View from City Road: Women's pay gap narrows

Earnings in Britain are becoming increasingly disparate, according to the Department of Employment's New Earnings Survey. The gap in earnings between the public and private sectors, manual and non-manual workers, and the high-paid and low-paid are all widening. Only the gap between men and women is shrinking.

In April, the average full-time employee earned pounds 317 a week before tax, 4 per cent up on the year, outstripping the 1.3 per cent rise in prices. Contrary to conventional wisdom, earnings are slightly higher in the public than private sector - pounds 321 a week against pounds 315.

As in the previous two years public sector workers enjoyed larger pay increases than those in the recession-hit private sector. This widens the public-private gap, but has the surprising effect of closing the gap between male and female pay. Many women are in better-paid jobs in the public sector - nursing and teaching, for example - than in the private sector.

The result is that this year women's earnings rose to 79 per cent of men's, the highest proportion since the survey began in 1970. But the narrowing in the gap could reverse as the private sector catches up during the recovery, and as public pay limits bite.

The figures also show that the 14-year trend towards greater inequality in gross pay has continued. The best-paid 10 per cent of workers earn about three times as much as the lowest-paid 10 per cent. There appear to be two factors at work. The first is that the low-paid and low-skilled have a higher chance of becoming unemployed, and therefore compete against a larger pool of people who might be hired instead. The second is that the modern economy pays a rising premium for skills and education.