Sun 26 May 2024

Gender pay gap reduced to lowest level since mandatory reporting introduced

A positive step or just not as bad as previous years?

Last year's statutory gender pay gap reporting figures had us Back where we started with gender pay gap, with the median pay gap sitting at 9.4%, exactly where it had been when larger employers (those with 250 or more employees) were first required to publish figures. Twelve months on, and this figure has reduced to 9.1%. Of course, any reduction is positive, but is this trend likely to continue, and is the median gap the figure we need to be looking at?

Looking behind the headline figures

The bigger picture with this year's figures is that:

  • The gender pay gap is higher in the public sector at 14.4%
  • 78.4% (so nearly 4 out of 5) companies have positive median pay gaps (i.e. in favour of men) which is a 1.1% reduction on last year
  • 13.6% (just over 1 in 10) have negative median pay gaps (i.e. in favour of women) which is a 0.9% increase on last year
  • 39 companies reported a 0% pay gap - something that is statistically unlikely unless the company employs no women (only 1 fits that bill)
  • According to the TUC, assuming that the current rate of change is maintained, it will still take more than 20 years to eradicate the gap
  • No fines or penalties have been issued to organisations that have failed to comply with the reporting obligation - although it is the Equality and Human Rights Commission's responsibility to monitor this, it does not have the power to issue a fine which requires a court order

Ideally there would be no pay gap in favour of women or men, so the increase in the negative median pay gap referred to above is not a sign of equality in this context.  

What can this year's figures tell us about where the gender pay gap is heading?

To get an idea of where the gender pay gap is heading, the more insightful figures to look at are the proportion of men and women in the highest and lowest paid jobs, and whether there are improvements being made there. After all, what the gender pay gap is showing is that women are not progressing their careers to more senior roles as regularly as men. The proportion of women remaining in lower paid (lower quartile) roles while men progress to higher paid (upper quartile) roles plays a large part in the gender pay gap.

This year's figures do show that there is a higher proportion of women in the highest paid jobs, albeit the increase is small, at around 0.5% since last year.  

Where do we go from here?

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 ("the Regulations") introduced the requirement for larger employers to report their gender pay gap. The Regulations included a provision requiring the Secretary of State to review whether the Regulations had achieved their objectives within 5 years of coming into force - over 7 years later we are still waiting for that review.  

The future of gender pay gap reporting will likely depend on the outcome of the general election. In the absence of the review, it is not known what the intentions of the Conservative government are in regard to potential changes to gender pay gap reporting. However, the Regulations themselves (brought forward by a Conservative government) consider whether the objectives of the Regulations could be achieved with a system that imposes less regulation.

The Labour party indicated in their green paper A New Deal for Working People that they will extend reporting requirements to include outsourced workers and introduce a requirement to devise and implement action plans. This has been repeated in the updated Labour's Plan to Make Work Pay.  Action plans are something that campaigners have been calling for since the requirement to report was implemented. The publication of ethnicity pay gaps may also be made mandatory for firms with more than 250 staff, and Labour have also said they will take steps to tackle the disability pay gap.

Irrespective of which party wins the general election, the implementation of the EU Pay Transparency Directive ("the Directive") may also impact the future of gender pay gap reporting. Although not directly applicable to the UK following Brexit (although non-EU employers who employ people in the EU will be affected). The more stringent requirements in the Directive will leave the UK lagging behind the EU unless changes are made. These more stringent requirements include a ban on asking job applicants about their pay history and employers with a workforce of over 100 employees being required to publish gender pay gap statistics.



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