Here’s Why You Should Care About the Gender Pay Gap
31st March 2020
"To close the gender pay gap we all need to take steps that put everyone on the same path." - Vyshi Pereira, Senior Talent Partner at Talentful.
I’m not going to mince words. The gender pay gap is a complex topic – it’s both government-mandated and culturally sensitive. Gender pay gaps are the result of economic, cultural, societal and educational factors of the world we live in and work.
On paper, the gender pay gap is the average difference between hourly wages for men and women. Since 2017, UK companies with more than 250 employees must report gender pay gap figures by the end of each financial year. These companies must also reveal the proportion of men and women who receive financial bonuses.
This year about 9,000 UK financial firms will be required to calculate their gender pay gap and publish it on a government website here. Gender pay reporting requirements were first introduced as part of the Equality Act 2010 and came into force in 2017.
With large companies revealing their figures, the gender pay gap is a significant talking point in offices around the UK. In 2019 the gender pay gap was 17.3% in the UK, which means that on average, women were paid approximately £0.83 for every £1 men were paid. Some of the most significant pay gaps are in the financial sectors, and many financial firms are paying the average man, almost 25% more than the average woman. In March 2020, HSBC posted an overall pay gap of 47.8%.
But the gender pay gap is nuanced. It also reflects the outcomes of personal choice. In contrast, the decision to seek paid employment may well be an individual choice; the result of that choice is influenced by matters outside of the individual’s control.
One example is the availability and affordability of childcare, where women have to give up work and take on part-time hours, just because childcare is too expensive. Employment by occupation and gender discrimination are both variable factors that cause women to fall into the hole of less pay. Unfortunately, the choices available to women are more constrained than those available to men.
And, there’s a difference between the gender pay gap and equal pay. Whilst both equal pay and the gender gap deal with disparities in pay women receive in the workplace; there are two different issues at play.
Equal pay means that men and women in the same employment performing the same work must receive equal pay, as set out in the Equality Act 2010. But the gender pay gap is a measure of the difference between men’s and women’s average earnings across an organisation or the labour market. It is expressed as a percentage of men’s earnings. And here’s something to think about: women make up 47% of the workforce, but only 35% of managers, directors and senior officials.
Since the gender pay gap report came into law in April 2017, large corporations such as Deloitte have started to pave the way on strategies to close the gender gap. A great example of learning from your data is Deloitte’s confession that after they analysed their gender pay gap reports since 2017, they began to notice that their gender pay gap was driven by a lack of women in senior positions.
What was Deloitte’s response to this discovery? They acknowledged there was no quick fix to reducing their pay gap until their gender balance action plan was embedded across all parts of their business.
The company said they reviewed their recruitment and promotion processes to minimise bias and focus on hiring more women to partner, director and senior manager roles.
Deloitte’s acknowledgments show the importance of closing the gender pay gap at both a national and company-wide level. Statistically, women outperform men educationally; and this is the most persuasive case to ensure their skills are utilised. Failing to tackle a gender pay gap is likely to cause damage to your company’s reputation in the eyes of both current and potential clients and employees.
To close the gender pay gap we all need to take steps that put everyone on the same path. We need more females in senior roles, more promotions, and this is the right place for companies to revisit their recruitment process and any unconscious biases. We could also use effective back to work programmes, flexible working hours, better maternity pay and shared parental leave, child care support and schools to encourage girls to take more science, technology, engineering and maths (STEM) subjects.
It is clear we are still at the early stages of tackling this topic, and a lot of companies in the UK have not fully taken part in submitting their company’s data, so we still have a long way to go.
Companies must begin to adhere to the legislation and publish their figures which compare men and women’s average pay across the company.
This type of legislation will only give us transparency in dealing with gender pay gaps, and the more we can bring attention to the gaps that do exist, the more help we can promote women to be driving forces to have a voice to make the change and stop women being short-changed in the UK.