Over the next few weeks into the New Year we are going to publish a series of short blog posts on gender pay gap reporting in the UK, based on the questions we have been asked by clients and contacts in recent months. By the time we get to the end of our series, the Government might even have published the final version of the Gender Pay Gap Regulations and we can all start preparing properly for this new regime!
Today we are going to start off with the basics, namely what is the gender pay gap? And why does the Government think that intervention is necessary?
The gender pay gap measures the difference between men and women’s average pay. It is expressed as a percentage of men’s earnings. According to the latest statistics from the Office for National Statistics the overall UK gender pay gap is currently 18.1% which means that a woman on average earns around 80p for every £1 earned by a man.
As with most headline figures, the overall gender pay gap figure does not tell us anything close to the full story. We know, for example, that the full-time pay gap for employees aged under 40 is actually pretty small, and is in fact negative for women aged 22-29 (meaning that average earnings are higher for women than men, in that age bracket). The gap widens considerably for older workers and is largest for women aged 50-59. Women are also disproportionately affected by the relatively low pay offered by part-time work.
Although the UK’s gender pay gap has fallen over time, progress has been slow. Back in 2011 the Government launched a voluntary reporting initiative called “Think, Act, Report”, with the aim of encouraging employers to publish their gender pay gap information. This was far from successful with only a small number of companies voluntarily publishing their statistics. In an attempt to accelerate progress, therefore, the Government has decided to introduce legislation requiring larger employers to publish information showing whether there is a difference in pay between their “average” male and female employees.
Narrowing the gender pay gap is not only good for women, but for the wider economy. As the UK Commission on Employment and Skills pointed out in its submission to the Women and Equalities Select Committee inquiry into the gender pay gap: “Many of the most talented people coming through our education and training systems are women. It makes no sense at all that these talents are not being fully used in the UK’s workplaces. A labour market that better reflects these educational outcomes, and that works as well for women as for men is essential if we want to maximise the productive potential of our labour force.”