Christine Adeusi is a communications support officer at Acas. She supports the communications team to work with internal and external stakeholders.
It has been 5 years since the gender pay gap reporting requirements came into place, requiring employers with a headcount of over 250 to take part in data collecting and reporting.
Since the initiative's inception, the pay gap has declined by only 0.5% with reports from the World Economic Forum suggesting it will take 132 years to close the gender pay gap worldwide if the current trajectory continues.
This year the national average for gender pay gap is now 12.9%, down 0.3% from last year. As a result, women in the UK earn on average 87p for every £1 earned by men, ranking the UK 22nd out of 146 countries with the highest gender pay gap on the Global Gender Gap Report (PDF, 11.9MB). Iceland ranked number 1 with the lowest gender pay gap.
Despite the numbers sounding disheartening, it is still crucial to explore why efforts to achieve gender equality require gender pay gap reporting as one part of the solution.
What pay gaps are
Pay gaps are essentially indicators of structural inequalities in the workforce. They can show pay inequalities between different groups within the workforce, such as ethnic minorities, and disabled and non-disabled people. These are both areas the government has consulted on in recent years, but mandatory pay reporting currently only applies to gender.
The gender pay gap can often be confused with equal pay. However, they are not the same thing. The gender pay gap refers to the difference in average earnings between all men and all women. Equal pay is the legal necessity under the Equality Act 2010 that requires employers to give men and women who are doing a similar job the same amount of money.
Where this all started
There are various reasons why there is a gender pay gap.
Stereotypes and traditions
Women historically came into the workforce late and when they did, the tone was already set. The gendered concepts of masculinity and femininity had entered the workforce, resulting in 'jobs for men' and 'jobs for women'.
This ideology has been socialised into us from a young age. I remember when I had the opportunity to choose my A-level subjects to help pursue future careers, there was still a clear divide where boys chose more vocational subjects (for example, IT and business), and typical subjects that girls chose were seen to be more academic (for example, sociology, humanities and English).
Segregation in the labour market
Similarly to academia, the distribution of work remains gendered. Women frequently work in sectors where their job can be undervalued and underpaid, such as public administration, health and education.
Women are also underrepresented in managerial and senior roles. For example, according to the FTSE Women Leaders Review (PDF, 3.5 MB) the number of women in FTSE 100 boardroom roles is only 39.1%.
Balancing work and private life
Known as the 'motherhood pay penalty', it is suggested that in the first 10 years of employment, there is hardly any difference in pay between men and women. However, the gap drastically widens when women have their first child.
Despite there being a move to a more shared parental role, domestic responsibilities still tend to fall to women. This, as well as women being more likely to go part-time in order to fulfil these responsibilities, can really stunt a woman’s career development.
The coronavirus (COVID-19) pandemic saw women being disproportionately affected on both a personal and professional level. Despite making up 48% of the workforce, 52% of the 15 million individuals who were furloughed were female, as reported in the FTSE Women Leaders Review (PDF, 3.5 MB).
Why gender pay gap reporting is important
Gender pay gap reporting is good for business.
It has been a great starting point for many businesses to build a more diverse and inclusive workforce, by carefully examining their data and using it to guide decisions around pay structures and more general diversity and inclusion issues.
Furthermore, a more diverse workplace has several benefits such as increased recruitment opportunities and staff retention, but it also has demonstrable financial advantages.
According to a recent report by McKinsey, gender diverse companies are 15% more likely to have financial returns above their respective national industry medians.
This is corroborated by research from the American Sociological Association, which found that for every 1% increase in the rate of ethnic and gender diversity in a workforce, sales revenue increases by 3% and 9%, respectively.
What happens once you know the numbers
Good employers will put agendas in place in order to improve their figures.
Here are some top tips employers can use to create a more inclusive working environment:
- increase transparency around pay – for example, clearly indicating whether a salary is negotiable or not, is a simple way to start closing salary gaps when women and men enter an organisation
- have an equality, diversity and inclusion policy which helps everyone to know the business supports and treats everyone fairly
- put the policy into action – employers, managers and employees should all understand the importance of equality, diversity and inclusion in all areas of work
- communicate – employees are more likely to get onboard with your organisation's purpose and values if they feel valued and are clear what these are
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