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What is the gender pay gap?

Since April 2017, companies with more than 250 employees have been legally required to publicly report their gender pay gap figures by the end of the financial year.

The gender pay gap can be defined as the difference between the median hourly earnings of men and of women and is not to be confused with equal pay. Unequal pay is when one person is paid less than another for doing the exact same work, this is discrimination and is illegal. 

In May 2020 it was 50 years since equal pay became a legal requirement under the Equal Pay Act 1970.1 Unequal pay does still happen, and it can be a component of the gender pay gap, however, it is not the main reason that men and women’s average salaries can be different. An employer providing equal pay may still have a large gender pay gap and an employer with a small gender pay gap may still be breaking the law.

Gender pay gaps can be caused by a variety of factors including:

  • Unusually and disproportionately high salaries.
  • Occupational segregation.
  • Balancing domestic and caring responsibilities.
  • Corporate culture.
  • Unconscious bias.
  • Discrimination.

Gender Pay Gap UK - 2019 statistics

In the early 1990s, average hourly wages were almost 30% lower for women than they were for men. Since then the gender pay gap has come down, but it remains at around 20%. When we look at a single year in isolation such as 2019, the issue is still very much apparent, with 78% of companies reporting a gap in favour of men.2

  • Overall gender pay gap: 20% in favour of men across all full-time, part-time, professional, public and private sectors.3
  • Full-time work: Men earned an average of 8.9% more than women. The gender pay gap becomes especially significant when women reach their forties.4
  • Part-time work: Women earned an average of 3.1% more than men.5

Gender Pay Gap Reporting

Companies with more than 250 employees are legally required to report their gender pay gap figures by the end of the financial year. They also need to provide a written statement (signed by a senior employee) confirming that the calculations are accurate. This must also include a narrative of why a gender pay gap is present and what they intend to do to close it. 

These annual reports must be published somewhere accessible on the company’s own website and on a government website.

Companies must report their gender pay gap in terms of six figures including:

  • Mean gender pay gap.
  • Median gender pay gap.
  • Mean bonus gender pay gap.
  • Median bonus gender pay gap.
  • Proportion of males and females receiving a bonus payment.
  • Proportion of males and females in each quartile band.

The mean gender pay gap is an average calculation derived by adding up the wages of all male and female employees and dividing it by the number of employees. The difference between the mean figures for men and women is the pay gap. 

The median gender pay gap is calculated by listing all male and female employees’ wages from highest to lowest and comparing the number that sits in the middle for each gender. The difference in salary between those two people is the pay gap figure. 

None of these calculations account for age, previous experience or differences in job roles but the median gender pay gap is still viewed as the most representative calculation. 

How do we achieve fair pay?

The World Economic Forum reported in December 2018 that it will take 202 years to close the gender pay gap. Since then updated figures show that it could in fact take 257 years to reach global gender parity.6

No one wants to wait 257 years for the gender pay gap to close. In 2015 the, then Prime Minister, David Cameron clearly felt the same, pledging to “end the gender pay gap in a generation”.7

The annual pay gap reporting requirement was designed to highlight discrepancies and create the pressure needed for change. While the introduction of the new living wage was set to make an immediate difference to those in low paid jobs. 

Despite these landmark changes pushing us in the right direction, there is still more to do.

Fast tracking our way to gender parity is in all of our interests. Before the COVID-19 (Coronavirus) pandemic, estimates suggested that closing the gender pay gap in the UK would add £600 million to additional annual GDP by 2025.8 This year, due to the COVID-19 pandemic there is no mandatory requirement to report gender pay gap data. As we emerge from the pandemic, organisations across the country are working towards offering remote and flexible working arrangements. 

With so many changes to working practices and policies happening over the next few years, this could be the best opportunity we have to make changes that equally support both men and women, resulting in a positive and dramatic impact to the gender pay gap going forward.

What can you do if you feel you are being paid unfairly?

If you believe that you are being paid unfairly you should feel confident in raising the matter with your employer. If you cannot then there are a number of independent resources available to you:

  • Citizens Advice Bureau Adviceline (England): 03444 111 444.
  • ACAS: An impartial organisation that aims to help people solve problems at work. Helpline: 0300 123 1100.

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References

1 The National Archives. Legislation.gov.uk [Internet] May 1970 https://www.legislation.gov.uk/ukpga/1970/41/enacted 

2 Parliament UK [Internet] August 2018 https://publications.parliament.uk/pa/cm201719/cmselect/cmbeis/928/92806.htm 

3 Financial Times [Internet] September 2020 https://ig.ft.com/gender-pay-gap-UK/ 

4 Institute for Fiscal Studies [Internet] February 2018 https://www.ifs.org.uk/publications/10358

5 House of Commons [Internet] January 2020 https://commonslibrary.parliament.uk/how-much-less-were-women-paid-in-2019/#:~:text=In%202019%20the%20gender%20pay,on%20a%20number%20of%20factors

6 World Economic Forum [Internet] December 2019  https://www.weforum.org/reports/gender-gap-2020-report-100-years-pay-equality 

7 HM Revenue and Customs [ Internet] July 2015 https://www.gov.uk/government/news/prime-minister-my-one-nation-government-will-close-the-gender-pay-gap 

8 Government Equalities Office (GEO) and Deloitte (2016), ‘Trailblazing transparency: Mending the gap’. [Internet] February 2016 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/498743/Trailblazing_Transparency_-_Mending_the_Gap_report_Feb_2016.pdf

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