What is gender pay gap reporting?
As you will probably be aware, the recent obligations on all companies, charities and public sector bodies with 250 or more employees to report statistics on gender pay gaps within their organisation are now in force and more than 10,000 firms have now complied. Gender pay gap reporting is an excellent opportunity to demonstrate where gender pay differences are really happening and highlights where we need to take actions to improve. It gives us an indication of the differences in men and women’s working patterns i.e. part-time roles being predominantly female and the lack of women in more senior roles. One thing to note is that gender pay reporting is different to equal pay reporting; equal pay deals with the pay differences between men and women who carry out the same jobs, similar jobs or work of equal value. The gender pay gap demonstrates the difference in the average pay between all men and women in the workforce. If a workforce has a particularly high gender pay gap, there are inevitably a number of internal analyses that will need to be carried out and a solution to the problem found.
There are also 238 firms who filed their figures voluntarily despite not being obliged to do so – organisations with fewer than 250 employees are not currently required to file these statistics. This is a great move for these firms as it demonstrates that they recognise that achieving gender equality in the workplace is important. You too might want to think about publishing your own company’s statistics sooner rather than later, as no doubt, the requirement to report will be applied to smaller companies in the very near future. It is also a very good time to start thinking about other inequalities which exist in the workplace and to think about ways of addressing these inequalities. It is apparent that barriers to career progression are not just limited to gender. For instance, we all know that people with a disability can often face fewer opportunities in the workplace. It would be worthwhile exploring the different characteristics of your workforce structure and pay levels as a whole to ensure that they are fair, equal and free of prejudice.
What do the figures tell us?
Nearly eight in ten firms pay men more on average than they pay women. If you’re a woman working at a large UK or international firm, you’re most likely working at a company which pays men more than women. Only 14% of the firms that reported had a pay gap in favour of women. Men are also paid higher bonuses than women and finance firms have the largest bonus gaps. If we take Barclays as an example, women receive a bonus of 27p for every £1 bonus which is paid to men. There is no single sector which pays women more.
The biggest reasons for the pay gap are a result of differences in occupations, roles and seniority. Many female dominated occupations pay less, such as care workers, primary school teachers or cleaners. Occupations that have typically attracted more men and that tend to pay more, such as technology, engineering or the financial services, have the biggest pay gaps. The main reason for the gender pay gap is the level and position of women versus men; more women tend to be in junior roles and more men tend to be in more senior roles. Career progression is vital, but women are very often side-tracked by starting families and other caring responsibilities that fall upon their shoulders. Around 45% of women with children at home had scaled back their working hours or moved to less demanding jobs. In general, men still take a much smaller role in caring responsibilities and tend to continue to developbn their careers.
Where do we go from here?
It needs to be recognised that closing the gender pay gap requires focussing on female progression (as well as an analysis of other inequalities in existence). An underrepresentation of women at the top of organisations is one of the top reasons for the difference in the average hourly earnings between all men and women in an organisation. There is clearly a disparity between the lack of jobs that offer flexibility and the number of workers seeking flexibility. To better drive positive change on diversity and inclusion in their workplaces, any employer can undertake to do the following:
- Create a development programme involving focus groups and workshops. If you have female managers and leaders, consider how they can increase their visibility and voice as role models. Invest in training women to do the well-paid jobs in which there is an absence of them.
- Provide training on unconscious bias and think about the diversity of a recruitment panel. HR should work closely with line managers to ensure hiring, promotion and reward decisions are fair and unbiased. Line managers need to be on the lookout for talented people who may not already be thinking about putting themselves forward for a promotion. This is because research demonstrates that women are unlikely to apply for a role unless they feel they meet the majority (80%) of criteria in a job description, whereas men will apply if they meet only around 60% of the role requirements. In the same way, nudge any recruiters you work with to consider more females for a role you may be advertising for. Recruiters are often given the sole responsibility for creating shortlists to fill some of the top roles on offer.
- From an analysis of the statistics, it is clear that a lack of flexible working opportunities is a huge barrier to female career progression. Caring responsibilities for both children and elderly relatives are disproportionately taken on by women, making flexible working arrangements a necessity for many. Flexible working opportunities must therefore be encouraged. Businesses often believe that having children, taking a career break or going part-time is a personal decision. This may be true, but recent research has demonstrated that it is important that flexible working should be encouraged among male employees as well as female. The stereotypes and gender pay gap can be reinforced otherwise, which businesses must now remain conscious to avoid. Flexible working provision does seem to have increased, but the range of flexible working arrangements is still small, largely restricted to part-time working and flexi-time. A vast talent group of women who desire career advancement remains untapped due to a lack of different working approaches. This results in so many women being unable to reach their full potential. Established practices such as job sharing and compressed hours are significantly underused and should be a point of consideration for employers. Employers should also think about offering an enhanced maternity package to women.
- Employers should also think about paternity leave arrangements and how shared parental leave operates. Right now, there is a lack of satisfactory financial incentive for fathers to take this up and this is a significant barrier preventing many working fathers from being able to fulfil their caring responsibilities. Unfortunately, as a result, women will simply take on more responsibility for the upbringing of the child on the basis of generous maternity allowances, tradition and culture. We need to encourage more men to take the time off for their children to allow women to move forward with their careers as well as to allow men the flexibility many desire.
It is important that smaller businesses remain aware of the measures they need to take to tackle gender pay gap inequality in the workplace. Although it was compulsory for larger firms to publish and report specific figures about their gender pay gap, companies of all sizes, including start-ups and SMEs, can take steps to close the gap too. It’s important to recognise that the majority of small businesses also face a unique set of problems when it comes to closing this gap between men and women in the workplace. Companies falling short of the 250 employee mark will likely be required to submit pay gap reports in the near future. Taking a proactive approach now will act to benefit smaller companies, putting them one step ahead and making the entire process far easier in the long run.
If you are a business owner and you require help with any of the above or if you require help with any other employment or HR related issue, please contact Hannah and Katie on 0845 345 5004 or fill out our online contact form.