A new study has revealed that the UK’s gender pay gap is larger than official estimates because the data used to calculate it is not weighted properly to account for jobs in small, young, private sector organisations.
Researchers at Bayes Business School, UCL, the University of the West of England and the University of Stirling reviewed the Office for National Statistics’ (ONS) Annual Survey of Hours and Earnings (ASHE), which is used to calculate the UK gender pay gap.
Published in the British Journal of Industrial Relations, the study has found that despite efforts to weight the sample to be representative of the breadth of the UK workforce, it had not accounted for higher non-responses from some types of employers to the survey.
Having developed and applied a more representative revised weighting scheme, the researchers have re-estimated the size of the UK gender pay gap. They found the gap has been consistently under-estimated over the past 20 years by a small but noteworthy margin of around one percentage point.
According to the researchers of the new study, this happened because the original weighting under-represented smaller private sector firms, especially for women, and over-represented larger and public sector employers, where pay is generally higher and the differences between men and women within jobs are generally smaller. This under-representation was due to smaller private companies being less likely to respond to the ONS’s survey.
Despite being a mandatory requirement, on average only 63 per cent of employers responded to the survey between 1997 and 2019, dropping to just 46 per cent since 2020. The response rate among the largest firms was around 50 percentage points higher than among the smallest firms, and around 15 percentage points higher among public sector employers than private sector.
John Forth, Professor of Human Resource Management at Bayes, and lead author of the study, said:
“The data collected in this annual survey has far-reaching consequences across our society, informing everything from official pay recommendations for doctors and nurses to anti-poverty measures like the National Minimum Wage. It is, therefore, crucial that the data is a true representation of wages and earnings in modern Britain.
“We welcome ONS’s recent announcement that they will be conducting a wide-ranging review of methodology behind the Annual Survey of Hours and Earnings. As part of the review, we encourage them to look at how the data can be made more representative of jobs in all types of organisations, so that the issues we observed can be addressed.”
Co-author Professor Alex Bryson, UCL Social Research Institute, said:
“When we saw the higher non-response rate among some firms, we questioned whether this could be skewing the sample and, therefore, distorting its findings.
“By adjusting the weighting, we accounted for this bias and saw that the UK gender pay gap has been consistently under-estimated for decades.”
It’s a heavy read, but you can take a look at the full findings of the report – which includes an examination of the mechanics used to set the National Minimum Wage and the National Living Wage – here.
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