Observation (CEACR) - adoptée 1996, publiée 85ème session CIT (1997)

The Committee notes the information provided by the Government in its report and the comments of the Trades Union Congress (TUC), dated 8 November 1996. The Committee also notes the Government's observations on the TUC's comments, received on the eve of the Committee's session.

1. Abolition of wages councils. In its previous comments, the Committee noted that the TUC was concerned that the abolition of the wages councils (by the enactment of the Trade Union Reform and Employment Rights Act, 1993) would cause women's remuneration as a proportion of men's to decline. The Government states that, since the passage of the 1970 Equal Pay Act, women's average hourly earnings excluding overtime have risen steadily as a proportion of men's from 63 per cent to the highest ever figure of 79.9 per cent in April 1996. In Northern Ireland the same trend has been observed with women's earnings reaching 85.3 per cent as a proportion of men's in 1995. The Government stresses that it was the application of the Equal Pay Act which required wages councils, other statutory bodies and employers generally to ensure equality of pay between the sexes and that, previously, wages councils could, and did, set lower rates of pay for women. The Government also indicates that changes in the earnings of both men and women reflect varying conditions in the particular industries or companies concerned which can themselves be influenced by a range of factors such as structural and technological change or profitability. The Government considers it neither possible nor appropriate to attribute changes to one particular event such as the abolition of any wages council. The Government refers to an analysis of the New Earnings Survey (NES) for the period 1990 96 as an illustration that the rate of earnings movement in those industrial sectors where the main wages councils had operated was subject to fluctuation both before and after the abolition of those councils. It also refers to an analysis of the 1993 and 1994 NES undertaken by the former Employment Department in 1994 to compare the movement in earnings of those individual workers who had been covered by a wages council in April 1993 and who had not changed jobs in the seven months following abolition of the council. The Government states that this analysis, as well as a further one comparing 1994 and 1995 NES data, has confirmed its view that there had not been any general fall in earnings following abolition of the councils.

2. The TUC indicates that its own analysis shows a considerable fall in pay in many of the industries formerly covered by the wages councils and that women have suffered disproportionately from this downward pressure on pay, exacerbating the inequality of pay which affects low-paid women workers particularly. It observes that, in the hotel sector, the average earnings of all workers have fallen in real terms since 1993 and that even in those sectors where pay has risen in real terms, such as in food retailing and the clothing industry, the increases have been significantly lower than those for the service and manufacturing sectors more generally. While acknowledging the fluctuations in earnings in industries previously covered by wages councils, the TUC states that 1993 96 has been a period of continuous wage growth and the fact that those industries are falling behind the growth gives cause for concern about the implementation of the principle of equal pay. In this connection, the Government states that the TUC analysis fails to take into account the differing impact of the recession and recovery on different sectors of the economy. Moreover, the Government states that the period covered by the TUC analysis is too short a period to differentiate the cyclical, structural and institutional changes and their effect on employment and earnings.

3. The Committee notes that both the Government and the TUC based their analysis on the NES. As concerns the TUC's statement that the NES does not fully reflect the situation of low-paid workers, the Government states that, while the NES does measure the earnings of many workers paid below the tax and national insurance thresholds, the Office for National Statistics acknowledges that the NES does under-represent lower-paid workers who do not pay income tax. The Committee notes that while there has been a welcome narrowing of the earnings gap overall, there appear to be some occupational categories where there remains a wide differential in the earnings of men and women (for instance, in sales occupations, the average gross hourly earnings excluding overtime of full-time women was only 66.6 per cent of the corresponding figure for men in April 1995 and in craft and related occupations it was 67.7 per cent). The Committee requests the Government to indicate whether any studies have been undertaken to discern more precisely the reasons for the existence of such a significant earnings differential in certain occupational categories.

4. Compulsory competitive tendering (CCT). The TUC refers to the publication in 1995 by the Equal Opportunities Commission of research on the effects of CCT in local government, which found that this process had a negative impact on the wages of women. According to the TUC, the research found that in female-dominated areas such as catering and cleaning the contractual hours fell by 16-25 per cent and the wages fell in some areas, whereas the pay levels increased and the contractual hours remained the same in male-dominated areas. Women part-time workers were shown to be the worst affected, with lower pay, fewer hours and worse terms and conditions of employment. The Committee requests the Government to comment on the 1995 study referred to by the TUC and to indicate whether any measures have been taken, or are contemplated, to redress any problems identified in the research which have an impact on the application of the Convention.

5. Part-time workers. The TUC considers that the application of the Lower Earnings Limit (LEL) for national insurance contributions has a discriminatory effect and an adverse impact on women's pay. It indicates that many now have earnings below the LEL and therefore fail to qualify for state benefits such as maternity and sick pay, unemployment benefit and state pensions. It states that most of those excluded from basic national insurance benefits are part-time workers of whom the large majority are women. The Government states that workers who earn less than the LEL are not excluded from the national insurance schemes altogether as they can choose to pay national insurance contributions on a voluntary basis so as to earn an entitlement to a retirement pension. Married women can also rely on their husbands' contribution records for pension purposes and are by far the larger group to benefit from Home Responsibilities Protection which acts to protect the basic retirement pension position of the individual. According to the Government, research shows that employers regard savings on national insurance contributions as a very minor reason for the employment of part-time workers: the main reason for the employment of part-timers (who comprise most of the low-paid workforce) was that this suited the work available. Even though many employers do not regard the LEL as an important determinant of wage levels, the Government considers that a requirement to pay contributions in respect of all employees could lead to a rise in non-wage costs and a possible reduction of work opportunities at lower wage levels, which would particularly affect women who often welcome the chance to combine paid employment with domestic responsibilities.

6. The Committee has taken note of the Government's information and explanations. It would point out, however, that the abolition of the wages councils, the application of the LEL and other measures have had deleterious effects on certain categories of women workers which are felt more particularly by those working part time. The Committee would welcome any indications from the Government as to the measures that might be taken to improve the situation of these women workers, especially as concerns their remuneration and entitlements.