The gender pay gap (currently a mean average of 13.9% for full-time work) remains a stubborn feature of our economy but could this be about to change? We will see new regulations introduced this year to require companies with 250 employees or more to publish their gender pay gap figure.
This will mean that employers will have to calculate the differences in pay, both basic pay and bonus payments, between women and men, and also publish how many women are in each quartile of the organisation.
For the first time employers will have to engage publicly with their organisation’s record on gender equality. No doubt many will find significant gaps – perhaps because they have more women in the most junior roles in their organisation, perhaps because women tend to receive smaller bonuses or perhaps because the roles women cluster in are often valued at a lower rate than those dominated by men. The real test is not what your gap is, but what you decide to do about it.
The government is consulting on the details of these proposals and it will be no surprise that whilst welcoming what’s been announced so far, the Fawcett Society believes that strengthening them would make them more effective for women at work but also for employers too.
We know many employers get the business case for overcoming discrimination and making sure you promote and retain the best. And a few additions to these requirements will mean employers are properly supported to do just that.
For example, we believe that organisations should publish their methodology. There are multiple ways a firm might choose to calculate their pay gap figure; do you calculate the gap within job roles or across the whole organisation? What’s included in pay: does overtime count how to you account for the fact that some people work much more than their contracted hours? Without that background information firms won’t be any the wiser about how their performance compares to competitors and they risk unfair comparisons with others.
To get the benefit of the findings of the pay review employers should be required to develop an action plan. Just knowing about a gap isn’t enough to close it. But employers need clear guidance as to how to go about that, what good progress on the pay gap looks like and where changes can have the greatest impact. So what might that action plan look like? The types of things that will make a difference are increasingly a part of the business debate.
Its great to hear the CBI’s new Director General, Carolyn Fairbairn, arguing that we need a target of 25% for women in executive positions. Progress on women on boards has been celebrated now that we have passed the target of 25% of board members being women (and before we get too excited that still means that 75% of board members are men), but less than 10% of executive positions are held by women. That is woeful. 25% will not be an easy target to hit. It is now broadly accepted that board diversity improves board performance and decision-making. But if we want women in positions of power we need them in executive positions.
A recent Fawcett Society Survation poll found that 7 in 10 men believe that gender equality would be good for the economy. 4 in 10 thought they would gain personally if we had a more equal society. But a majority of people, women and men, across all age groups and social classes believe men at the top won’t make room for women unless they have to. So we’d encourage employers to think seriously about introducing quotas for their top jobs.
Fawcett’s research also found that recruitment decision makers were twice as likely than the wider population (16% vs 8%) to say they did not believe in equality of opportunity. That is worrying and suggests that the attitudes of these ‘barrier bosses’ may get in the way of progressive policies and leadership within their own organisations. If you are an employer wondering why you are not making faster progress, this may help to explain it. Taking a through look at pay in your organisation will highlight where some of these barriers are – then you can start to remove them.
The pay gap is now regarded as unacceptable, a measure of wasted talent and potential, a symbol of lost productivity. So now we need to close it not just because it’s fair for women, but also because it’s better for business.