New ONS data links gender and ethnicity pay gaps to location

The size of the new dataset, which draws on historical data from the Department for Work and Pensions, HM Revenue and Customs and the 2011 Census, allows for the first time analysis into how young people with varying personal characteristics living in different parts of England and Wales experience earnings progression, says the ONS.Among the key findings among the data covering 2011-16 – and in alignment with existing evidence – is data showing women’s median earnings and wage growth were lower than men’s, and that this trend starts on entry to the workforce. These observations could together with more recent data help HR, mobility and talent managers tailor their recruitment and reward structures, and inform the drive to developing more inclusive organisations.

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Gender pay gaps persist at every level for young women

As perhaps expected, qualification level links into pay and pay growth. The ONS analysis shows that median earnings and median earnings growth are higher for those with degree qualifications, and lowest for those with no qualifications over the timeframe studied.  While the ONS sounds a note of caution over its new methodology, its research found that for young people aged 16 to 29 years, the level and growth of median annual earnings were generally lower for women than men and across all qualification levels during this period.New figures released today that show the gender pay gap for gross median hourly earnings fell to close to zero for people aged 18 to 39. 

London graduate gender and ethnicity

From the perspective of ethnicity – where there is another strong body of evidence suggesting pervasive pay gaps – men and women from the black ethnic group typically had low initial median earnings and consistently lower earnings over the five-year period compared with other ethnicities.Linking this to the gender pay gap, the FT's anlaysis of the ONS's new data shows white male graduates aged 26-29 and working in London during 2016 earned on average £7,398 more than white female graduates and £15,473 more than black female graduates. 

The national picture for ethnicity pay gaps

Slightly more encouragingly, the ONS’s analysis of the highest and lowest earnings growth rates shows in 2011 among people qualified with a degree or higher, men of black or other ethnicity generally had some of the highest earnings growth. However, large pay gaps remain. For example, men of black ethnicity living in the North East region recorded the lowest median annual earnings for degree-educated 26-to 29-year-olds in tax year ending (TYE) 2012 of £12,565. This was over £10,000 less than the comparative figure for men of White ethnicity.Despite this group having higher earnings growth of 63% compared with 27% over the five years, there remained a gap of over £8,000 in TYE 2016. 

Consultation into ethnicity pay gap reporting

These new findings around pay gaps, location and ethnicity could help inform responses to the government’s current employer consultation into ethnicity pay reporting.It launched the consultation earlier this month alongside its Race at Work Charter with workplace campaign body, Business in the Community. The charter offers practical steps to help tackle racial barriers in the workplace.

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Does relocating boost pay prospects?

The UK Industrial Strategy identifies People and Place as two of the five foundations to boost earnings power throughout the UK. Overall, geographical mobility is linked with wage growth and higher earning potential. Ideally, all areas of the UK would provide equal opportunity for earnings growth, says the ONS. However, London consistently has the highest average earnings of any region, but also some of the highest living costs and pay disparities among younger people.In any case, ONS analysis across all age groups of people on relative low pay did show that moving area was strongly associated with moving out of relative low pay.

Staying close to home

Young people living in the East of England and South East were most likely to move to London between 2011 to 2015, whilst those from Wales and the North East were least likely to move to London.This pattern of moves could reflect relative living costs as a barrier to moving or the geographical distance away from family and friends. Over half (57%) of young people moving to London are internal moves between local authorities in London, suggesting a highly mobile young population in the capital. This apparent preference for proximity is repeated across England’s City regions, which tended to attract people from nearby local authorities during the period studied.For example, a third of movers to London were from the South East, 36% of movers to Greater Manchester were from the North West, and 35% of movers to the West Midlands Combined Authority were from the West Midlands region.

Head to the Human Resources section for more news and insight. 

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