On 13th March I attended an event organised by Cityworks on the new gender pay gap reporting regulations. The event included a talk from Dr Duncan Brown, Head of HR Consultancy, Institute of Employment Studies, and a Q&A. It was, in one word, outstanding. It provided an excellent round-up of all the facts about the current gender pay gap, clearly explained the new reporting requirements, and finished with immediately actionable advice on reducing the gender pay gap at work. So I decided to write a summary for the employers and employees wondering what’s coming.
Why should there be gender pay gap reporting?
Women will earn nearly 20% (or £361,000) less over their careers than men, despite higher qualifications leaving school.
If a boy is called Philip, he is twice as likely to become a FTSE100 CEO than a girl.
The number of female MPs in the UK is below the European average.
The UK’s gender pay gap has become fairly fixed at its current level – it has become much harder to reduce it any further.
These are just four of the facts quoted by Dr Brown to illustrate the context in which the new regulation was (protractedly) born. He provided a whole plethora of facts to back up his claim that, simply put, our current economy does not provide men and women with equal opportunities at work – which is what is reflected in the gender pay gap. If you would like to find out more about his and the IES’s work, take a look at their website here.
As Dr Brown explained to a room full of nodding HR professionals, the aim of the new gender pay gap reporting regulations is not to intimidate and ruin the reputation of a number of companies. It is, instead, to support attempts at creating more diverse workplaces. So what is actually required?
(Some of) the regulations
- Organisations with 250 or more employees in any sector must calculate their gender pay gap figures from 5th April 2017 and publish them prominently on their websites by April 2018.
- When working out the number of their employees, employers must use the definition provided by the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.
- Similarly, when calculating their gender pay gap, they should use the definition of ‘pay’ provided, which includes bonuses in basic pay as well as a separate calculation of bonuses.
- Reports should include mean and median gender pay gaps and gender bonus gaps.
- Companies don’t have to publish any accompanying commentary, but they can – and many are likely to take advantage of this opportunity to explain their figures.
As is clear from the above, what isn’t required by the new regulations is any kind of action to close the gender pay gap. The hope, presumably, is that the fear of a large gender pay gap will be enough to nudge companies into action. So what can they actually do, other than simply paying women more?
Gender pay issues exist in a social context – in other words, jobs carried out by men and women (and seen as acceptable for them) are socially influenced or even defined. As a result, only collective action works. Individual actions by governments and employers just don’t tend to be enough. So, the first thing employers can do? Collaborate and cooperate.
Dr Brown provided an example of successful collective action: Boston. The city’s government, higher education institutions and employers are working together on 33 areas they feel they need to improve to reduce Boston’s 17% gender pay gap. These areas include careers advertising and investment, and have already led to a 2% decline in the gap since 2012.
Issues that need to be addressed in the UK:
- the national living wage (because most women are the ones on jobs at the lower end of real wages),
- women on boards (there might need to be tax breaks/legislation to incentivise companies)
- flexible working (the Women and Equalities Committee’s suggestion last year was to make any position available on a flexible basis unless an employer can prove a business case that this would have a negative impact)
- parental leave (making it possible for men and women to take parental leave on the same terms, with the same pay, and make maternity/paternity pay a higher proportion full-time pay so more people actually take it)
- girls studying STEM subjects at A-level (participate in or organise schemes to encourage them as this will increase their future earning potential).
What employers can begin to address on their own:
- more women on boards
- flexible working
- parental leave
- recruitment processes (do channels, phrasing, etc., put men in a better position, or just reach them more?)
- review processes (do they value and reward traditionally male traits?)
- pay and promotion structures (when, how, how much, bonuses, etc. – companies need to assess whether they unfairly disadvantage women at any step in this process)
Why should we have more diverse and fair workplaces? Making changes in existing workplaces will probably be costly in some cases. It could also appear to have a negative impact on male employees’ pay and promotions (whether you think losing some of the advantages over women is a truly negative impact is another question). So it’s important to understand that both collectively and individually we will benefit from more equal workplaces.
A McKinsey Global Institute study published in 2015 shows that allowing women to replicate male levels of labour market participation could add $12 trillion to global GDP. And, more immediately, as Dr Brown pointed out, fairness matters to people. The perception that men and women are treated equally and fairly matters to prospective and current employees – and the impression that they are not can be thoroughly damaging.
To find out more about the event, visit Cityworks. You can also see more events by going to Cityparents. To read more about gender pay gap reporting go to the Institute for Employment Studies, where you’ll also find insightful analysis on other topics.
– by Anna
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