4 April 2023 marked this year’s deadline for organisations with 250+ employees to publish their gender pay gap data for the financial year 2021/2022.
Whilst there are a few eligible businesses who have missed the deadline, from those who have complied with their reporting obligations, this is what we have learned so far:
1. The gender pay gap remains at 9.4%.
When the government introduced The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, it was hailed as a trailblazer. The aim was to increase transparency within and across organisations, industries and sectors with a view to narrowing and eventually reducing the gender pay gap. The obligation for those organisations to publish their data – which could then be reviewed and scrutinised by market competitors and the public was heavily lifted from the “naming and shaming” playbook of self-regulation.
Six years and one pandemic later, the gender pay gap is reported to be precisely where it was in 2017[i].
This obstinate stasis may suggest, on the one hand, that the gender pay gap remains too pervasive to resolve and, in an Alice-Through-The-Looking-Glass-style frenzy, we are having to run as fast as we can simply to stay in the same place. Another explanation could be that gender pay reporting (mandatory or otherwise) is an unwelcome distraction, resulting in employers channelling their energies into finding explanations to justify their existing gender pay gaps rather than focusing on the steps needed to actually close them.
Whilst the results are naturally disappointing, taking an optimistic view (and we like to be optimistic here at Prettys!), identifying the scale of a problem is the first step in finding a solution to resolve it. Gender pay reporting may be administratively burdensome but it provides a useful benchmark from which we can work to identify trends, alleviate pressures and legislate for a fairer and more representative workplace culture. The pay gap may not have got any narrower – but it hasn’t widened either. For that, we can at least be grateful.
2. Occupational segregation is a significant contributor to the ongoing gender pay gap.
The statistics show that finance and construction have the biggest gender pay gaps whilst hospitality and health care are the lowest.[ii]
It is perhaps not surprising that an industry like construction has, at 22%, a higher-than-average gender pay gap in favour of men. The physical nature of the work, which lends itself as a general rule to a male-dominated workforce, tends to be a less attractive career path for women.
The fact that the finance sector also records a pay gap of 22% is, however, disappointing. There remains no obvious reason why there should continue to be an under-representation of women in senior leadership positions within this (generally lucrative) sector.
Conversely, industries such as hospitality, health and social care report a marginal gender pay gap of between 1 and 1.5%.[iii]
Why there should be such a marked difference between these industries is a particularly interesting question. The divide perhaps suggests that the culture and environment associated with particular types of industries are instrumental in attracting or deterring certain genders.
Whilst, as a matter of fact, fewer women are employed within the private sector (and so arguably there is a smaller talent pool of women from which to choose), the 9 – 5 working, out of hours schmoozing and old-boys’-club reputation which precede many financial institutions, may be off-putting for women. On the other hand, hospitality and healthcare, which traditionally offer varying working hours and shift patterns, which can be organised around childcare commitments, have a female-dominated workforce.
3. The gender pay gap in the UK is narrower than the EU – for now.
Germany, France as well as most Scandinavian countries have reported wider gender pay gaps than the UK[iv]. There are various reasons for this. In Germany, for example traditional male/female stereotypes are more deeply entrenched here than in the UK. There is much poorer access to childcare than in the UK and, as children do not start school until the age of six, women are generally absent from workplace for longer than those residing in countries with earlier school ages.[v]
In countries such as Spain, on the other hand, which has a gender pay gap of just under 9%, children start school at the age of three. Women are encouraged to return to work and cash benefits are provided for working mothers.[vi]
A salient reminder not to be dazzled by statistics, however, is evident with Italy. Italy has reported a gender pay gap of around 5%. This is largely a result of its high female unemployment rate than due to having made any significant headway in terms of gender pay parity.
The EU, however, is taking action to address discrimination more generally and to close the gender pay gap. On 20 March 2023, the European Parliament approved the EU Pay Transparency Directive and this was formally adopted by the European Council on 24 April 2023.
