Increase in cost of childcare widens gender pay gap in UK

Increase in cost of childcare widens gender pay gap in UK

According to a new report by accountancy firm PwC, the gender pay gap in the UK has widened due to a sharp increase in the cost of childcare.

This has resulted in a “motherhood penalty” that has put many women out of work.

The nation’s average pay gap increased by 2.4 percentage points to 14.4% in 2021, indicating that UK companies have taken a step backwards regarding gender parity.

The rate at which the pay gap is closing suggests it will take more than 50 years to reach gender pay parity.

The UK also dropped five places in PwC’s annual index of women’s employment outcomes across 33 countries that are members of the Organisation for Economic Co-operation and Development (OECD) and included in the analysis.

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

The impact of the Covid pandemic set back progress towards gender equality in work by at least two years around the world. Women’s employment losses from Covid were relatively worse than men’s.

The report found that childcare costs have risen dramatically in the UK since 2015 while wage growth has slowed. Average nursery costs per week rose by more than a fifth between 2015 and 2022, while average weekly earnings rose by 14%.

Net childcare costs represented almost a third of a family’s income on the average UK wage, compared to as little as 1% in Germany. This has resulted in women bearing the brunt of higher childcare costs in their careers.

The motherhood penalty is now the most significant driver of the gender pay gap, with women being hit even harder by the rising cost of living and childcare. For many, it is more affordable to leave work than remain employed and pay for childcare, especially for families with lower income levels.

Alongside more affordable childcare, societal attitudes about gender roles must shift to tackle the motherhood penalty.

The analysis suggested 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.

»Increase in cost of childcare widens gender pay gap in UK«

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