, 13% in personal service occupations and 10.5% in sales occupations (Table 3). The corresponding figures for men in these areas are much lower. In contrast, nearly 30% of male workers are managers and professionals. These occupations employ only just over 19% of women. Moreover, within broad occupational groups we find further concentrations. For example, two thirds of women in professional occupations are teachers whereas teaching accounts for only a quarter of professional males. Similarly, more than half the women in associate professional jobs are nurses.

Table 3: Distribution of employment by occupation (%)

MenWomen
Managers19.311.6
Professionals9.57.6
Associate professionals7.89.9
Clerical and secretarial6.728.1
Skilled manual23.13.5
Personal services6.113.0
Sales4.510.5
Plant and machine operators14.35.1
Other7.59.9
Not adequately described1.10.8
Source: 1991 Population Census, 1992, OPCS
D319_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to university level study, find out more about the types of qualifications we offer, including our entry level Access courses and Certificates.

Not ready for University study then browse over 900 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus