WOMEN’S PART-TIME PAY PENALTY

Women working part-time in the UK have hourly earnings that are on average 26% lower than women working full-time. While some of this ‘part-time pay penalty’ is explained by differences in education and experience, even women who move from full-time to part-time work receive less hourly pay because of ‘occupational downgrading’.

These are among the findings of research by Professor Alan Manning and Dr Barbara Petrongolo, published in the February 2008 issue of The Economic Journal. Their study also finds that part-time work in the UK carries a higher self-reported job satisfaction premium with non-pecuniary job attributes (or a lower job satisfaction penalty) than in other countries. And part-time women in the UK do not report high levels of under-use of their skills.

The majority of British women will work part-time at some point in their lifetime, and around 45% of women workers in the UK are part-time. Consequently, the types of jobs and the levels of pay and conditions that are available on a part-time basis are of crucial importance in influencing the economic opportunities
for women.

But although the overall pay gap between men and women in the UK has fallen in the last 30 years, there is an important difference in the fortunes of full- and part-time women over this period. While the earnings of full-time women have been rising relative to men’s earnings, this is not true of the earnings of part-time women. Indeed, the part-time pay penalty has widened since 1975 (when it was 10%) though most of the deterioration seems to have occurred prior to the
mid-1990s.

Evidence from the New Earnings Survey (NES) for the period 1975-2005 and the Labour Force Survey (LFS) for 1993-2005 suggest a large part-time pay penalty. The NES indicates that in 2005, average hourly earnings among part-time women were 29% below those of full-time women. The LFS indicates the gap is around 26%.

Policy initiatives in recent years like the National Minimum Wage (1999), the Part-Time Workers Regulations (2000) and the Right to Request Flexible Working (2003) appear to have had little impact on the part-time pay penalty as yet although it is too early to make a definitive assessment of the full impact of some of these regulations.

The most effective way to reduce the part-time pay penalty would be to strengthen rights for women to move between full-time and part-time work without losing their current job.

Women working part-time and women working full-time are very different in their characteristics and do very different jobs. Women who work part-time are more likely to have low levels of education, to be in a couple, and to have dependent children that are both young and numerous.

They are also more likely to work in small establishments in distribution, hotels and restaurants and to be in low-level occupations. Almost 25% of part-time women are shop assistants, care assistants or cleaners. 15% of full-time women are managers but only 4.4% of part-time women are.

Allowing for education and experience, the part-time penalty for women is about 10% without taking account of differences in occupations between part-time and full-time work. But the gap is only 3% taking account of these differences. So it is the difference in the occupations of full- and part-time women that explains most of the pay differential between them.

Most of the rise in the part-time pay penalty can be explained by the rising importance of differences between jobs. Women working part-time have failed to match the occupational upgrades made by women who work full-time.

Rising UK wage inequality has also acted to widen the pay gap between women working part-time and those working full-time, as it has widened the pay gap between high-level and low-level occupations.

On average, women moving from full-time work to part-time work make a downward occupational move, evidence that many women working part-time are not making full use of their skills and experience. There is also evidence of under-use of the skills of women working part-time among women with nursing and teaching qualifications.

Women who want to move from full-time work to part-time work are often forced to change employer and/or occupation. Downward occupational mobility is less marked for women who change their hours without changing their employer. It is not clear why some employers are more willing to offer a reduction in hours
than others.

Women working part-time in other European Union countries face similar problems to those in the UK. But the UK has the highest part-time pay penalty and one of the worst problems in enabling women to move between full- and part-time work without occupational demotions.

ENDS

Notes for editors: ‘The Part-time Pay Penalty’ by Alan Manning and Barbara Petrongolo is published in the February 2008 issue of The Economic Journal.

The authors are at the Centre of Economic Performance at the London School of Economics.

For further information: contact Barbara Petrongolo on 020-7955-7799 (email: b.petrongolo@lse.ac.uk); Alan Manning by email: a.manning@lse.ac.uk); or Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com).