Mind the gap
Katy Bennett, PwC
At Benefex’s Winter Client Forum, I was part of a panel debate, along with experts from Johnson Fleming and Fairsail, to give our views on how diversity and inclusion is impacting the workplace, and how it will continue to do so this year.
Although we knew this would be an interesting discussion, I wasn’t prepared for the debate that was to follow. It’s clearly an area of great interest for many of our delegates, and, a particular hot topic was the issue of the gender pay gap.
The “gender pay gap” refers to the difference in pay between men and women, albeit that this can be calculated in a number of different ways. Over the past few years, this issue has gained significant media attention as research has started to highlight just how big this gap is. According to research by PwC, the UK’s gender pay gap is currently ranked 21st out of 33 countries, so it’s no surprise that employers are keen to address this issue in 2017.
The Equality Act 2010
From April this year, The Equality Act 2010 (Gender Pay Gap Information) will require employers with 250 or more employees to publish calculations showing how large the pay gap is between male and female employees in their business. In a year’s time on 4th April 2018, employers will be required to have published this gender pay gap publicly for all to see.
Gender pay gap reporting will shine a real light on the issues of equality and inclusion in the workforce, well beyond gender. Many firms will be looking at a sizeable gap and, for them, there are some real reputational risks to think about - with their existing employees, potential talent, customers and investors.
In a world where employer review sites like Glassdoor continue to attract high usage, for many potential employees, a poor gender pay gap will undoubtedly stop some key talent from even considering coming to work for you. Younger members of staff have been shown to be more likely to be driven by social and moral issues, so the impact on an employer’s brand on this population could be huge. More generally, it is inevitable that those organisations with the largest gender pay gaps will be highlighted by the media, and may see their bottom line affected as a result.
Why is there still an issue?
For the next few years the spotlight will remain firmly on gender pay, and therefore it must remain at the top of HR’s agenda. In order to close the gap, we need first need employers to understand why it’s there in the first place. The risk is that those looking in assume that there is clear gender bias; employers may be intentionally paying their male workers more than their female workers. However, with equality legislation enshrined in law for many years, it’s unlikely this accounts for most of the gaps. Ant Donaldson, Product Expert for Employee Benefits at E.ON UK, thinks the issue is much bigger than pay:
“Our analysis shows insignificant pay gaps by role, but a visibly bigger difference between the roles people do. For me, the biggest issue in the gender pay debate is about which jobs males and females go into, and how we need schools and the media to help shift expectations - especially towards getting more women into STEM subjects and roles."
Roles that have traditionally gone to women, like healthcare tend to be less well-paid than those society deemed to be more ‘male’. The reality is that true equal pay gaps (i.e. where two people doing the same job are paid differently due to their gender) are thankfully now relatively rare. Instead, what the numbers will reflect is the continued lower proportion of women in senior and well-paid roles. We’ve seen evidence of this recently as the media examines the split of male and female CEOs in the UK. Among chief executives and chairs of FTSE 100 companies, there are 17 men called John, twice as many as there are women in these roles. Research by The Guardian newspaper discovered an even more bizarre statistic; there are more men with knighthoods leading British companies than there are women in total.
Part of the issue also seems to be the differing hours that men and women work as a result of stereotypical roles. The Guardian found that 90% of men work full-time, while just 10% work part-time, compared to 57% of women working full-time and 43% part-time. The proportion of women in the UK who work on a part-time basis hasn’t significantly changed at all since the 1970s. It is also still more common for women to be carers for children and older family members, Donaldson says, “Employers need to truly enable and encourage career progression for those employees with caring or family commitments.” If we’re seriously looking to schools and the media to shift expectations to boost female take-up of STEM subjects and roles, so we must also make sure that the expectation of men (and of society) is that couples take equal share with caring or family commitments, and employers must encourage this.
Increased stress at work and at home
The gender disparity in the workplace is also having negative effects outside of pay. Citing BHSF’s recent report into stress, mental health and the workplace, Donaldson says, “Family life appears to be a greater cause of stress for women than it is for men. Whereas men appear to find their jobs more stressful.” Stress of any kind negatively impacts the employer (as well as the employee) and can lead to long-term absence and reduced productivity, so, it makes sense for organisations to encourage equal pay and equal responsibility for men and women.
Closing the gender pay gap is about bringing more equality to the workplace. It’s the morally right thing to do, and it also makes good business sense. Those organisations with the smallest gaps will find it easier to recruit and retain the best talent, as their potential employee pool may be wider. Engagement will also increase, as female staff feel more positive about their employer and the potential for progression. As we scrutinise employer practices more than ever before, there are other public image benefits too. After all, as women account for just over 50% of the UK population, female opinion and buying power is just as important as male.
If you have any queries relating to the gender pay gap, or any associated legislation, give Benefex a call on 0844 963 0023
Take a look at our Chief People Officer and Director of Employee Wellbeing's Q&A: Equality and Diversity: A Strategic Priority.
Katy Bennett, PwC
Katy Bennett is a Reward Director at PwC.