Glacial progress means women still have to mind the pay gap
World in Motion – Global equities blog

Glacial progress means women still have to mind the pay gap

International Women’s Day, which is on 8 March every year, is a day for the world to focus on key issues that face women – one of which is continued inequality in the workplace.

Although the gender pay gap is slightly improved compared with 2021, at the current rate of progress it will take 132 years for women to reach pay parity with men (Figure 1).

Figure 1: years to close overall global gender pay gap, based on progress each year

Figure 1- years to close overall global gender pay gap based on progress each year
Source: World Economic Forum, Global Gender gap reports, 2016-2022

Recent years have not been good for women. First, the Covid-19 pandemic set back female workforce participation rates, with women taking on most of the childcare burden when nurseries and schools shut. And with the current cost-of-living crisis, women are less likely than men to receive pay rises that keep up with inflation1 while also facing soaring childcare costs.

The availability of affordable, quality childcare is vital to ensure women are both retained and progress in the workplace. In the UK, the Pregnant Then Screwed charity found that three-quarters of mothers who pay for childcare say it no longer makes financial sense for them to work. UK nursery fees have risen by a fifth since 2017, significantly outpacing inflation.2 This “motherhood penalty” is the biggest driver of the gender pay gap in the UK.  
The US faces similar pressure with childcare inflation at 214% over the past three decades versus the average family income rising by only 143%.3 In fact, the UK and US have among the highest childcare costs in the world due to their governments providing little financial support – resulting in families covering a higher proportion of childcare expenses (Figure 2).  

Figure 2: childcare costs – net expenses for a couple as a share of average wages, 2021

Figure 2: childcare costs – net expenses for a couple as a share of average wages, 2021
Source: OECD, 2021. Assumes a couple with two children aged two and three using full-time centre-based childcare
But there is also a severe shortage of quality childcare, with demand far outstripping supply. In the UK there was an 87% rise in nurseries shutting down in 2022 as the industry faced chronic labour shortages and high running costs.4
Aside from governments, corporates also have a critical role in supporting an inclusive workforce. Setting a boardroom diversity target does little to address the underlying reasons for why fewer women than men stay and progress through corporate ranks, nor why women are underrepresented in high-paying occupations. A more inclusive workplace culture and equitable work policies – such as paid parental leave, childcare and flexible work options – are vital if women are to progress through corporate ranks. In the US, childcare benefits are the second-highest reason parents stay in their jobs after health insurance.5

Having a more diverse workforce makes good financial sense too. It gives corporates greater access to skills and talent, while women bring more diverse ideas and perspectives to help drive topline growth. Higher female participation also supports stronger economic growth – an economy cannot operate at its full potential if half of its population cannot fully contribute to it.

We own Bright Horizons6 in the Columbia Threadneedle Sustainable Outcomes Global Equity strategy, which partners with employers in the US to provide on-site childcare centres as well as running full-service childcare centres across the UK, Netherlands and Australia. It now operates more than 1,000 preschool centres globally as well as providing back-up childcare and elder care services to support workers. Its services are critical to its customers’ ability to attract and retain a more diverse workforce.  
4 May 2023
Pauline Grange
Pauline Grange
Portfolio Manager
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May 2023
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1US Bureau of Labour statistics (BLS), due to higher female participation rates in sectors with pay rises lagging inflation such as the education sector
3US Bureau of Labour statistics (BLS) consumer price index.
4National Day Nurseries Association’s analysis – April-December 2022.
5KinderCare Confidence Report, 2023.
6The mention of any specific shares or bonds should not be taken as a recommendation to deal.

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