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24 March 2017

Demystifying the gender pay gap

In a re-issue of a March 2016 multi-country study recruitment giant Glassdoor® reveals the “unadjusted” and “adjusted” gender pay gaps among employees in the United Kingdom, United States, Australia, Germany and France. The report has been republicised in the light of the gender pay gap reporting regulations, which come into effect in April this year.

Using Glassdoor’s unique data set of hundreds of thousands of salary reports from employees online, the study goes much further than simply looking at average salaries by gender, as is the case for the statistics produced by the UK’s Office for National Statistics.  In producing this report, Glassdoor has statistically controlled for factors such as employee characteristics, location, job title, employer and more. In addition, the study reveals what is – and what isn’t – causing the gender pay gap and provides policy recommendations to target these causes and help reduce the gap.
Demystifying the Gender Pay Gap reveals the gender pay gap is real and significant across each country, consistent with official sources. The study finds that in the UK on average, women earn about 77p for every pound a man earns. The study refers to this simple explanation of the gap as the “unadjusted” gender pay gap. However, to better understand what’s going on at the individual employee level, the study also reveals the “adjusted” gender pay gap by controlling for a wide-range of factors including employee age, years of experience, education level, location, job title and employer.
For example, in the UK, the adjusted gender pay gap is 5.5 percent, and while smaller than widely reported figures, it is significant a gender pay gap remains even after comparing similar workers down to the specific job titles and companies. In other words, a woman with the same job title, at the same employer, in the same location, with a comparable age, education and years of experience, will still be paid over five percent less than a man. This finding is consistent across each country the report studies.
To better understand the causes of the gender pay gap, the study divides the overall gap into what can be “explained” due to differences in worker characteristics (e.g., age, education, etc.) and what remains “unexplained.”

Glassdoor researchers found that the majority (64 percent) of the overall UK pay gap can be explained, while 36 percent of the overall pay gap cannot be explained by any factors observable in Glassdoor data. This means the unexplained pay gap may very well be attributed to workplace bias (whether intentional or not), negotiation gaps between men and women and/or other unobserved worker characteristics. It comes as no surprise that the study reveals that the largest contributing factor to the gender pay gap is explained by differences in how men and women sort into occupations and industries with varying earning potential. This finding is consistent across all five countries, and in the UK, it makes up more than two thirds (38 percent) of the unadjusted gender pay gap.

 “Women and men tend pursue different career paths early in life and then sort into different industries and occupations, which, in large part, is due to a variety of societal expectations and traditional gender norms. This is the single largest factor we see contributing to today’s gender pay gap,” said Dr. Andrew Chamberlain, Glassdoor’s chief economist.

This may explain the gender pay gap, but it doesn’t excuse it. First, why should the work that women do be valued any less than the work that men do – why do we pay people more for looking after our cars than for looking after our children and our frail elderly? Second, why do women feel bound by societal expectations? And third, how much do young women starting out on a career path know about the extent to which following societal expectations will impact on their lifetime earnings?

A positive vision for equality and human rights in Britain

Government Brexit plans are showing a lack of ambition for equality and human rights standards, Equality and Human Rights Commission Chair David Isaac has warned.

Publishing a 5 point plan on how Britain’s status as a world leader on equality and human rights can be maintained and strengthened after we leave the European Union, Mr Isaac has called for the government to set out its vision for a fairer Britain once we leave the EU and demonstrate how it will take a once in a lifetime opportunity to create a shared society and heal the divisions exposed during and since the referendum campaign.
The Equality and Human Rights Commission argues that Britain has a long history of upholding people’s rights, valuing diversity and challenging intolerance. At this moment of significant constitutional change, it is important to set out a positive vision for the kind of country we want to be after we have left the EU. Building on our heritage of respect and inclusion, the Commission will encourage all political parties to pursue five priorities to protect and promote equality and human rights in the UK:
  • protecting parliamentary sovereignty over the UK’s equality and human rights legal framework
  • retaining the UK’s equality and human rights legal framework as we leave the European Union
  • ensuring the UK is a global leader on equality and human rights
  • protecting the UK’s equality and human rights infrastructure
  • promoting the UK as an open and fair place to live and do business
While each of these five priorities implicitly encompasses the issues of equal pay and the gender pay gap, it would have been good to have seen explicit mention of the topic, not only because this is an area in which the development of EU jurisprudence has played a key role, but most importantly because women’s economic independence is central to the achievement of equality of opportunity.

