The 18 November is Equal Pay Day. This is the day – calculated by the Fawcett Society, that women, on average, stop earning for the year due to the gender pay gap.
Unfortunately, women don’t get a six week holiday at the end of each year. Instead, on average our salaries are just lower.
There are many reasons for the gender pay gap. It’s certainly a nuanced issue. Regardless, Equal Pay Day is important and is something we should be working to eradicate.
- What is the gender pay gap?
- Why does it exist?
- Why is Equal Pay Day important?
- How does the gender pay gap affect women?
- What can women do?
What is Equal Pay Day?
Equal Pay Day exists because there is still a gender pay gap.
Equal Pay Day is actually 2 days earlier this year. This is because the gender pay gap has widened in the past 12 months.
The mean gender pay gap for full time employees has risen from 10.6% to 11.9% in 2021, according to the Office for National Statistics.
This is likely to have more to do with furlough rates during the pandemic than a permanent deterioration in women’s pay, but it still demonstrates the scale of the challenge facing women.
The gender pay gap exists at all ages, but increases hugely around the age of 40.
For under 40s, the average gender pay gap is 3%, while for over 40s the gap is 12%.
Why does the gender pay gap exist?
The gender pay gap exists for a myriad of reasons. It’s a nuanced issue and is hard to cover fully in one blog post. Essentially, it’s due to societal ideals and systematic sexism – often presenting itself in the form of gender roles.
There are different pressures on men and women, and this certainly contributes to the gender pay gap.
However, Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, noted the pay gap doesn’t widen when people start a family and one of them has parental leave. It starts to come into effect a few years later.
For some, when they have a second child that they decide to have a career gap. Others take a career break while their children are young.
Either way, the ONS found women are more likely to make career compromises in order to work closer to home. Women are also almost three times as likely as men to work part time.
There is nothing wrong with taking a career break, but it can subsequently affect your future career when you return to full-time work.
The ONS found that after the age of 39, more men tend to be promoted into senior management positions, suggesting women may have missed the opportunity to move into layers of management where pay is usually much higher.
Exacerbating the problem, more caring responsibilities often emerge in later life – for example when your parents get older.
As women are usually already earning less, they tend to do more of this caring too. This can further impact their career progression.
Of course, these decisions are a choice. Some women make the choice to spend more time with their family and should not be made to feel like this.
Why is Equal Pay Day important?
Equal Pay Day is important because it draws attention to the gender pay gap and its consequences.
Sarah Coles said: “The pay gap has far-reaching implications for our finances throughout our lives. It’s worth getting to grips with the impact it is having on you and understanding what you can do to protect yourself.”
For us to reach true equality as a society, women need to be in a less financially precarious sisuation.
How does Equal Pay Day affect women?
There are 4 key ways Equal Pay Day – and the gender pay gap affects – women, aside from having less money!
1. Women tend to be less financially resilient
Lower pay means women tend to have less space in our budgets to manage shocks.
This means women are less likely to be able to pay an unexpected bill or expense.
2. Women are less likely to have savings
Hargreaves Lansdown found 71% of men have savings, compared with 66% of women. This is a small difference, but an important one nonetheless.
3. Women are less likely to invest
Hargreaves Lansdown’s research found 70% of women say they don’t have any investments, compared with 59% of men.
When asked why they don’t invest, 49% of women said they don’t have enough money.
4. Smaller pensions
Women and men start their pension journey at the same point, but as time goes on, men pull ahead as women take time out or reduce their hours.
What can women do on Equal Pay Day?
Sadly, we’re not going to fix the gender pay gap overnight.
So, in the meantime, here are some things women can do to improve their financial situations.
Have early conversations with your partner about parenting, roles and responsibilities, so you both understand each other’s expectations. It should be a choice to make career and pay sacrifices.
If you do this and your household income becomes unequal, you need to think carefully how you divide all the expenses. It shouldn’t be assumed that the woman should sacrifice her financial goals.
Also, be open with your employer. Speak about what options are available for flexible or parttime work. Some companies also offer childcare vouchers or nursery schemes.
3. Talk pensions
If you have a career break, think about how you will maintain pension contributions.
If you aren’t working, your partner can contribute up to £2,880 into your pension and the government will top it up to £3,600 via tax relief. This is a very tax efficient way of saving.
6. Ask for a pay rise
Asking for a pay rise may not always work, but it’s usually worth a try.
Make sure you give yourself the best chance of success by doing your research and finding out what the market rate is. Then, set up a formal meeting and explain your case.
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