2.16 - Gender Inequalities in Income & Wealth - notes

Evidence of gender disparities in earnings

Key findings from the LSE study (2016)

• Background - The London School of Economics (LSE) conducted a study in 2016 examining tax data and income sources across seven European nations, including Britain. This research focused on earnings from work, investments, and other sources to assess gender representation in top income brackets.

• Method - Analysed tax records and income data to track women's presence in high-earning groups.

• Results - Fewer than one in five of Britain's top earners were women. Women accounted for less than one third of the top 1 per cent earners across the studied nations. There was growth in women's representation in the top 10 per cent of earners, but no similar increase in the top 1 per cent.

• Conclusions - A 'glass ceiling' - an invisible barrier preventing women from advancing to the highest positions and earnings - limits women's access to elite income groups.

This evidence suggests that while some progress has been made in mid-level earnings, significant obstacles remain at the very top.

Reasons for women's lower average income

Women, on average, earn less than men due to a combination of employment patterns, family responsibilities, and reliance on state support. These factors create cumulative disadvantages over a woman's working life, reducing overall income and economic security.

Employment and pay-related factors

• Lower pay in certain roles - Women are more likely to work in part-time or temporary casual jobs, which typically offer lower wages than full-time positions held by men.
• Career interruptions - Women often take more time out of paid work for pregnancy and childbirth, leading to gaps in employment history and reduced earning potential.

Family and caring responsibilities

• Childcare demands - After having children, women who return to full-time work tend to take more time off than men to care for sick children, further interrupting their careers.
• Elderly or ill family care - Women are more likely to leave work entirely to provide full-time care for aged, disabled, or acutely ill parents, resulting in lost income and career progression.

Reliance on state benefits

According to the Fawcett Society, women depend more on state benefits and tax credits than men, primarily due to their greater caring responsibilities and existing economic disadvantages. As a result, reductions in these benefits disproportionately reduce women's income, exacerbating poverty and inequality.

These interconnected reasons mean that women's lifetime earnings are often lower, affecting their financial stability in both working years and retirement.

Factors contributing to inequalities in pension wealth and retirement income

Retirement income disparities arise from differences in work patterns and access to pensions, leaving women with less financial security in later life. Occupational private pensions are savings schemes provided by employers, often building wealth over a career through contributions.

Key reasons for pension gaps

• Limited access to occupational pensions - Women are less likely to have these pensions because they frequently take significant time out of work to raise children, reducing opportunities for pension contributions.
• Lower overall pension wealth - In 2010/12, the average value of men's total pension wealth was nearly twice that of women's - £63,000 compared with £34,800 - reflecting cumulative effects of lower earnings and career breaks.

These factors lead to retired women having less income than men, increasing their vulnerability to poverty in old age.

Disparities in overall wealth ownership

Wealth inequalities extend beyond income to ownership of assets like property, investments, and other valuables. These disparities highlight how women accumulate less wealth over time, often relying on inheritance or other indirect means rather than independent accumulation.

Evidence from UK wealth distribution

The Office for National Statistics (ONS) in 2014 identified clear gender differences in asset ownership.

Key disparities in assets (2014 ONS findings):

• Homes - Men owned more properties on average than women.
• Pensions - As noted earlier, men's pension wealth was significantly higher.
• Cars - Men possessed more vehicles.
• Stocks and shares - Men held greater investments in financial assets.

Representation in the UK's wealthiest

• Background - The 2014 Sunday Times Rich List examined the 1,000 wealthiest people in the UK.

• Results - Only 114 were women, a decrease from 118 in 2004.

• Evaluation - Of these women, only a few (J.K. Rowling and Tamara Mellon) had built their fortunes independently. The majority had inherited wealth or gained it through divorce settlements, indicating limited independent wealth creation among women.

Global perspectives on wealth inequality

• Women make up 49.6 per cent of the global population but own less than 1 per cent of the world's wealth.
• This disparity reflects broader systemic issues, such as limited access to property rights, education, and high-paying jobs in many regions, perpetuating cycles of economic disadvantage.

These patterns in wealth ownership underscore the need for policies addressing gender barriers to promote more equitable accumulation of assets.