David Isaac said:
We’ve had calls for all kinds of Brexit. A soft Brexit, a hard Brexit and a red, white and blue Brexit. No one is talking about a fair Brexit - one that will unite the country and lead us to a shared society based on fairness and mutual respect the Prime Minister has talked about.
“At any crossroads there are important decisions to be made. We can either set out the positive requirements to maintain our traditions of respect for equality and human rights and be a country that really does work for everyone, or we can miss this golden opportunity to demonstrate how post-Brexit Britain can create a fairer and more united Britain.”

10 March 2017

Icelandic employers to be audited on how jobs are valued

Iceland marked International Women’s Day 2017 by requiring companies to prove they offer equal pay regardless of gender, ethnicity, sexuality and nationality.

Companies with more than 25 employees on their books will need equal pay certification under new laws coming into force in spring 2018.

Þorsteinn Víglundsson, Iceland’s Minister of Social Affairs and Equality said that businesses opposed the law at every level, but they were necessary as Iceland has not moved closely enough towards closing the disparity in earnings between men and women. The country has set a target of eradicating the gender pay gap completely by 2022.

Iceland’s gender pay gap is 15 per cent. Britain’s is 18 per cent.

Iceland has been at the forefront of a push towards gender parity of pay and for the past eight years has come first on the World Economic Forum’s Gender Pay Index. The UK ranks 18th.

Iceland has introduced a number of measures to reduce the gender pay gap in the country, including greatly improved parental leave schemes aimed at ensuring that having children doesn’t hold women back, and quotas of minimum 40 per cent women on boards of companies with 50 employees or more. This move has had a significant impact on representation, increasing the ratio of women on boards from between 20 per cent to around 37 per cent.

Under the new certification law, companies will be required to document how they value education, experience, responsibility and all other performance factors they incorporate into their pay system. Each company will be audited. The audit reports will be published and companies which fail audits will have to notify employees and unions. Individual employees would then have the right to seek compensation.

Mr Víglundsson said “We need to have the ambition and boldness really to try new methods of decreasing the gender-based pay gap. This is our next step in that direction, getting the equal pay system enforced into law.” 

7 March 2017

Women’s Pay Day

In a reversal of Equal Pay Day, which takes place in November on the date on which the average woman stops getting paid, compared to the average man, new analysis by the TUC, prepared for Women’s Pay Day – the 7th March – reveals that the average woman has to wait nearly a fifth of a year (66 days) before she starts to get paid, compared to the average man.

The current gender pay gap for all full-time and part-time male and female employees stands at 18 per cent. This pay gap means that across the board women effectively work for free for the first 66 days of the year.

In a number of key industries – even in jobs dominated by female workers – women have to wait until even later in the year for their Women’s Pay Day:

  • In education, the gender pay gap is currently 27 per cent, so the average woman effectively works for free for more than a quarter of the year (97 days) and has to wait until the 7 April before she starts earning the same as the average man.
  • In health and social work, the average woman waits 69 days for her Women’s Pay Day on 10 March.
  • The longest wait for Women’s Pay Day comes in finance and insurance. There the gender pay gap is the equivalent of 137 days, more than a third of the year.

Women’s Pay Day by industry

% gender pay gap
Number of days
Women’s Pay Day
Transport and storage
Accommodation and food services
Sewerage and waste management
Admin and support services
Agriculture, forestry and fishing
Real estate
Arts, entertainment and recreation
Public admin and defence
66 days
Wholesale and retail, motor vehicle repair
Human health and social work
Information and communication
Professional, scientific and technical
Other service activities
Electricity, gas, steam and air conditioning
Financial and insurance
 Source the Office for National Statistics,  Annual Survey of Hours and Earnings,  2016.

TUC General Secretary Frances O’Grady said:

“The UK has one of the worst gender pay gaps in Europe. Even in industries where women dominate, like education, they get paid far less than men. Paying lip service to the problem is not good enough. Companies that don’t pay women the same as men for work of equal value are breaking the law. But with Employment Tribunal fees of £1,200, too few women can afford to access justice when bad bosses break the law."

