Maternity leave and its enduring impact on the gender pay gap – what can we do to bridge the divide?

Maternity pay made headlines in September when Tory hopeful Kemi Badenoch was reported as describing maternity pay as “excessive” during an interview on Times Radio. Whilst many – including Badenoch – argue that this was a misrepresentation or misreporting of the interview, the anger caused reflects the difficulties many women face when taking maternity leave, both financially and professionally.

Whilst some companies have generous maternity pay, there can be a serious disparity. Statutory maternity pay is 90% of full earnings for six weeks, followed by a maximum of only £184.03 for the next 33 weeks (and nothing thereafter). This can be financially very challenging for lots of women.

The public sector and larger companies are much more generous – for example, the Ministry of Justice offers full pay for six months. However, this is not the norm. There is no question that maternity is financially tough for many women. However, the financial impact is perhaps less significant than the career gap caused by pregnancy and maternity leave.

Undeniably, one of the most significant factors in the enduring gender pay gap is maternity. In 2023, the overall gender pay gap stood at 14.3%. Whilst a significant reduction in the 27.5% gap recorded in 1997, there is clearly some way to go.

Diving deeper into the gender pay gap figures, the effect of maternity leave becomes clear. While the gender pay gap is 14.3% overall, it almost halves to 7.7% when only comparing men and women in full time employment. The gender pay gap falls to only 3% when comparing men and women between 22 and 29 and it is negative among those aged 18-21.

It is hard to explain the modern gender pay gap through discrimination alone. In many ways younger women are ahead of men. Women are more likely to go to university than men. Nearly two thirds of new solicitors are women and more than half of doctors under 50 are women.

What is clear from the figures therefore is that the gender pay gap changes as employees age, widening to over 10% when employees reach 40 even among full time employees.

When women have children, it is not uncommon for their labour participation and working hours to reduce. Many women either through choice or necessity take a step back from long hour employment when they have children and work reduced hours. In 2021, the Institute for Fiscal Studies noted an employment rate of 90% for women without children but only 75% for women with children.

Gone may be the days when men would never change a nappy, but women still tend to take on the majority of childcare responsibilities. This historical problem is demonstrated by the length of parental leave. Women often take a full year of maternity leave. In contrast, statutory paternity pay is only two weeks.

Pregnancy can be particularly difficult for women in professional services. As careers advance, personal contacts become more important. Senior lawyers, accountants and financial advisors are often valued because they have a “following” – i.e. a group of clients that are loyal to them personally. A following is difficult to maintain when taking a year out of the workplace - clients often move on. Worse, many women experience redundancy situations, which are often unlawful, when they return from maternity leave finding that their employer has reallocated their work.

Listening to the full interview, Ms Badenoch actually said that the rate of maternity pay was “neither here nor there” and that she wanted an environment where people had more freedom to “make their own decisions”. In terms of the gender pay gap it is probably fair to say that the rate of maternity pay is indeed “neither here nor there” and that cultural factors and individual decisions are the driving factor.

One area where couples have the freedom to make their own decisions is shared parental leave. Men already have the option to take on part of a woman’s maternity leave. However, in 2023 only 5% of men exercised this right.

This is an area where the rate of pay is also important. Many large companies have generous maternity pay provisions but still only offer £184.03 per week (the legal minimum) to men taking shared parental leave. This makes shared parental leave unviable for many couples.

There is also clearly a cultural issue at play. While it should not be the case, few would deny that some eyebrows are raised when a man steps back from work to raise children.  However, if there was a genuine cultural change and time off to raise children was split between men and women more equally, it is clear that the gender pay gap would reduce.

There is an element of choice here but there is also more that government could do to encourage men to play their part in childcare responsibilities – possibly starting with equalising shared parental leave and encouraging its use. There is also a lot that could be done to limit the professional and financial hardship that comes with maternity leave and pay.

Andrew's article was published in Personnel Today, 4 November 2024, and can be found here.