Gender pay gap in UK gets another look

In aggregate, the gap is little changed from the previous year, highlighting again how women are under-represented

LONDON • The UK is the biggest country yet to examine the explosive topic of the pay gap between women and men via mandatory annual disclosures.

For a second year, employers with at least 250 workers in Britain have reported gender wage data, after the results from a debut survey in 2018 produced widespread criticism. In aggregate, the gap is little changed from the previous year, highlighting again how women are under-represented in higher-paying roles, and why it will likely take years to narrow the difference.

What do the latest numbers show?

About half of private employers saw their pay gap narrow, while half said the difference was worse or there was no change, according to preliminary data from the Government Equalities Office.

Analysis of 10,455 filings by Bloom- berg shows the overall figure was little changed, with a mean pay gap of 14.23% on April 5, 2018, compared to 14.21% a year earlier, based on all types of organisations. The median difference was 9.6%, compared to 9.2%. The disparity in bonus payments, however, widened to 15.7% from 8.4%. Men in aggregate were paid more at 88% of companies and public-sector bodies, according to Bloomberg.

How is the gap measured?

Employers had to submit a blunt, uniform assessment of the gap between what men and women earn on average in their workforces by April 4. The numbers don’t measure the pay of men and women in the same job or attempt to adjust for any other characteristics.

Specifically, companies must report any difference between the salary and bonus of all male employees and all female employees on a mean and median hourly basis, the proportion of each gender receiving a bonus and the proportion of men and women in each pay quartile.

Publication of an “action plan” showing how employers will try to close any gap is encouraged, but not mandatory, with the Equalities Office saying about half of private firms put one in place in the last year.

Does that mean companies ignored the feedback?

Not necessarily. The latest figures are based on a snapshot on April 5, 2018. Any changes made in the last 12 months won’t show up until next year’s report. Many of the plans in place will take time — building a pipeline of senior female employees can mean hiring more women at all levels.

On the other hand, some reports have raised concerns about the trajectory of change in certain companies: HSBC Bank plc’s gender pay gap,
for instance, actually got worse. It widened to a mean 61%, in part because just one-third of its highest-paid employees were female. In the financial services industry overall, the average difference held at 26% in the latest figures.

How far is the UK from ‘equal pay for equal work’?

That’s hard to say. The phrase refers to the idea that men and women doing the same job at the same company should receive the same salary. The disclosures by UK companies don’t provide employee-to-employee comparisons. Reporting on a so-called adjusted basis — taking into account job title, seniority, geography and other factors that can affect compensation — is more popular among US companies that have chosen to disclose their pay gaps under pressure from activist shareholders.

What’s been the reaction in the UK?

The annual nature of the reporting has already helped build greater awareness and understanding of the gender pay gap. There’s been criticism over the lack of women in more senior — and thus well-compensated — positions.

The disparity in financial services was described as “astonishing” last year by Nicky Morgan, an MP and chair of its powerful Treasury Committee. She was also among politicians demanding that some law and accounting firms revise their figures after they classed their top-earning partners as owners, who are excluded from the calculations, and thus potentially understated the gender wage difference.

At what point does a wage gap violate the law?

That remains to be seen. The data could potentially provide fodder for existing or future lawsuits under the UK’s 2010 Equality Act. The law gives women and men the right to equal pay for equal work, and there’s a framework for comparing jobs by effort, skill or decision-making.

In early 2019, thousands of women working for the Glasgow City Council in Scotland reached a financial agreement over pay discrimination after fighting for more than a decade and staging what is believed to be the UK’s biggest-ever strike over equal wages.

What prompted the UK to disclose the pay gap?

David Cameron, who served as prime minister from 2010 to 2016, made addressing the gender-pay “scandal” part of the Conservative Party’s agenda. Eliminating the difference could add £150 billion (RM803.6 billion) to annual GDP by 2025 by boosting female participation in the workforce, encouraging women to work longer hours and moving them into more productive jobs such as those in science and engineering, according to a 2016 study by McKinsey & Co. It’s also a question of fairness.

The UK’s Office of National Statistics, which publishes its own analysis, says the gap is caused, in part, by more women working part-time, clustering in occupations with lower pay and taking time out to have children. The discrepancy widens with age, and women’s pay stops climbing at a younger age than that of male colleagues.

Are other countries doing this?

Yes. Australia requires firms with more than 100 employees to report on gender annually and publishes reports on their equality objectives, while Germany has implemented new rules around the issue.

Austria and Belgium were other early adopters, though they don’t force companies to release figures publicly. Meanwhile, the US has moved away from requiring more uniform or transparent disclosures to the federal government.

Where is this heading?

After the first round of reporting, a group of UK lawmakers suggested ways to make the figures less blunt, to bolster enforcement and to require remedial action, but the government rejected the recommendations in order to maintain consistency and comparability from one year to the next. The government has also declined to increase the number of organisations required to file reports.

However, it is considering the possibility of mandatory pay reporting by ethnicity to expose the pay gap for citizens of “Black, Asian and minority ethnic”, or BAME, origins. A public consultation ended in January and already some firms, such as Deloitte, KPMG and broadcaster ITN, have voluntarily decided to release their numbers. — Bloomberg