Discrimination in the Labour Market (AQA A Level Economics): Revision Note

Conditions Necessary for Wage Discrimination

• Wage discrimination occurs when there is a difference in wages between workers with comparable skills in the same job

Conditions Necessary for Wage Discrimination

Gender & Ethnicity Discrimination

Gender Discrimination

• The gender pay gap is the difference in average earnings between men and women, typically expressed as a percentage of male earnings

  • For example, if the average hourly wage for men is £20 and for women is £18, the gender pay gap is 10%

• It reflects both equal pay issues (paying men and women differently for the same work) and broader structural factors, such as differences in industries worked, seniority, working hours, and unpaid care responsibilities

• The gender pay gap for full-time UK employees in 2023 was 7.7%. This is due to the following:

  • Women are concentrated in lower-paying occupations. They make up 77% of workers in health and social work

  • Fewer women are in senior and leadership positions

    • In 2022, only 1 in 25 of CEOs in Britain's largest publicly listed companies are women

Key Contributing Factors

1. Occupational Segregation

   • Women are more likely to work in lower-paid sectors (e.g. care, education) while men dominate higher-paid fields like finance or engineering

2. Part-Time Work

   • A higher proportion of women work part-time, which tends to offer lower hourly rates and limited progression opportunities

3. Career Interruptions

   • Maternity leave and childcare responsibilities can slow down career progression, creating long-term wage penalties

4. Under-representation in Senior Roles

   • Women are still under-represented in top-paying leadership and boardroom positions

5. Unconscious Bias and Discrimination

   • Even today, bias in recruitment, promotions, and salary negotiations can affect outcomes

6. Lack of Flexible Working Opportunities

   • Inflexible job structures can limit women's ability to take on high-responsibility or full-time roles

Ethnicity Discrimination 

• Ethnic pay gaps show the difference in the average pay between workers from minority ethnic backgrounds in a workforce, compared to white workers 

  • Ethnic minorities in the UK face both wage and employment disparities 

• Minority groups are more likely to work in lower paid sectors such as hospitality and retail. These sectors also tend to offer fewer opportunities for career advancement

  • E.g In 2023, UK-born black employees had a pay gap of 5.6% less than white employees

    • Non-UK-born black employees has the highest pay gap, earning 12% less than UK-born white workers

• Ethnic minorities are also underrepresented in leadership positions within businesses

  • E.g Only 4.6% of UK leadership roles are held by minority ethnic groups