Mind the (gender pay) gap: Will gender pay reporting make any difference?

Published: 5 April 2017 | Duncan Brown, Head of HR Consultancy

  • the mean and median or mid-point gender pay gap;
  • the mean and median bonus gaps and the proportion of males and females receiving a bonus payment; and
  • the proportion of males and females in each quartile in a list from top to bottom of the pay levels of all their employees.

Transparency

A variety of studies supported by the EHRC indicate that employers with greater pay transparency have narrower gender pay gaps. This logic underpins the compulsory reporting requirement which is becoming increasingly common in Europe. In Sweden, businesses with 25 or more employees have to conduct an equality action plan every three years, which has contributed to the narrowing of the gender pay gap to only 3 per cent for women working in male-dominated occupations.

Flexible working and parental support

Despite the recent extension of the right to request flexible working to all employees in the UK, the evidence suggests it has not yet delivered substantial change. Research by legal firm Hogan Lovells and My Family Care based on a sample of 70 organisations, suggested that only 2 per cent of them had seen a significant uptake of shared parental leave since it came into effect in April 2015. This survey found the biggest barrier to take-up (41%) was a cultural perception that an extended period of time off for a father would be career limiting. The National Childbirth Trust similarly found that almost a third of the men interviewed (30%) would not consider sharing parental leave with their partner, with almost half (45%) stating that the poor remuneration of parental leave was the key barrier. Generally working hours’ flexibility is associated with lower earnings.

Recruitment

A number of studies have identified that the uneven distribution of jobs between men and women is key to the ‘maintenance of gender disparities’. In some occupations and industries such gender bias against women limits those short-listed for interview and impacts recruitment decisions, which in turn impacts the gender pay gap. The use of gender-blind screening — whereby the applicant name is removed during the initial screening process — has been found to have a significant positive impact on the number of women recruited. It is also at the point of recruitment that interventions around controlling starting salaries for new recruits and limiting line manager discretion in this area will also, in turn, impact the size of the gender pay gap. Careers advice is a related area that is revealed to have a significant impact in a number of qualitative research studies.

Female representation

A UK government review conducted by Lord Davies in 2011 found that the growth of numbers of females on boards was very slow and recommended that FTSE 100 companies should aim for a minimum of 25 per cent female representation by 2015. Davies’s target was achieved in 2015, although this was heavily focused on growth in part-time and lower paid non-executive roles. A new five-year plan was agreed in 2016, focusing on building the talent pool below board level and greater representation in executive as opposed to non-executive roles. Although a voluntary initiative rooted in individual corporate actions, the tacit threat of legislation has undoubtedly also encouraged progress.

Training and qualifications

Quantitative research by London Economics highlighted that wages are greater when a STEM A-level is undertaken and girls taking one STEM A-level can expect annual wages be £4,500 higher, on average, than if they hadn’t; while those who take two STEM A-Levels can expect a wage return of 33.1 per cent (London Economics, 2015). Olsen et al (2010) found that training (formal study, on-site training and other training paid for by employers) was associated with 6% higher hourly wages.

Minimum pay

The introduction of the UK’s National Minimum Wage (NMW) followed by the more rapidly escalating National Living Wage in 2015 benefited women in particular, as they hold the majority of minimum wage jobs (59% — LPC, 2014). The Low Pay Commission’s research, however, suggests that the impact on the national gender pay gap has been limited by the preponderance of low-paid females in part time work.

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