'Motherhood penalty' causes UK gender pay gap to widen

Gap between what the average man and woman are paid each hour has widened by 2.4 per cent

Businesswoman carrying baby boy while holding smart phone at home - stock photo

A sharp increase in the cost of childcare has worsened a “motherhood penalty”, causing the UK’s gender pay gap to widen and pricing many women out of work altogether, a report has shown.

Accountancy company PwC found in its Women in Work index that the nation’s average pay gap widened by 2.4 percentage points to 14.4 per cent in 2021.

This shows that UK companies have taken a step back when it comes to gender parity, as the gap between what the average man and the average women are paid each hour has widened.

At the rate the pay gap is closing, it will now take more than 50 years to reach gender pay parity, PwC said.

Furthermore, the UK dropped five places in the firm’s annual index of women’s employment outcomes, which ranks 33 countries that are members of the Organisation for Economic Co-operation and Development.

The UK stood in 14th place in 2021, down from ninth place in 2019, meaning that as well as the pay gap, indicators such as the female labour force participation rate has declined and more women have become unemployed.

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Around the world, progress towards gender equality in work was set back by at least two years due to the Covid pandemic, the report found.

Women’s employment losses from Covid were relatively worse than men’s.

Moreover, childcare costs have skyrocketed in the UK since 2015 while wage growth has slowed, PwC said.

Average nursery costs per week rose by more than a fifth between 2015 and 2022, while average weekly earnings rose by 14 per cent.

And net childcare costs represented almost a third of the income of a family on the average UK wage, compared to as little as 1 per cent in Germany.

It means that women have born the brunt of higher childcare costs when it comes to their careers, the report suggested.

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“The motherhood penalty is now the most significant driver of the gender pay gap and, in the UK, women are being hit even harder by the rising cost of living and increasing cost of childcare,” said Larice Stielow, senior economist at PwC.

“With this and the gap in free childcare provision between ages one and three, more women are being priced out of work.

“For many, it is more affordable to leave work than remain in employment and pay for childcare, especially for families at lower income levels.”

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Alongside less expensive childcare, societal attitudes about gender roles need to shift to tackle the motherhood penalty, the analysis suggested.

It found that fathers taking more paternity leave could pave the way for more women remaining in full-time employment in the UK, therefore improving its overall ranking in the index.