What causes the gender pay gap?

There is no single cause of the gender pay gap. One of the most important contributors is the greater share of unpaid caring that is done by women rather than men. Women are more likely than men to take time out of the workforce to raise children and more likely to work part-time while children are at school.

One way this is illustrated is how the gender pay gap changes with age. The 2021 census for England and Wales shows that the average age that women have their first child is nearly 31. In 2024, the gender pay gap for men and women aged from 22 to 29 for all employees is 3.4%. However, the gender pay gap begins to have an impact on women in their 30s and 40s, rising to 9.7% in their 30s and 16.5% in their 40s. So the pay gap widens during the years of raising children.

Much of this may be depressingly familiar. What is less reported however is how the gender pay gap continues to affect women beyond the workforce. Successive UK governments have taken steps to have greater equality between men and women in the state pension (although there is a debate about how these changes have affected women born during the 1950s).

In a knowledge exchange project I did at the House of Commons Library, I noted that the gender pay gap feeds directly into how much women save into private pensions. This occurs in two ways. If people spend time out of the workforce then they are less likely to add to a private pension. Second, being in lower paid or part-time work means that women then make lower contributions than men into private pensions.

The result is the gender pay gap is compounded into a much bigger problem of the gender pension gap.

Since 2017-18 all employers with 250 staff or more have been required to publish data on the gender pay gap. However, it was only in 2023 that the UK government published data for the first time on the gender pensions gap. This data suggested a gender pension gap of 35% in private pension wealth.

Tackling the roots of the gender pay gap then will improve not only the situation for women in the workforce but also will affect their outcomes in retirement. Women on average live longer than men. So women on average need more pension wealth to have the same amount of income per year during their retirement.

Regular reporting of the gender pay gap has helped, and reporting of the gender pension gap should highlight the wider impacts.

Paid childcare is likely to be vital for reducing the barriers that women face in entering the workforce. There are other potential policy changes to automatic enrolment into a workplace pension that could be helpful.

There is no quick and easy solution, and for millions of women who have retired already any change will come too late. But recognising that the gender pay gap has effects beyond the workforce is an important start.