Summary
The gender pay gap measures the difference in hourly earnings of men and women. At an aggregate level, the existence of a considerable gap has been well established: the median across the economy is 18% in favour of men. At an organisational level, the new figures reveal some alarming truths: gender pay gaps of over 40% are not uncommon in some sectors; 78% of organisations reporting have gender pay gaps in favour in men. We found that 1,377 employers (13% of the total), including many household names, have gender pay gaps of over 30%.
The UK has one of the highest gender pay gaps in Europe. This must be closed, not only in the interests of fairness and promoting diversity at the highest levels of our business community, but in order to improve the country’s economic performance. The penalties of working part-time, both financial and in terms of career progression, are a major contributory factor to the continuing failure to fully utilise the talents of women.
The new figures expose, business by business, how men dominate both the highest paid sectors of the economy and the highest paid occupations within each sector. This is part of the explanation for the size of the gender pay gap, but not the whole story. Some of the causes are rooted in the education system and out of date attitudes on the role of women in society. These must be addressed on a coherent cross-departmental basis that fosters cultural change and the elimination of all forms of conscious and unconscious bias. But businesses must also take responsibility for the impact of their own policies, practices and culture. We believe that they have an obligation, not just to reflect change, but to drive it.
We highlight a range of initiatives that have been used, with differing levels of success, to enable women to make the fullest possible contribution in the workplace and to be rewarded accordingly. It is up to individual companies to diagnose the causes of the gender pay gap in their own organisations and apply the best possible remedies. But all will need to demonstrate leadership and commitment at the highest level that has not been sufficiently evident up to now. Where leaders are not showing the necessary degree of effectiveness, they should be held to account.
The requirement for all organisations of over 250 employees to report their own gender pay gaps in 2018 is a welcome initiative, but we call on Government to be more ambitious. We recommend that organisations should be required to publish, alongside the bald figures, an explanation of any gender pay gap and, most importantly, an action plan for closing the gap, against which they must report progress each year, as part of normal reporting requirements.
We also call on the Government to alter the reporting requirements and improve the quality of the guidance on how to calculate the figures. This would avoid the situation in which some of our leading providers of professional services could exclude their highest earners (ie partners) from the statistics, thereby producing figures that underestimated the size of still substantial gender pay gaps. In the light of evidence that the pay gap is higher in smaller businesses, we also recommend that the Government widens the net of organisations required to publish gender pay gap data to those with over 50 employees.
In spite of some teething problems around the clarity of reporting requirements and the accuracy and timeliness of the data provided, we conclude that overall, compliance was very good. This was partly owing to effective enforcement by the Equalities and Human Rights Commission (EHRC). Nonetheless, we find that the Government was remiss in failing to clarify the legal sanctions available to the EHRC to purse those failing to comply and we recommend that the Government rectifies this error at the next opportunity.
Increased transparency should, over time, improve fairness. And a more equal role for women in the workplace will contribute to economic growth. We will monitor the role of Government and businesses in translating this new transparency into a marked acceleration in the pace of change.
Published: 2 August 2018