How is the UK minding its gap?

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For the second year, British companies were obliged to publish their gender pay gaps on April 4. Based on a regulation approved in 2017, companies with more than 250 employees are required to submit their pay data to the government. In this second round, around 10,500 employers published reports. Firms are required to self-report their data annually, in order to identify gaps in remuneration.

In comparison to the previous round of reports, the discrepancy between men and women’s earnings has widened. Data shows that at 45% of firms submitting reports, gaps increased. Meanwhile, 7% of the companies did not present any significant difference in the rates from one period to the other. Overall, gender pay gaps persist at as many as 78% of British companies. 

The open data, provided through the website of the UK government, sheds light on another aspect of the gap: its variation across industries. Among airlines, for instance, the results are striking. EasyJet, a giant budget airline with more than five thousand employees, reported a gap of 45,5% last year. The most recent numbers now reveal a discrepancy of 47,9%. Ryanair, an Irish budget airline with offices in the UK reported a median pay gap of 64%, among the worst gaps. In the sector, the difference has been attributed to the number of male pilots and the higher presence of women as flight attendants.

It is not an isolated case of airlines, but rather a tendency observed in many areas. The discrepancy in payslips in the financial sector was also noticeable. In the area, findings display wide gaps in hourly earnings, as well as in bonuses offered to employees. At J.P. Morgan Securities, for instance, the report shows an increase in median rates, from 46% to 60%, and a similar mean rate in the two reports. The difference in the amount paid for bonuses remained high, showing a gap of more than 60%. Another example comes from Credit Suisse, which presented a similar gap in hourly pay, reaching 45% in the median. In terms of bonuses, the rate decreased from 82.3% in the previous year to the current median, 76.3%.

Companies reported discrepancies in both mean and median hourly rate. The first one refers to the total amount spent with salaries of men, in comparison to the same variable of women. The latter describes the difference between “middle” men and women. It is calculated through the listing of employees in all positions within the same firm, and ranking them in accordance to their level in the hierarchy. By doing so, it is possible to compare the salaries of those who stand “in the middle” of the list.

Translating the data

The numbers constitute complex scenarios concerning the gender pay gap. On the bright side, companies are now mandated to collect and publish their data, the hope being that this transparency with translate to equal pay accountability. It is impossible to solve the problem if one does not see it. On the other hand, less than half of the firms provided a plan to actually close the gap.

Even though the overall gender gap in the UK slightly decreased, its reduction tracks a slow pace. If the tendency continues worldwide, women will reach pay parity by 2235, according to the World Economic Forum. This is far worse for industries which show a persistent and wider gap, such as finance. However, it would be a mistake to imagine that the gap concerns only overt discrimination in hiring or in setting wages.

In the UK, the Equal Pay Act was introduced back in 1970, providing a legal guarantee for the principle of equal pay for equal work. In other words, policies cannot explicitly set lower salaries for women. Instead, however, discrimination takes place in more indirect practices. For instance, asking about the candidate’s pay history in an interview might impact women more negatively. The reason behind is the assumption that previous salaries were fairly set — what ends up perpetuating discriminatory wages. As an alternative, the American Association of University Women (AAUW) suggests the use of market research to set payment levels.

Another possible explanation for the differences in wages relates to occupational segregation. Women not simply earn less than men, but they are also more likely to occupy lower-paid positions or be employed in lower-paid industries. In other words, it happens both vertically, in the hierarchy of positions within a company, and horizontally, as women are concentrated in specific sectors. Female-dominated fields tend to have lower remuneration, and this is particularly true in high-skilled areas such as medicine. According to a report from the Institute for Women’s Policy Research, positions which require less educational qualifications or work experience display the same feature.

Possible solutions

Solving the gap requires more than individual measures. As Iris Bohnet, the director of the Women and Public Policy Program at the Harvard Kennedy School, notes, it is a systemic matter. Clearly, pay transparency represents a first step, as it makes the problem visible. In that sense, the efforts of the Equality and Human Rights Commission (EHRC) to establish a self-reporting mechanism proves to be an important move. Deciding on how to act upon the findings is the next one.  

The campaign from the British government recommends a series of “effective” and “promising” actions. Among them are investments in transparency, diversity management and the enforcement of skills-based assessment in selection processes. The list of recommendations also features structured interviews and processes, both in the hiring procedures and promotions.

“Promising actions” describe initiatives which have been implemented but still need more research regarding the level of their effectiveness. Increasing flexibility in the workplace, for women and men, is cited by the government as beneficial. To avoid stigma, however, this option should be framed as a benefit extended to all employees regardless of their gender. Shared parental leave also appears as a recommended solution to reduce the gap, as it encourages men and women to share caring responsibilities. The possibility of making use of this policy should be clear to employees, who need to be fully aware of how to request it and benefit from it.

What lies beneath these changes in the workplace is the need to normalize women’s trajectories. Data shows that the gap widens during women’s childbearing years. Among female employees who have just left higher education, the discrepancy stands close to zero. As the years pass, the need for options of part-time positions and more flexible work scale becomes an obstacle.

Other actions encouraged by the British government focus enhancing women’s connections in the workplace. Initiatives for networking, for example, allow women to build relationships which could help them with career advice in their companies and abroad. In addition to that, mentoring makes a difference in solidifying meaningful connections with more experienced colleagues. Programmes which promote opportunities for career development, with the support of fellow peers, benefit women in particular. Especially if their mentors actively advocate for their progress in the company through sponsorship. For instance, having someone who helps ensure that their contributions to projects are visible and acknowledged.

While promoting these relationships is important, it is also necessary to be aware of possible discrepancy in the process. Women should be granted access to male and female mentors, instead of restricting their options to only one group. A critical factor is the kind of advice and the skills transmitted through programmes, which should be provided equitably to all employees. Technology plays a role in avoiding biases, by guaranteeing that all participants access the same benefits. For companies, this also creates better mechanisms for monitoring, where it is possible to follow projects more closely. WERKIN’s inclusive mentoring helps companies provide the same steps and opportunities for career development for underrepresented employees.