Pay gap reporting, why should we care?

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The gender pay gap is the difference between a man and woman’s average weekly earnings, based on equivalent hours and job roles.

In 06 April 2017, new regulations came into force which meant all employers with over 250 employees are now required to report their gender pay gap data.

Under this new regulation, it was reported in February 2018 that 100 per cent of UK employers had published their gender pay gap data. The ONS also reported that the UK’s gender gap has fallen to its lowest level ever for full time employees at 8.6 per cent, according to the ONS.

Despite the slight progress, the data shows that more than three out of four of the UK companies that fall under regulations, pay their male staff more on average than their female staff. More than half give higher bonuses to men, on average, than women, and over 80 per cent have more women in their lowest paid positions than in their highest paid positions.

Helene Reardon-BondOn the second anniversary since the pay gap reporting regulations were brought in, WeAreTheCity speaks to Helene Reardon-Bond OBE, former Director at the Government Equalities Office about pay gap reporting, regulations and what individuals/companies can do to address their pay gaps.

Helene Reardon-Bond was appointed Interim Director of the Government Equalities Office in April 2016. She was responsible for the equality strategy and legislation across government. Helene is a leading international expert on Gender Equality and in particular, the Gender Pay Gap and how to support women to progress in the workplace and in public life. She was the policy architect behind the recently introduced UK Gender Pay Gap reporting regulations and worked closely with senior Government ministers and employers to deliver the new legislation and guidance. These regulations are now being used as a template for international implementation in other major economies.

As a senior civil servant, Helene worked closely with Cabinet Ministers and No10.  She has worked in several government departments and been responsible for a large number of high-profile programmes, legislation and campaigns.  These include Equal Marriage, violence against women and girls campaigns, body image, maternity and flexible working rights and action to increase the numbers of women in senior positions.  She has been an advisor to major reviews such as Lord Davies’ inquiry into increasing the numbers of women on top UK boards, the Hampton Alexander Senior Women Leaders review and established and supported the Women’s Business Council. Helene has represented and negotiated on behalf the UK at the United Nations, across the EU and at numerous international forums.

She now works directly with businesses and regulators to help and support them to improve diversity and inclusion in their work forces and provides consultancy services to international organisations.

Helene was awarded an OBE in 2008 for services to gender equality and her voluntary work. She undertakes many voluntary roles including being a member of the Centenary Action Group steering group led by Helen Pankhurst CBE, a trustee of Modern Muse, Vice Co-Chair of the Chartered Management Institute Women’s Committee, a member of the Mary Wollstonecraft Steering Group and the Chair of Governors at a state primary school in Camden. She was recently appointed the Gender Champion for the London Borough of Camden where she has been a resident all her life.

A number of people get confused between equal pay and the pay gap, can you explain the difference?

That is so true. Equal pay and the gender pay gap too often get confused and it’s one of the questions I am most asked. It needs to be much more clearly communicated and understood.  Equal pay deals with the pay differences between men and women who carry out the same jobs, similar jobs or work of equal value and has been unlawful for more than 40 years!

The gender pay gap however, shows the differences in the average pay between men and women.

Remind us what do employers have to publish?

They have to publish the following:

  • Overall Gender Pay Gap – mean and median
  • Overall Gender Bonus Gap – for those receiving them
  • Proportion of male and proportion of women receiving them
  • Number of men and women at different pay quartiles – to get a sense of where employees are in the pipeline.

Why did the Government introduce Pay Gap regulations?

Gender Pay Gap Reporting was included in the Equality Act 2010 (Section 78) by the Labour Government but were not brought into force for several years as the Coalition Government wanted to encourage employers with over 250 employees to report their gender pay gap on a voluntary basis. However, there was little take up so in 2015 the decision was made to enact the regulations and by then this had cross party support as closing the gender pay gap had stalled.

Supporting women to fulfill their potential in the work place and close the UK’s skills gap makes huge economic sense for any country especially when considering that girls and young women do so well in terms of educational qualifications. So while there has been progress it is still the case that the average woman earns just under 80p compared to every £1 the average man earns – it’s one of the key reasons why women end up being the poorest pensioners. Research by McKinsey shows that bridging the gender gap in the workplace we could add £150bn to the economy by 2025.

Did the government meet with any resistance when the pay gap regulations were proposed?

Yes, without a doubt there was quite a bit of concern and apprehension from employers and their representative bodies. To address this we established a Gender Pay Gap Business Reference Group with a wide range of employers and organisations plus we conducted two public consultations and did loads of outreach events so that we could listen and learn from each other. Working in partnership and collaboration meant that we could address employers concerns and deliver sensible and workable regulations and guidance.

Last year was the first year that companies over 250 staff had to report, did all companies report on time?

