Let’s narrow the divide on the unfinished business of pay gaps

There seems to be no resolution to the UK’s gender pay gap – the difference between what men and women earn

We know these figures because of transparency legislation. Since 2017, the law requires companies with 250 or more employees to reveal their gender pay gap annually. This year marks a significant milestone as we see the gap narrowing to its smallest margin so far. However, with women still earning 91p for every £1 that men earn, is that progress?

The gender pay gap can be misunderstood and often misreported as some talk about equal pay, others about equality and many about average gaps. Equal pay for equal value is about men and women receiving identical compensation for jobs that demand similar levels of skill, effort and responsibility. The legal framework for this is governed by the Equality Act 2010, which aimed to strengthen anti-discrimination.

Beyond the moral obligation, companies that prioritise pay equity and diversity stand out as leaders in ethical business practices

Although the legislation focuses on average wages, it fails to address the nuances of equal pay and pay equity, and masks deeper inequalities within organisations. One question stands unanswered before business leaders: if progress to equality is slow, how can we catalyse genuine improvement?

The path to bridging the gender pay gap extends beyond mere compliance, requiring
a proactive and comprehensive approach from businesses. These include:

Incorporating ethnicity pay gap analysis

This provides a more granular view of pay disparities, unearths inequities that intersect with gender, fosters a more equitable workplace and shows a commitment to inclusivity.

Enhancing transparency of pay practices

Offering employees clear insights into pay structures promotes a culture of trust and openness. This encourages dialogue around pay equity and can prevent potential disputes.

Adopting gender-neutral job evaluations

Assessing roles free from gender bias and accounting for occupational segregation ensures compensation is equitable. Recognising and rectifying gender biases in certain professions can ensure more balanced pay structures.

Fostering continuous improvement culture

Cultivating an environment where pay practice feedback is acted upon can drive sustainable progress. Engaging employees in discussions about pay equity and diversity solidifies a firm’s dedication to these principles.

Insight-driven, strategic decision-making

Using data analytics to understand the root causes of pay gaps can shape more effective strategies. By analysing trends, companies can gauge the effectiveness of their initiatives and adjust approaches accordingly.

Beyond the moral obligation, companies that prioritise pay equity and diversity stand out as leaders in ethical business practices, enhancing their brand reputations. Furthermore, research shows that diverse and equitable workplaces are more innovative, productive and profitable.

Despite the reduction in the gender pay gap, true equity remains elusive and achieving it requires transcending basic legal compliance. By adopting a holistic and strategic approach, businesses can address this, unlock the full potential of their workforce, advance equality and contribute to the broader societal good.

Zara Nanu is a serial entrepreneur and a member of the women’s leadership board at Harvard Kennedy School.