Although the Office for National Statistics (ONS) has monitored the gender pay gap in the UK since 1997, only since 2017 have employers with 250 employees or more been required to publish data on their gender pay gap. In this article, Head of Employment Joseph Lappin reviews recent changes in pay gap data and considers how employers can help to reduce the gender pay gap.
This article was first published in HRM Guide.
What is the gender pay gap?
All UK employers with 250 or more employees have a legal obligation to publish their gender pay gap data annually. Normally, employers must report their data by 4 April each year. However, this year, the Equality and Human Rights Commission, which is responsible for enforcing gender pay gap reporting, extended the reporting deadline by six months. This is in recognition of the difficulties many businesses would face in meeting the 4 April 2021 deadline during the pandemic. Therefore, this year employers had until 4 October 2021 to publish their gender pay gap reports.
All employers must publish their gender pay data on a government website.
Gender pay gap reporting provides employers with an insight into the size and causes of their pay gap and allows them to identify issues that need to be addressed. Continuing to publish and monitor this information annually should help employers monitor how effective their pay action plans are.
In summary, the gender pay gap is the difference in average earnings between men and women. It is expressed as a percentage. A positive pay gap figure means that the average pay of men is higher than women.
Employers must report their mean and median gender pay gap figures. The mean figures can be skewed by outliers, so we consider that the median figure is usually a better indicator of pay disparity.
It is important to point out that the gender pay gap is different to equal pay, which is the difference in pay between men and women who carry out the same or similar work or work of equal value.
How has the gender pay gap changed in 2021?
Analysis of the data reported by employers in 2021 makes for depressing reading. Not all employers with 250 or more employees reported their data by the 4 October 2021 deadline. Still, initial analysis of the latest data by the Financial Times shows that on 5 April 2020 (the relevant ‘snapshot’ date for the purpose of the 2021 figures), women were paid 87 pence for every pound earned by men. This means the gender pay gap (at just over 13%) has, according to the Financial Times, widened since employers last reported their gender pay gaps in 2020.
The latest figures, particularly those in construction and hospitality, must be viewed with a pinch of salt because so many employees were on furlough on the 5 April 2020 snapshot date (furloughed employees were excluded from the latest reporting figures).
How has the pandemic affected the gender pay gap?
It remains to be seen what impact the pandemic will have on the gender pay gap.
As reported by the ONS, we know that when the economy reopened, total earnings, including bonuses, rose by 8.8% for the three months to June 2021 against the same period last year. This wage inflation was widely predicted. However, most of this wage increase is in the private sector (those working in the public sector have received only modest increases). The biggest increases have been reserved for those working in senior and management roles, which we know are disproportionately held by men. Many fear this trend will continue and the gender pay gap may increase further in 2022.
During the pandemic, women disproportionately took on the role of home-schooling children when schools were closed. More women than men switched from full-time working to part-time working, took unpaid leave or agreed to reduced working hours. The ONS reported that during the pandemic, women carried out an average of two-thirds more childcare and/or home-schooling duties than men.
The pandemic will, we think, result in more workers leaving the workforce to take up childcaring responsibilities. These workers are more likely to be women. Further, more employees will request to work flexibly and part-time. We know that part-time workers are disproportionately female.
In addition, some of the industries adversely impacted by lockdowns (hospitality, retail and travel) are also large employers of women due to the flexible nature of the work. This means women are more likely to have either lost their jobs or been placed on furlough under the Coronavirus Job Retention Scheme.
What can we do to reduce our gender pay gap?
The Government Equalities Office has published a guide containing evidence-based actions to help employers close their gender pay gap. The guide includes effective and promising actions to improve the recruitment and progression of women in the workplace. The following actions have been tested in real-world settings and are found to have the most positive impact:
- Recruitment and promotions. Ensuring women are shortlisted for a new role or an internal promotion increases their chance of being selected and rising through the company into higher-paid roles.
- Skills-based recruitment. Rather than relying on interviews, asking candidates to complete role-based tasks will determine their suitability for the job and help ensure fairness to all candidates.
- Encourage salary negotiations. As women as less likely to negotiate on pay, employers should communicate salary ranges to encourage pay discussions within that pay bracket.
- Transparent promotion, pay and rewards. By being open and honest with employees and applicants on processes and policies regarding company benefits, an employee can understand what is involved and see that all decisions are objective.
- Diversity managers. Using diversity managers or task forces to monitor talent management can reduce bias decisions within an organisation. This accountability can improve the representation of women and other people from diverse cultures.
Employers who want to know more about their legal obligations should contact Joseph Lappin.
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