Under these rules, EU employers will be required to inform candidates before interview of the initial wage level for a role and are prohibited from asking applicants about their wage history. Organisations with more than 250 employees will be required to report their gender pay gaps on an annual basis, whilst those with 100 or more employees will be required to report their gender pay gaps every three years. Employees will have the right to ask employers about their individual salary level and, in particular, the gender breakdown for it, and where an employer’s gender pay gap exceeds 5% a gender pay gap assessment must take place with employee representatives. Sanctions for non-compliance include compensation for employees and fines for employers.
Whilst these rules do not apply to the UK, if the EU is ultimately successful in closing the gender pay gap (and particularly if we want to attract the best candidates to work in the UK), it may only be a matter of time before we introduce a similar initiative in this country.
4. The pandemic exacerbated ingrained gender and social inequalities, and arguably, widened the gender pay gap.
The snapshot data from 5 April 2022, reportable in April 2023, will be the first year since 2019 that the COVID-19 pandemic should have had a lesser impact on the reported gender pay gap figures.
Although this year’s figures reveal that the gender pay gap has remained static, due to a large numbers of employees being furloughed and employers making use of the coronavirus job retention scheme over the last few years, these figures may be inadvertently distorted.
Whilst there are always exceptions to every rule, women workers were more likely than men were to have taken part-time roles, reduced their working hours or taken unpaid leave during the pandemic in order to care for their children. In reality, therefore, the gender pay gap may be wider than is currently reported. Arguably much more work and analysis will need to be done to understand the extent of the task ahead of us.
5. Draft legislation, which is currently making its way through parliament, could be instrumental in narrowing the gender pay gap once it is in force.
It seems clear from the statistics that those industries which offer the greatest flexibility around working hours and working patterns, fair better in terms of their gender pay gaps.
Various draft regulations such as the Employment Relations (Flexible Working) Bill, the Workers (Predictable Terms and Conditions Bill) and the government’s plans to extend free childcare to 30 hours per week,[vii] may help to open up opportunities for women within industries which have traditionally been unattractive for working mothers.
Clearly, the right to request flexible working hours and/or a predicable working pattern does not equate to a right to work flexibly. However, for those employers who are genuinely intent on closing their gender pay gaps and widening their talent pools (as clearly the one will affect the other), it will be incumbent on them to give such requests the consideration and attention that they deserve.
Conclusion
Many commentators argue that gender pay gap reporting does not do enough to tackle diversity and equalities issues in the workplace. This is probably a fair point; after all, it is just one tool within what should be an ever-increasing armoury. With this in mind, calls for both ethnicity and disability pay gap reporting have gained traction in recent years and, on 17 April 2023, the government published guidance for employers who wish to report on their ethnicity pay gaps[viii].
Whilst this is currently a voluntary process (the government having rejected calls to make it mandatory a few years ago and there are no plans to depart from this), declining to do so in an age where diversity, inclusion and social responsibility are becoming increasing priorities for job applicants, could be a hostage to fortune. Organisations are already struggling to find good quality candidates. Tacking an Equalities statement onto the end of a job advert or website, or drafting an Equal opportunities policy, is no substitute for cold, hard facts. A demonstrative track-record on equalities issues, backed up statistics, may ultimately help to keep your business at the very top of its game.
[i] https://www.thetimes.co.uk/money-mentor/article/gender-pay-gap-uk-2023-how-to-check-your-employer/
[ii] https://www.bbc.co.uk/news/business-65179430
[iii] https://www.bbc.co.uk/news/business-65179430
[iv] https://commission.europa.eu/system/files/2022-11/equal_pay_day_factsheet_2022_en_1_0.pdf
[v] https://www.reuters.com/markets/deals/new-german-government-vows-tackle-wide-gender-pay-gap-2021-11-24/
[vi] https://inhuntworld.com/the-gender-pay-gap-in-spain/#:~:text=in%20Different%20Industries-,
[vii] https://educationhub.blog.gov.uk/2023/03/16/budget-2023-everything-you-need-to-know-about-childcare-support/
[viii]https://www.gov.uk/government/publications/ethnicity-pay-reporting-guidance-for-employers/introduction-and-overview