What is the gender pay gap and how is reporting on it progressing?
Since April 2018 employers with over 250 staff have to report their Gender Pay Gap. What have the results shown since this started, and how do different sectors differ?
Gender pay audits mean employers with over 250 members of staff have to report annually the median and mean gap between their employees by gender in four pay bands. They also have to report their gender bonus gap and are encouraged to publish an analysis and suggest how they will tackle it. The analysis and action plan are not compulsory. The first deadline for reporting figures was April 2018.
There has been some confusion with unequal pay. Unequal pay is being paid less for doing work of equal value. It can overlap with the gender pay gap, but those audits which have been published show that one of the main contributors to the gender pay gap is the lack of women in senior roles as well as, depending on sectors, large numbers of women in lower paid ranks.
Some sectors, such as construction, have low numbers of women throughout and, in some cases, attempts to build the female pipeline have increased the gender pay gap because they have brought more women into the lower pay bands.
The figures show the need for employers to focus on how to increase women’s progression into senior roles as well as attract more women into those industries where figures are low and which are often better paid than those where women predominate.
The latest figures show four in 10 private companies have seen a year-on-year gender pay gap increase between 2018 and 2019.
Currently, the reporting requirements do not place any legal obligations upon employers to close the gap, or even to justify why one exists within their company, but the Equality and Human Rights Commission has chased employers who are not reporting their figures and come to legal agreements with six. It is also chasing those with ‘implausible’ figures.
The business reasons for tackling the gender pay gap are many, including retention of women already in the business. If there is perceived bias about progress, it will be harder to retain women.
Replacing employees that a company has invested time and money in can be a costly process, with the new member of staff likely requiring varied levels of training before they are at the same level as their predecessor.
According to Clare Parkinson from Croner, if a company can actively demonstrate that they are taking steps to work against the gap it can encourage positive working, increased productivity and improved output.
It can also reassure any employees who are thinking of starting a family that they will be supported by their employer, helping to avoid them taking prolonged career breaks to facilitate child care and therefore not depriving the company of an otherwise valued member of staff.
Parkinson says the gap can also discourage external candidates from applying for positions within a company. She adds that it is becoming “increasingly apparent” that, in the modern workforce, employees are drawn towards roles which offer the potential for progression and development and they may be deterred from submitting an application if they believe that they would have increased opportunities in another role.
She cites an October 2018 report from the Equality and Human Rights Commission which revealed 58% of women asked would be less likely to recommend their employment to others if there was a clear gender pay gap.
“By promoting progression opportunities for women, companies can improve their overall reputation within their sector. This can also assist in encouraging women towards sectors with a traditionally male environment, such as the construction industry,” says Parkinson.
The figures have brought calls for tougher action on the gender pay gap. According to a recent analysis of the 2018 figures published by the Chartered Institute for Personnel and Development, only eight per cent of organisations have acted as a result of publishing their gender pay gap data.
The CIPD’s report, Not just a number: lessons from the first year of gender pay gap reporting, says the lack of action highlights that organisations “have yet to recognise the implications for gender pay gap reporting and to connect the results of their analysis to changes in practice”.
Although many said their actions were ongoing outside of the gender pay gap reporting process, the CIPD says they need to ensure they are connected to the outcomes of the reporting process and provide clear narratives that outline if and how progress is to be made.
Some employers have been pushing away at the gender diversity issue for years, trialling policies aimed at tackling career progression for women such as making their work culture more flexible, introducing unconscious bias training for managers, launching sponsorship initiatives aimed at helping women progress, promoting Shared Parental Leave and advertising more senior roles that can be done on a part-time basis, such as in job shares, or in a more agile way, for instance, with more homeworking.
The spotlight on the gender pay gap has brought a focus on other aspects of bias affecting women’s income throughout their working lives and beyond. For instance, the gender pension gap, the gender bonus gap and the gender commuting gap.
The pension gap is caused in large part by the fact that women are much more likely to take career breaks to look after children or relatives and/or to reduce their hours or take a lesser paid role as a result of care responsibilities.
Meanwhile, a recent study showed men are paid on average more than twice as much in bonus pay as women. This is mainly due to men being more likely to be in senior positions than women, but also due to the type of work men tend to be more likely to be employed in.
The commuting gap is due to men being more likely to do longer commutes than women once children come into the equation. As women are still seen as the primary carer, they tend to work more locally than men, which also affects pay.
Women’s pay may also be affected by their greater loyalty to an employer. According to a report on gender pay audits filed by Government departments in 2019, the gender pay gap is widening at five Whitehall departments. The biggest increase was in the Department for Digital, Culture, Media and Sport where the gap increased from 8.2% to 22.9%.
This was blamed in part on external hiring of senior men and the need for people with more digital skills. The Department said women often suffered a “loyalty penalty” by staying with their employer and getting incremental pay rises instead of moving around and negotiating a higher salary in a new job.