The UK continues to make steady progress towards gender equality in the workforce, rising from 14th to 13th place in this year’s Women in Work Index. However, deeper analysis into regional female employment prospects reveals that this progress has not been distributed equally across the UK.
When we constructed the Women in Work Index for each region of the UK, we found that Scotland, the South West and Wales take the top three positions, with Northern Ireland following closely in fourth place. Yorkshire and the Humber, East Midlands and West Midlands rank at the bottom. What is driving this disparity and what are the implications for improving gender equality in the workplace across the UK?
We find a positive correlation between long-term economic growth and improvements on the Index. However, it is possible that the direction of causation runs either way: economic growth may generate economic opportunities that then provide more job opportunities for women. Conversely, the fact that more women are in work increases the production capacity of each region, which grows the regional economy. Existing studies support the latter hypothesis: Luci (2009) finds that evidence for economic growth boosting job opportunities for women is mixed, while Klasen (1999) suggests that economic growth is the result of the growth in economic production capacity as more women enter the workforce.
This suggests that growth-enhancing policies are – on their own – unlikely to be sufficient to tackle regional disparities in gender equality.
Our analysis suggests that the structure of the regional economy plays a key role in determining women’s employment prospects. Scotland, Wales and Northern Ireland outperform almost all English regions, and this is likely to be due to these regions having a higher concentration of public sector employment. Using ONS data for 2018 we find a positive correlation between regional Index score and the share of workforce employment in the public sector, estimated as the share of workforce employment in public administration, education and health services. The South West has the strongest performance of the English regions which is probably driven by the above average size of the hospitality sector in this region. The public sector and hospitality sector are both characterised by more balanced gender representation at all levels than most industries and therefore, smaller gender pay gaps (see our research). As a result these regions tend to perform better on indicators of women’s employment prospects.
On the other hand, Yorkshire and the Humber and the East and West Midlands perform less well on the Index. All three regions have a relatively large share of traditionally male-dominated sectors such as manufacturing. We find a negative correlation between regional Index score and the share of workforce employment in manufacturing (ONS 2018 data). The outlier to this trend is London, whose middling performance on the Index is likely the result of the dominance of financial services in the region. Financial services is another traditionally male-dominated sector which is characterised by quite large pay gaps. This is partly due to the high share of discretionary pay – such as bonuses – that tend to favour men.
The importance of the mix of regional economic activity as a determinant of women’s employment prospects suggests that regional approach is needed to promote gender equality in the workforce. For regions that struggle with large pay gaps, initiatives could focus on encouraging diversity in leadership positions or a greater drive for transparency in discretionary pay. Regions with low female full-time employment rates may benefit more from policies to support women who work full-time, for example by making affordable childcare more widely available. As the devolved nations – Scotland, Wales and Northern Ireland – have control over more policy levers, they may also have more policy flexibility such as in areas like childcare. For example, Scotland’s National Advisory Council on Women and Girls have recently proposed a number of recommendations to improve gender equality in the region, including offering up to 50 hours of free childcare a week and two months of paid paternity leave.
Businesses also have a role to play in identifying the source of gender disparity in their organisations and developing policies to address these issues. Clear outcomes, targets and accountability are key to ensuring business initiatives drive effective change.
While tackling gender-inequality in the labour market is a challenge that will take time to solve, the gains at stake for the UK and all its regions are clear. Closing the gender pay gap would increase female earnings by £92 billion, while increasing female employment rates to match Sweden’s would boost GDP by £178 billion.
To read more about our research, go to our website at pwc.co.uk/womeninwork.
