GPG: the effects of age – a different ‘scarring’
I’ve just been through a major desk refurb. This was an actual physical reconstruction (courtesy of my brother-in-law’s carpentering talents) and not just a clearing out of papers, but I did come across a few interesting items that had slipped out of sight. These included a press cutting from a few months ago on the gender pay gap for the over 50s.
The piece cited a report from an organisation called Rest Less. I couldn’t find the report on their website but the headline showed a median salary gap of 23% for full timers over 50, and 25% for those over 60. This is large in itself, but of course it assumes greater significance when you think about the implications for the pension period – now quite likely to be 25-30 years.
Admittedly, defined benefit pensions, where an occupational pension is paid as a proportion of final salary, are disappearing. On a DB scheme 25% pay gap at retirement age means at least a 25% pensions gap for the next 25 years, even where there is full entitlement. Aggregate that and you’ll get some dizzying level of disparity. But even in the brave new world of defined contributions, individual or collective, the pay inequality of the final period of employment will have lasting effects, which amount over time to some quite massive amount.
We hear – rightly – of the scarring effects of youth unemployment, signalling the effects on young people’s lifetime earnings of a period of unemployment early on. This accentuates generational inequalities. But scarring seems to me to apply equally to the continuing effect of the gender pay gap in later life, as older women’s lower pay persists into the decades of retirement. And let’s not forget that the women now in that 50-65 age group are already quite likely to have been better qualified than their male counterparts.