Holyrood report: Scottish Government ‘can help close gender pay gap and boost economy by up to £17billion’*

26.06.2017

The Scottish Government could use devolved powers to help close the gender pay gap, and boost Scotland’s economy, according to a Holyrood committee report.

The Scottish Parliament’s Economy, Jobs and Fair Work Committee gender pay gap report, ‘No Small Change’ calls on the Government to take action in a range of devolved areas, including making care a priority sector; and upskilling women currently compelled to return to lower-paid, lower-skilled jobs after career breaks. The report’s recommendations include:

  • Developing an overarching strategy covering all areas of policy where positive steps could be made towards narrowing the pay gap.
  • Care should become a Scottish Government priority sector, acknowledging the importance of the sector to Scotland’s economy. Improving pay, conditions and the status of the child, adult and elderly care sectors would not only reduce the gender pay gap but also help recruit a more balanced workforce.
  • Scottish Government to learn from the successes of the Modern Apprenticeship programme and develop a new, appropriately resourced programme for people returning to work. Currently, ‘Three in five professional women returning to the workforce being likely to move into lower-skilled or lower-paid roles, experiencing an immediate earnings reduction of up to a third.’** This approach could bring many additional jobs to Scotland.
  • Scottish Government, its agencies, and the Scottish Parliament to ensure that they are following best practice principles and ensure that all roles are advertised as flexible, agile or part-time, unless there is a business reason not to do so. The committee was told that currently UK-wide, in the region of ‘8 per cent of roles that are advertised with a salary of over £20,000 per annum offer some sort of flexible working.’ ***

Convener of the Economy, Jobs and Fair Work Committee, Gordon Lindhurst MSP said:

“The Committee is clear there is a gender pay issue for Scotland’s workforce. Women across Scotland’s economy are still concentrated in low-paid jobs and part-time work. The pay gap primarily affects women and isn’t just attributable to women choosing to start a family or to take time out of their careers.

Mr Lindhurst continued:

“Each and every one of us is likely to rely on professional care at some time in our lives. Despite the radical change in skills over the years, this continues to be one of the lowest-paying, female-worker dominated sectors in Scotland. We want to see the Government address this issue by prioritising the care sector; it is vital that we raise the status of care in Scotland.

The Convener concluded:

“Supporting everyone – both female and male – in all our sectors to achieve their full economic potential will take ambition, innovation and, for some, a shift in cultural thinking. But it is within the Scottish Government’s power to help make this happen, and the benefits for Scotland’s economy could be significant.”

Further recommendations in the No Small Change report include:

  • The Committee recognises the role that targets can play in making progress on the gender pay gap issue, and supports their use to produce change.
  • Scottish Government to consider amending the current procurement regulations to include a question for bidders on their gender pay gap. Bidders could be asked to calculate and submit their gender pay gap, using the formula stipulated in the 2017 Gender Pay Gap Reporting Duty.
  • Recommends the Scottish Government clearly sets out what is expected of the enterprise agencies in relation to addressing the gender pay gap and that it monitors their performance in this area.
  • The Committee is not persuaded that the enterprise agencies are as fully committed to promoting the Scottish Business Pledge as they might be. The Committee expects to see the inclusion of ambitious Scottish Business Pledge targets and gender pay measures within future business plans.
  • Scottish Government to represent the gender pay gap in its National Performance Framework using a measure which includes part-time workers in Scotland. The current Scottish calculation does not take into account 40% of female workers.
  • Equal pay claims still exist in Scotland, despite unequal pay on the basis of gender being illegal in the UK for over 40 years. The Committee recognises this is a contributing factor to the gender pay gap, and calls on all employers to ensure, by carrying out equal pay audits, that their pay systems do not discriminate on grounds of gender.

The Economy, Jobs and Fair Work Committee’s No Small Change report can be viewed via this link: http://www.parliament.scot/parliamentarybusiness/CurrentCommittees/105452.aspx

The Economy, Jobs and Fair Work Committee scrutinises a broad range of topics within the remit of the Cabinet Secretary for Economy, Jobs and Fair Work including energy policy, the impact of the UK vote to leave the EU, fair work and matters relating to the Scottish economy. It comes to a view after taking evidence from, and engaging with, a wide range of stakeholders ‘on the frontline’ and applies authoritative, expert, effective and influential scrutiny to policy.

Photographs of the Committee and Convener are available free of charge.

Background

* In its evidence to the committee, campaigning organisation Close the Gap cite a £17.2 billion figure as the return to the Scottish economy were barriers to women’s participation removed. The Committee also heard much about the figure from the 2016 McKinsey report, The Power of Parity, that narrowing the gap could add £150 billion to the UK economy. Others mentioned reports by Deloitte and PwC which suggested similar gains. According to Professor Tom Schuller, author of The Paula Principle “Huge figures are bandied about in relation to the economic cost of the failure to make full use of women’s competences…but there can be little doubt that for Scotland the economic benefits of closing the pay and career gaps run into tens or even hundreds of millions…”

**2016 McKinsey report, The Power of Parity the findings projected 840,000 additional – not replacement – jobs to the UK economy. The McKinsey report is based upon a number of assumptions and did not look at the demand side of the economy.

***PWcS report.

Gender pay gap: background and statistics

  • Women have historically clustered in sectors that are traditionally low paid - the “five Cs” (cleaning, caring, catering, clerical, cashiering) – and this pattern continues. However, even in higher paid sectors where women are working in near equal numbers to men, the pay gap persists. For example, in the finance sector, women hold 50% of the positions but are still concentrated in lower paying positions
  • The largest pay gaps are found in skilled trades and management, with finance and insurance the industrial sector with the highest pay gap, at 29.9%. This is a sector where 51% of employees are women. (According to SPICe’s gender pay gap report: http://www.parliament.scot/parliamentarybusiness/103275.aspx)
  • The legal profession in Scotland has seen a dramatic change in gender balance over a short period of time, with 52% of solicitors now female. However, this has not resolved the significant pay gap within the sector. The Law Society wrote to the Committee that “male solicitors on average earned more than female solicitors. Women featured more prevalently in the £15k to £45k brackets whilst men were more prevalent in the £65k to £150k brackets”.
  • Progress on closing the pay gap has been so slow that on current trends it will not be eradicated until 2069 – or 99 years after the 1970 Equal Pay Act, with women working full-time in Scotland still earning on average 6.2% less than men.
  • According to UK government figures, equalising women’s productivity could add almost £600bn to the economy, while if the 2.2 million women who wanted to work could find suitable jobs, 10% could be added to the size of the economy by 2030. (pg 11, Maximising women’s contribution to future economic growth report, UK Government Equalities Office.)
  • The Committee heard that, by the age of 42, mothers who are in full-time work earn 11 per cent less than women without children who work full-time. (https://www.tuc.org.uk/sites/default/files/MotherhoodPayPenalty.pdf p.3)

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