The recent ESRI report, How Unequal? Men and Women in the Irish Labour Market, examined pay differentials between men and women. The report established that women in Ireland earned approximately 15 per cent less than men.

This figure, based on 1997 data, compared with a difference of 20 per cent in 1987 and 18 per cent in 1994. The trend towards the narrowing gender pay gap is welcome. But why, in a State with some of the most advanced equality legislation in the world, should a gap exist at all. After all, Irish legislation specifically excludes different rates of pay being applied to men and women who are doing the same work.

Ireland is not alone in relation to the existence of a gender pay gap. This position is mirrored across other European countries.

We should also note that, since 1997, the pay gap should have narrowed further. It is estimated that the minimum wage will have reduced the gap by one percentage point at a stroke. However, the most significant point is the survey's finding that two-thirds of the gap is accounted for by the fact that rates of pay tend to rise with age and labour market experience.

In Ireland, the average woman worker has worked for 12 years compared with 18 years for the average man.

According to the ESRI, when the figures are adjusted to reflect equal lengths of service, the actual wage gap is 5 per cent and not 15 per cent. The single biggest contributing factor for the pay gap, therefore, is the reduced level of participation by Irish women, who drop out of the formal workforce on the birth of a child/children.

The ESRI report states: "For a typical man and woman, identical in terms of educational qualifications, it is found that the arrival of one child when aged 26 and another when aged 29 will lead, by the time the second child is 18, to the woman having nine years less labour market participation than the man. This has a major effect on the wage which can be commanded in the labour market."

It is evident from these findings that the key issue in addressing the pay gap must be to eliminate any barriers to female participation in the formal workforce during the child-bearing and child-rearing years. Two key points arise - first, what can be done to make workplaces more family-friendly, and second, are we finally going to substantively address the child care issue in the December Budget?

In respect of family-friendly policies, an important initiative has emerged from the Programme for Prosperity and Fairness. A framework committee under the chairmanship of the Department of Enterprise, Trade and Employment has been established.

Representatives from IBEC, ICTU and the Equality Authority are participating and a budget of £4 million (€5.08 million) has been set aside to implement positive measures in this area. In addition, an interactive website is being developed and demonstration projects will commence early next year.

The childcare issue is much more complex. The positions being adopted by the social partners differ significantly.

To date, the approach adopted by the community and voluntary pillar in seeking a universal payment will, in IBEC's view, do nothing to increase female participation rates (in fact, it could be argued that the proposal is anti-employment) and, therefore, will not impact on the gender pay gap.

The enormous cost of childcare is a significant burden on families and must be tackled through deliberate, tailored and targeted relief.

This can be achieved through a combination of tax and social welfare measures, paying particular attention to the needs of employees on the comparatively lower end of the wage scale. This approach is favoured by IBEC above a universal-benefit approach.

Efforts to address the affordability issue by means of a universal benefit approach will not provide an efficient, cost-effective or substantive solution to this problem. Targeting relief at costs actually incurred will not only assist parents in meeting their childcare costs, but it will also provide an incentive to use regulated care.

IBEC's approach in seeking targeted support measures for parents, together with a focus on increasing childcare supply, will be of benefit to women who wish to return to or remain in the formal workplace. This type of action, in turn, could further reduce the wage gap.

There are genuine reasons explaining the existence of a gender pay gap. The forthcoming Budget and its approach to the childcare issue will be crucial. Looking ahead, perhaps the best way to address the issue of a gender pay gap is to reduce the emphasis on number-crunching and put in place measures to promote genuine equality of opportunity.

Brendan Butler is director of social policy in the Irish Business and Employers' Confederation.