THE ANATOMY OF THE RISE OF BRITISH FEMALE RELATIVE WAGES IN THE 1970s: EVIDENCE FROM THE NEW EARNINGS SURVEY
| Author | P. Z. Tzannatos,A. Zabalza |
| Date | 01 July 1984 |
| Published date | 01 July 1984 |
| DOI | http://doi.org/10.1111/j.1467-8543.1984.tb00161.x |
THE ANATOMY OF THE RISE OF BRITISH FEMALE RELATIVE
WAGES IN THE
1970s:
EVIDENCE FROM THE
NEW EARNINGS SURVEY
P.Z.
TZANNATOS*
AND
A.
ZABALZA?
1.
INTRODUCTION
During the first half
of
the last decade female relative to male pay rose to historically
record levels, after being constant for almost a century. The aim
of
this paper is to
study how this increase took place across industries and occupations, and to
investigate to what extent the system
of
collective agreements has constituted the
channel through which this rise has been implemented. Our analysis allows
us
to
examine whether the increase in female relative pay was simply a reflection
of
compositional changes in the labour force or whether it was due to genuine
improvements of female pay within sectors. We are also able to discuss whether the
rise in female relative pay was caused more by a deterioration of male wages than by
increases in female wages.
Our findings confirm that this increase in female relative pay was very uniform
across all sub-groups studied, with the notable exception of white-collar employees in
the public sector. This increase was due neither to compositional effects nor to any
significant deterioration
of
male pay. We also conclude that the machinery
of
pay
determination in Britain may have played an important role in the implementation
of
Equal Pay legislation, and that this contributed significantly to the observed rise in
female pay.
In the following section we review the main features of the evolution
of
relative pay
and employment during the seventies. In the third section the changes in relative pay
are shown to be due mainly to changes in pay within industrial and occupational
groups. The fourth section examines the role that the system of collective agreements
may have played to increase female wages, and in the fifth section we perform a
decomposition
of
wage changes using the more homogeneous data
of
collective
agreements. The last section summarises the main findings.
2.
RELATIVE PAY
AND
EMPLOYMENT
DURING
THE
SEVENTIES
Female relative pay was remarkably stable until the mid-seventies. From
1886,
the
date
of
the first British national survey, until 1970 female
weekly
pay oscillated mildly
around the 50 per cent level. We also know that, at least since 194Sthe date that
reliable estimates were first produced-female relative
hourly
pay had also been fairly
constant around
60
per cent, and that this constancy is true of both full-time and
part-time workers. This pattern, however, came to an end in the early seventies, when
female relative pay started to rise substantially up
to
a
new level which has been more
or
less maintained since 1975.
Between 1970 and 1980, female relative hourly wages increased by 11.2 per cent.
and female relative employment by 12.9 per cent. The increase in relative wages was
*
London
School of
Economics
and
University College, London
t
London
School
of
Economics.
177
178
BRITISH JOURNAL
OF
INDUSTRIAL RELATIONS
quite general, affecting both manual workers (an increase
of
14.9 per cent) and
non-manual workers (an increase of 16.4 per cent). The increase in relative
employment,
on
the other hand, was exclusively due to the expansion of female
workers in the non-manual sector. Relative employment
in
that sector increased by
5.0
per cent during the period, while in the manual sector it decreased by
0.3
per cent. It is
interesting that while relative wages in the two sectors had a similar history over the
period, the evolution of relative employment was
so
different. If the evolution of
relative employment was due only to output expansion in each sector we might expect
a much smaller increase of relative wages in the manual sector due to the relative
contraction
of
manufacturing output. The fact that this is not the case seems to suggest
that other factors may have affected relative wages
and
that these factors exerted a
uniform influence on both sectors. That the Equal Pay legislation enacted during the
period was among these factors is
of
course a strong possibility.
Table 1 presents the year to year details
of
this evolution. The most obvious feature
of these data is the substantial increase
in
female relative wages during the period
1973-1977. This increase is common to both sectors and the pattern that follows is also
very similar: moderate increases in the first and last year (1974 and 1977), and very
large increases in the two middle years (1975 and 1976). Does this large increase in
relative wages coincide with a paralleled increase
in
output? The literature on wage
industry differentials suggests that gaps tend to narrow during upturns
of
economic
activity (Wachter, 1970). In
our
case, the first substantial increases in relative wages
coincide with falls in the real level of GDP. Between 1973 and 1974 it decreased by
1.4 per cent, and between 1974 and 1975 by 0.9 per cent. Thus it looks as if the jump in
relative wages was quite unrelated to the cycle,
or
at least to that contemporaneous
depression. Chipiin
et
al.
(1980) suggest that this increase could be due to the operation
of
incomes policies, which over the last decade have been explicitly equalising. There
are two issues here. First, although the policies were intended to be equalising, the
actual results in this direction were very limited (Ashenfelter and Layard, 1983).
Year
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
TABLE
1
Relative Employment and
Wages
of
Full-time Workers
1970-1980
(per
cent)
Manual
FIM
21.30
21.20
21.37
21.48
21.38
19.63
19.96
20.61
20.96
20.78
21.24
workers
Wj
Wm
61.68
61.25
61.76
62.00
64.43
68.04
71.06
71.74
71.99
70.22
70.85
Non-manual workers
73.91 52.49
73.18 53.17
74.52 53.98
74.23 54.31
73.27 55.54
72.53 60.65
74.92 62.58
76.36 63.05
76.03 61.23
77.71 61.00
77.60 61.10
Fl
M
W/Wm
All
FIM
40.37
40.07
40.90
41.35
41.01
40.86
42.27
43.52
44.01
44.55
45.59
workers
Wt/
Wm
63.68
63.28
64.02
63.66
65.11
69.87
72.59
72.90
71.31
70.50
70.82
Notes:
1.
‘Year’ refers
to
April
of
that
year.
2.
‘Employment’ refers to
all
full-time adults
in
the sample (i.e. men aged
21
and over
and women aged
18
and
over)
whose
pay for the
survey
period
was
not
affected
by
absence.
3.
Wages
are Average
Gross
Hourly Earnings
excluding
overtime pay
and
overtime
hours
of
those adults whose pay was not affected
by
absence.
Source:
N.E.S.
1970
to
1980.
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