UK Pay-Gap Reporting Shows Gender-Based Differences in Pay

By Dinah Wisenberg Brin March 7, 2019
UK Pay-Gap Reporting Shows Gender-Based Differences in Pay

​Companies in the United Kingdom are due to submit their second annual reports on gender pay gaps by April 4, and data show that large U.K. employers have significant work to do to close the compensation divide between men and women.

Slightly more than 1,200 employers—a relatively small percentage of those who must submit reports to the U.K. government—had provided 2018 data as of Feb. 22.

As recent reports showing a high and widening gender pay gap at British banking giant HSBC illustrates, a brief period of compensation disclosure doesn't translate into overnight improvement for women's earnings.

Slow Change

The pay gap exists, but not necessarily between men and women who do the same job. The preponderance of highly paid positions in companies are occupied by men, while women most often perform lower-paid jobs.

Last year—the first year that employers were required to report—company data showed that men working full time across all jobs earned 9.1 percent more in 2017, based on median hourly wages, than their female counterparts.

The reports filed so far this year indicate that the gap narrowed to 8.4 percent in 2018, according to Michelle Sequeira, Mercer's U.K. diversity and inclusion and analytics lead and talent strategy consultant in London.

"It's so encouraging to see the extent to which gender pay-gap reporting has shone a light on the topic of diversity and inclusion in the U.K. But this is only a step in a journey that may take generations," said Katy Bennett, diversity and inclusion consulting director at PwC in London.

Reporting regulations regarding the U.K.'s gender pay gap require organizations with at least 250 employees to provide annual reports on compensation differences by gender, both on their own websites and via a government portal. The first report was due April 4, 2018.

Companies must report on mean and median hourly and bonus-pay gaps, the proportions of men and women receiving bonus payments, and the ratio of men and women, divided into four groups, by pay.

As the government points out, a gender pay gap isn't the same as unequal pay, which is illegal and defined as paying men and women differently for performing the same or similar work. The gender pay gap—the difference in men's and women's average hourly wages across an employer's workforce—is usually bigger in companies where women perform more of the lower-paid work.

"From what we have seen so far, it looks like, unsurprisingly, progress has been slow. Encouragingly, just over half of companies so far appear to be reporting a decrease in the mean pay gap," Bennett said. But many are reporting an increase, she added. "The majority of companies so far have reported an increase in their bonus gap."

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Pay Gaps Across Professions

"At an industry level, it will come as no surprise that the largest gender pay-gap figures are in the most male-dominated sectors," with financial services showing a 24.6 percent median pay gap and software firms a 20.6 percent gap, Sequeira said.

"However, it is worth noting that sectors that are male-dominated but at the unskilled or semiskilled level, such as in logistics and manufacturing, have the lowest median gender pay-gap figures," she added. "We typically see that the organizations with the largest gender pay gap have a large proportion of female employees in the most junior grades and in lower-paid occupations, such as administration and support services."

In addition to financial services, the largest gaps also typically occur in the engineering-construction industry and the legal profession, according to Shirley Hall, senior partner in law firm Eversheds Sutherland in Newcastle upon Tyne, England. Hospitality and health care organizations often produce lower gaps, PwC's Bennett noted.

The reasons for gaps vary by sector, and the differentials don't necessarily reflect the effort that companies and industries are making to address gender pay imbalance, Bennett said. "Ultimately the factors that are driving pay gaps are complex and varied—which is why addressing them is so challenging." 

Different Approaches

The U.K.'s Government Equalities Office has issued guidance on reducing the gender pay gap, and companies have taken different approaches, depending on their issues.

Some have focused on programs such as mentorships, sponsorships or "returnships" to attract and support female talent, while others are evaluating their recruitment and promotion processes, Bennett said.

"Leading organizations are using their own data as a starting point to understand why they don't have women in, say, senior roles. Are they not being hired, are they leaving, or are they getting stuck in the middle and not progressing to senior levels?" Bennett said.

Some employers have implemented equal-pay audits following their mandatory reporting, "as they are often concerned that their gender pay gap may reveal a potential equal-pay issue and are looking for assurance in this respect," Hall said.

Making Changes Throughout the Organization

Equality consultant Sheila Wild, a former Equality and Human Rights Commission policymaker now running the EqualPayPortal in Oldham, England, suggested that a change in the data over one year doesn't necessarily reflect a significant shift.

Reading too much into short-term statistics "is to misunderstand how the gender pay gap manifests at an organizational level. If, for example, the salary of the CEO contributes to the pay gap, and a male CEO is replaced by a female, or vice versa, then the pay gap will narrow or widen accordingly in the year that the change takes place, but it can just as easily be reversed," Wild said.

"Companies are looking at their gender profiles, and many are discovering that it isn't sufficient to seek to bring more women in at the top. What is needed is a more even gender distribution throughout the organization," she said. "And getting men into 'women's jobs' is harder than getting women into 'men's jobs.' Evening out the gender profile will take years, but it's essential."

Dinah Wisenberg Brin is a freelance writer and journalist based in Philadelphia.

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