Quite amazingly, there was 100 per cent compliance to the regulations in 2018, the first year of reporting. All 10,500 employers within scope – that’s those with 250 employees published their data.  However, 1500 published late and the Equality and Human Rights Commission (the regulator) had to be chased. Really interesting I was pleased to see a few hundred employers under the 250 threshold published too. I expect they thought publishing would help to attract and retain talented female employees through a very public commitment.

What were your observations when companies first reported in 2018?

The regulations cover all large employers (10,500+) that’s 50 per cent of the UK’s workforce and reporting with at a snail’s pace to begin with. However, it took off like a rocket as the deadlines were approaching. I can honestly say it went better than I thought it would.  I think a lot was due to the intense media pressure on employers many of who did not want the reputational risks or damage to their brand by not reporting. Also lets not forget that 2018 was a pretty amazing year for women’s rights what with the #Meto campaign, the President Club scandal and of course the 100th Anniversary when (some) women first finally won the vote. All this added to the momentum.

2019 is the second year for pay gap reporting, are you expecting to see any improvement? If not, why?

Looking at the data so far some employers have made progress and others not. It will take a few years for the trends to appear and for good practice to kick in.

We need to remember that last year was probably the first time most boards and senior executive teams were discussing their gender pay gap analysis – previously this was the domain of HR directors and their teams. For 2019 I would expect all employers now to have a much greater understanding of what creates their gender pay gap. The key factors for the pay gap are mainly due to women not progressing at the same rate as men, taking time out of the labour market so their career history is impacted, being trapped in lower paid and part time work – often due to the lack of flexible working and caring responsibilities or not taking STEM qualifications and going into STEM careers (which are higher paid).

If companies report a larger gap than the previous year, what might have caused the increase? 

Usually it would be down to an employer continuing to recruit men into senior well paid positions and more women into the lower paid more junior grades. Despite having more women working than ever before only around 34 per cent of managers, directors and senior officials are women. Plus there are specific industry challenges. By this I mean that there are societal challenges. The STEM workforce is vital to our economic growth but its still the case that too few girls take A Level in Science or Maths.  We just can’t afford to miss out on talent, so increasing the take up of STEM subjects amongst girls, is essential to helping to close the pay gap.

Do you believe that if little improvement is shown in the 2019 pay gap figures, that companies should be forced to publish action plans alongside their future pay gap reports?

All employers have the option to publish their gender pay gap along with a voluntary supporting narrative and an action plan. But only about a third of employers did this last year. Some were fairly bland and non committal statements too. Most also said they didn’t have an equal pay problem. I know that the Government and the regulator, the Equality and Human Rights Commission are looking at the quality and standard of these plans and will be encouraging greater efforts going forward. It doesn’t happen they could legislate and many are calling for this.

What can companies do to improve their pay gaps?

The Government Equalities Office and the Behavioral Insights Team published some really interesting evidence based research on what actions help to close the gender pay gap. This includes:

  • Include multiple women in short lists
  • Use Skills-Based Assessment
  • Use structured interviews for promotion and recruitment
  • Encourage salary negotiations by showing pay ranges
  • Introduce transparency to promotion, pay and rewards processes
  • Appoint diversity managers and diversity task forces
  • Improve flexible working at the workplace and encourage parental leave
  • Offer mentoring and sponsorship
  • Offer networking programmes
  • Set internal targets

Is there anything that individuals can do for their companies to improve their pay gaps? What should we as female employees be asking for?

Get involved. Most good employers have a whole range of employee networks. I would say join these and help to influence your employer’s action plan with the ideas that you think work. It’s also important for instance to get your employer to calculate their ethnicity pay gap too. The Government published a consultation of this recently which is well worth asking them to do.

I would also say if you are in the STEM sector then get out to schools to encourage more girls to think about a STEM career. Occupational and sectoral segregation is accounts for about 40 per cent of the gender pay gap. Be a positive role model.

We want more men to be champions of change too and feel that they can be advocates for closing the gender pay by taking up flexible working or shared parental leave.

Also if you are a line manager we can all fall into the trap of making well intended choices for others. Too many managers assume a woman returning from maternity leave or with young children won’t want to take on a high profile project or a post with travel. Well don’t assume – ask first and let her decide with her partner whether she wants to take up the opportunity!

Where can an individual find their companies pay gap?

The Government Equalities Office has a viewing service where all employers within scope have to upload their figures to. It also allows you to do comparisons of other similar companies. I would also give a big shout out to the Office of National Statistics which has a great web tool which allows you to compare the average hourly wages of men and women in huge range of jobs. It’s so helpful to see if you are getting a fair rate for the job you are thinking of applying for or when entering into salary negotiations – which I would encourage all women to do more frequently.

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