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29 Jul 2019

Five things we learned from 2019 gender pay gap reporting and what they mean for reward and benefits

This year marks the second anniversary that gender pay gap reporting was required, by law, for all UK companies, public sector organisations and charities with more than 250 employees. The initiative was introduced in 2018 as a way to highlight workplace inequality between male and female pay, and to help organisations narrow and ultimately remove the pay gap. However, with the causes often deep-rooted, the headline analysis in 2019 revealed that the median pay gap between male and female employees had actually increased from 9.2% in 2018 to 9.6% in 2019.

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But what did the wider data – which represents snapshot figures from April 2018 – reveal? And what can we learn about how to report the data accurately and, most importantly, how to reduce the gap in the years to come?

1) A regional split

Although no UK region achieved an equal pay gap, data analysed by the CIPD showed a marked difference in the size of the gender gap depending on the part of the country you’re in. The gender pay gap in the South East and South West is 11% and 10.4% in London. That is more than double the 5.7% gap in Scotland – with the North West (6%) and North East (8%) also featuring in the five regions with the smallest pay gap. A theory for this is the prevalence of certain industries in different regions.

2) Construction has work to do

Construction and the Financial and Insurance Activities industries have the widest gender pay gaps – a worrying 24.35% and 23.9% respectively. Construction had reduced the median gap by 0.6% between 2018 and 2019 but, clearly, there is still some way to go.

3) Bonus pay

Male employees were rewarded in the form of bonus pay at a higher rate than their female coworkers. A median 19.3% of male workers received a bonus, compared with 17.4% of women.

4) The size of the organisation

Somewhat surprisingly, of the 10,000+ organisations that submitted data, the biggest organisations had the smallest gender pay gap. Those with more than 20,000 employees had a, still disheartening, 7.6% median hourly gap. Whereas organisations with between 250–499 staff had a gap of 10%. This shows there is work to do at all levels of organisations, and small businesses are not exempt from criticism.

5) Reporting with context

Those reporting gender pay gap data have a responsibility to give it proper attention and to place it into context. For instance, CIPD highlight the case of Hilton Hotels who explained that its median pay gap had increased as a result of hiring more entry-level females in an effort to build a pipeline of talent for the future. However, if the hotel chain had not explained this context alongside the data they provided, it would have left them open to criticism.

The next steps

All UK business can, and should, be putting more focus into reducing the gender pay gap. It isn’t enough to publish the data and move on. Introducing an action plan to affect change is vital, as is explaining the how’s, why’s and when’s internally to staff and publicly. Action plans are critical given that more than two-thirds of UK workers would consider leaving their job if they discovered an unfair gender pay gap at their organisation, according ADP’s Workforce View in Europe (2019) study.

Gender pay reporting should be considered by reward directors, HR professionals and those in charge of benefits when producing future reward strategies, too. For instance, bonus pay has traditionally increased with seniority level. Are there other forms of reward that could be offered? The raw data can also be used as a starting point when taking your ideas to the boardroom level.

The Government Equalities Office has published a summary of reported gender pay gap data for 2018/19.

This article is provided by Firstbeat.

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