Anxiety around the gender pay gap data is misplaced

Economy & Politics | Employment & Skills | National | Opinion | Reports

With businesses over 250 employees due to report their gender pay gap data this week, there has been much hand-wringing about the data and the workplace inequalities it suggests. The idea is to enforce a level of transparency, and thereby encourage businesses to hire more women and pay them the same as their male counterparts. But while there certainly are gender-based inequalities in the UK business sphere – that much is hardly news – much of the anxiety surrounding the gender pay gap data is misplaced.

To begin with, the data collected does not represent a direct comparison of male and female employees’ pay for the same role. Instead, it is a much broader snapshot of the average male pay in an organisation versus the average female pay.

Companies in male-dominated industries – such as banking – are more likely to report a severe gender pay gap because the female employees they do have tend to be in lower paid, administrative roles. Meanwhile, companies which have recently recruited more women into entry-level roles will likely report a larger pay gap, until those women can progress to more senior positions. It would be hasty to point at the pay gap data and automatically decry certain businesses.

A reported pay gap does not necessarily amount to female employees being paid less for the same work as men, and nor does a widening pay gap necessarily mean a company is blind to its gender-based workforce issues. The data does, however, highlight some problem areas.

First, there are problem sectors which have done little to rectify their imbalanced workforces. It would be disingenuous for male-dominated companies to shrug and blame the make-up of their sectors. If businesses in STEM or finance have categorically failed to attract a diverse workforce, only so much of the blame can be put on social forces. Even putting aside the moral reasons to employ a diverse staff, businesses which fail – or do not desire – to recruit more women risk missing out on half the available talent.

Helen Wollaston, Chief Executive of WISE, the campaign to increase gender balance in science, technology, engineering and mathematics (STEM), explains: “It is important that you develop a culture that supports and increases inclusion so that women want to work for you, they want to stay working for you and they can see opportunities to progress through the management structure. As well as being the right thing to do, there is also a strong business case for having a diverse workforce; you will benefit from greater creativity, greater productivity and improved profits.”

Second, the reason mandated reporting exists is because a gap in average gendered pay is endemic in UK business. If companies find that their workforces are balanced in numbers but that women struggle to rise through the ranks, they need to look at their workplace culture and the opportunities they afford to female staff.

Helen says: “The pay gap itself is not the issue – what is important is understanding the reasons for it, so we recommend that you start from a position of really understanding your data. There is not one single reason as it varies by context: it could be that women are clustered in the lower paid roles, it could be about bonuses and the rewards package, it could be about hours of work because more women work part-time and the hourly rates for part-time work are [generally] much lower.”

Some businesses may have to report a pay gap even while they are working to empower women in their workforces. Others are in line for deserved censure. The pay gap data is a blunt tool – but a useful one, if businesses are willing to reflect.

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