With the cost of living crisis still ongoing in the UK, there are many people struggling to make it from month to month. Women, especially, still face extreme financial disparity in the UK, despite progress made to tackle this.
Moving on from the gender pay gap, here are three ways financial disparity is exacerbated against women in the UK. These are contributors to limiting women financially that are perhaps not always spoken about.
We often focus on the gender pay gap; however, there are hidden and more insidious ways that women are more financially disadvantaged than men.
Although this is not men’s fault, it is a conversation and a privilege they face without realising the real-life consequences for women, particularly low-income women and ethnic minorities.
1. Unpaid domestic labour
According to the Office for National Statistics, women in the UK currently do 50% more unpaid care work than men.
This unequal distribution of labour can lead to a decline in women’s mental well-being.
It also means they cannot dedicate as much time to their own careers. It is deep-rooted patriarchal norms that cause this to continue to be the case.
Women are still given the primary responsibility for unpaid care work, despite women now being part of the workplace. Alongside being expected to be main caregivers to children, they are also primary elder caregivers, too, even for their partner’s family.
The pressure of managing both paid and unpaid work leads women to have higher stress levels. It also creates more mental health challenges and less time for personal activities, either for leisure or personal development.
Care and domestic work is also ‘invisible’, meaning it is not recognised by others in the household or mainstream economics. As a result, national accounting systems fail to factor in women’s total contribution to society’s economy.
2. Benefit system bias
The current structure of the UK’s tax and benefits system disproportionately disadvantages women, particularly low-income and single mothers.
Universal credit has particularly been criticised, and without scrutiny and input from women, it leaves women at a financial disadvantage that they cannot control or improve.
One of the main ways this happens is through the taper rate. Universal credit is paid to one individual per household, but based on both earners in a two-person household. Women are often the ‘second earners’ due to making less than their male counterparts.
The taper rate ( the mechanism which controls the reduction of universal credit as earnings increase) is currently at 55%. This means for every pound earned over the work allowance, the universal credit is reduced by 55 pence.
Due to this, it is often not financially attractive for the second earner (primarily women) to increase their working hours or take on a job.
As a result, women are kept financially reliant on their partner, and do not have a separate, independent income from the one universal credit payment.
This is particularly concerning for women in abusive relationships, as they are financially dependent on their partner.
And what does this mean for single women?
Single mothers represent 90% of single-parent households in the UK and are often let down by the universal credit system. Single parents report that there are delays, errors, fluctuating payments, and hostile advisors on the phones.
There is evidence that shows that universal credit has had a negative impact on the mental health of single mothers. This is due to the stress and anxiety when claiming.
From these statistics, we can see that both single women and women in a relationship are at a financial disadvantage. When relying on the benefit system they are often let down.
Women cannot rely on the system that is meant to support them financially to give them an equal opportunity with men.
3. Gender bias in entrepreneurship and investment
Often unrecognised, female entrepreneurs in the UK still face substantial barriers to receiving investment and financing for their businesses.
In 2022, women-only founded startups received a mere 2.1% of total venture capital (VC) in the UK. In comparison,male-only teams received 89% of this funding.
Alongside this, it is reported that women tend to ask for smaller amounts of funding than men. This is due to societal beliefs that are imposed on women, teaching them to be smaller and not ask for too much. The same belief is not imposed on men.
In 2023, the average amount women-led businesses received was £174,000, and the average for male-led businesses was £507,000.
Another barrier women face is due to gender bias in investment decisions, which impacts what they can share about their brand in front of investors.
A Harvard Business Review found that investors in the UK tend to focus on risk-prevention questions when hearing a woman’s pitch. On the contrary, when hearing a man’s pitch, they focus on growth-based questions.
For women in business, before they even step foot in a boardroom, they are immediately at a disadvantage.
This is another way in which women are financially hindered in the UK before they even attempt to make money and gain financially.
What now?
When we talk about financial inequality, the conversation can’t stop at salaries. Women in the UK are navigating a system that undervalues their labour at home and makes it harder to access support when it’s needed. It also builds impenetrable barriers before they even try to start something of their own.
Don’t get me wrong, addressing the gender pay gap is deeply important, but it won’t be enough on its own. To actually create change, we have to look at the full picture of what keeps women financially restricted and ask who benefits when that picture stays hidden.
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