Equality & Diversity initiatives are designed to redress the balance where decades of inequality have led to high levels of disparity in the workplace. Gender Pay Gap reporting is no different and the Equality Act 2010 makes it a statutory duty for organisations with more than 250 employees to report on their gender pay gap, which looks to redress the long standing percentage difference between average hourly earnings for men and women. Currently, the national average mean gender pay gap is 17.9%, which indicates – on average – woman in the UK earn 17.9% less than men. In fact, the Guardian (April 2019) reported that a quarter of companies and public sector bodies have a pay gap of more than 20% in favour of men. However, according to the Financial Times (23 April 2019), Government policymakers hoped the transparency would shame large employers into taking swift action to narrow the difference between what they pay men and women.
What is the Gender Pay Gap?
The gender pay gap shows the difference between the average (mean or median) earnings of men and women. This is expressed as a percentage of men’s earnings e.g. women earn 15% less than men. Used to its full potential, gender pay gap reporting is a valuable tool for assessing levels of equality in the workplace, female and male participation, and how effectively talent is being maximised.
What is the difference between the gender pay gap and equal pay?
It’s worth noting that a gender pay gap isn’t the same as unequal pay. Equal pay – where men and women doing the same job should be paid the same – has been a legal requirement for nearly fifty years. Under the Equal Pay Act 1970, and more recently, the Equality Act 2010, it is unlawful to pay people unequally because they are a man or a woman. This applies to all employers, no matter how small. As such, a company might have a gender pay gap if a majority of men are in top jobs, despite paying male and female employees the same amount for similar roles.
The gender pay gap shows the differences in the average pay between men and women. If a workplace has a particularly high gender pay gap, this can indicate there may be a number of issues to deal with, and the individual calculations may help to identify what those issues are. In some cases, the gender pay gap may include unlawful inequality in pay but this is not necessarily the case.
What is the Median pay gap?
The median pay gap is the difference in pay between the middle-ranking woman and the middle-ranking man.
If you place all the men and women working at a company into two lines in order of salary, the median pay gap will be the difference in salary between the woman in the middle of her line and the man in the middle of his.
What is the Mean pay gap?
The mean pay gap is the difference between a company’s total wage spend-per-woman and its total spend-per-man.
The number is calculated by taking the total wage bill for each and dividing it by the number of men and women employed by the organisation.
Why is there a Gender Pay Gap?
According to the BBC, there’s no one reason behind the gender pay gap – it’s a complex issue.
The Fawcett Society, a group which campaigns for equality, says caring responsibilities can play a big part. Women often care for young children or elderly relatives. This means women are more likely to work in part-time roles, which are often lower paid or have fewer opportunities for progression. Another important factor is a divided labour market. Women are still more likely to work in lower-paid and lower-skilled jobs. Women currently make up 62% of those earning less than the living wage, according to the Living Wage Foundation. Discrimination is another cause of the gender pay gap. The Equality and Human Rights Commission (ECHR) has previously found that one in nine new mothers were either dismissed, made redundant or treated so poorly they felt they had to leave their job. This can create a gap in experience, leading to lower wages when women return to work.
Men also tend to take up the majority of the most senior roles at a company, which are the highest paid.
Who has to publish Gender Pay Gap data?
As stated earlier, it is a legal requirement for all employers (with 250 or more employees) to publish their gender pay report within one year of the ‘snapshot’ date: this year’s date being 31st March 2019. However, whilst all employers must comply with the reporting regulations – for employers whose headcount varies they must comply with the reporting regulations for any year where they had a headcount of 250 or more employees on the ‘snapshot’ date.
What information needs to be published?
The following information must be reported by organisations:
- Their mean gender pay gap
- Their median gender pay gap
- Their mean bonus gender pay gap
- Their median bonus gender pay gap
- Their proportion of males receiving a bonus payment
- Their proportion of females receiving a bonus payment
- Their proportion of males and females in each quartile pay band
- A written statement, authorised by an appropriate senior person, which confirms the accuracy of their calculations. However, this requirement only applies to employers subject to the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.
Can companies be punished for a wide gender pay gap?
According to Lorna Jones, Business Reporter, BBC News, companies can’t be punished for a wide gender pay gap. But they might be punished for failing to publish their data, or for publishing inaccurate or misleading figures.
The Equality and Human Rights Commission (EHRC) is responsible for ensuring employers publish their pay gap figures. The EHRC set out plans for its enforcement policy in December. The EHRC says it will approach employers informally at first, but businesses could ultimately face “unlimited fines and convictions”.
As the EHRC is still consulting on these plans, it remains to be seen whether they can or will punish companies in this way. At the moment, there is no enforcement mechanism in the regulations on publishing pay gap data. The UK government says it will also publish sector-specific league tables, highlighting companies failing to address pay differences between men and women.
What can organisations do to reduce the Gender Pay Gap?
According to Dharishini David, Economics Correspondent with the BBC, gender pay gap reporting may not be enough: the government may need to get tougher. Ask gender pay specialists how to solve the problem and they’ll tell you there are many initiatives that companies can take – tackling unconscious bias, offering more flexible working and encouraging shared parental leave.
However, the issue doesn’t end at the office door. The experts say society needs to change.
For example, schools could encourage girls to take more STEM subjects: science, technology, engineering and maths. There should be more flexible, affordable childcare options. And men could take on more of the household chores.
However, societal change takes time, sometimes a generation, and currently we can report on the organisations gender pay gaps and look for short term internal solutions but overall society needs to change its attitude to gender, specifically in relation to employment, if we are to have pay equality across gender.
JD
The Equality Blog 