The TUC is calling on the government to:
  1. End discriminatory pay: through equal pay audits, tougher sanctions on employers who don’t play fair, and ending employment tribunal fees so women who are discriminated against can access justice.
  2. Tackle occupational segregation: getting more women into better paid jobs like engineering through good careers advice, the apprenticeships system and removing discrimination and prejudice.
  3. Improve pay for “women’s work”: through valuing important jobs which are done by predominantly female staff, like nursery nurses or carers, by increasing pay, progression and status.
  4. Tackle the motherhood pay penalty: through a combination of tackling pregnancy discrimination, improving access to flexible work, creating more well-paid, high-skilled part-time jobs and giving dads better opportunities to share parental leave and work flexibly so it’s not all about women putting their careers on hold to raise a family.

6 March 2017

Mixed picture for the gender pay gap by ethnicity

The Fawcett Society has today published new analysis of the gender pay gap by ethnicity, charting progress over more than 25 years.

The analysis reveals a mixed picture, with some minority ethnic groups making great strides while pay for others lags far behind. Fawcett has also calculated the gap within ethnic groups as well as the gap between minority ethnic women and White British men to reveal a clearer picture of gender inequality.

On the downside, the report reveals:

  • Black African women have seen virtually no progress since the 1990s in closing the gender pay gap with White British men, with a full-time pay gap of 21.4 per cent in the 1990s and 19.6 per cent today. When part-time workers are included this figure rises to 24 per cent.
  • Pakistani and Bangladeshi women experience the largest aggregate (i.e. including full-time and part-time workers) gender pay gap at 26.2 per cent.
  • Indian women experience the biggest pay gap with men in their ethnic group at 16.1 per cent.
  • White British women have a larger pay gap than Black Caribbean women, Indian women or those who identify as ‘White Other’.
  • Women who identify as ‘White Other’ are the only group who have seen their pay gap widen since the 1990s from 3.5 per cent to 14 per cent today. This is largely because the composition of this group has changed over time and is today largely comprised of Central and Eastern European migrant women, many of whom are in low paid work.
Commenting, Sam Smethers, Chief Executive of the Fawcett Society said:

“This analysis reveals a complex picture of gender pay gap inequality. Black African women have been largely left behind, and in terms of closing the pay gap, Pakistani and Bangladeshi women are today only where White British women were in the 1990s.”

On the upside, the report shows some women experiencing real progress:

  • Black Caribbean women in full-time work have overtaken Black Caribbean men so that they now have a reverse pay gap of -8.8 per cent.
  • Chinese women have reversed their pay gap since the 1990s. Those in full-time work now earn more per hour than White British men (a reverse gap of -5.6 per cent), but the gap between Chinese men and women has widened from 4.6 per cent in 2000s, to 11.6 per cent in 2010s.
  • Indian women have seen the gender pay gap with White British Men narrow from 26 per cent in the 1990s to 6.3 per cent in 2010s for those working full-time and reduce by more than half over that period when including part-time workers (from 27 per cent to 12 per cent).
  • White Irish women have seen the most progress since the 1990s, overtaking White Irish men and White British men and now have a sizeable -17.5 per cent full-time pay gap. White Irish women are more likely to be older, working full-time or in senior or managerial roles.
Sam Smethers adds: 

“For women in some ethnic groups a combination of higher education, concentration in better paid professions and more women working full-time has seen their gender pay gap narrow or even reverse when compared with White British men. However, when compared with men of their own ethnicity the pay gap has either widened over time (Chinese women) or narrowed at a much slower rate (Indian women), indicating that they are still experiencing gender inequality.

“The exception to this is Black Caribbean men who are faring considerably worse in the labour market both in terms of pay and participation than Black Caribbean women. However, Black Caribbean women still experience discrimination.

“We have to address pay inequality for all, and look behind the headline figures to get a true picture of what is going on. We also have to understand and address the combined impact of race and gender inequality. As a minimum the ONS should routinely collect and publish this data.”

Gender Pay Gap by Ethnicity in Britain calls for 5 key actions:
  • Collect the data
  • Increase pay for the lowest paid
  • Address the unequal impact of caring roles
  • Tackle multiple discrimination
  • Ensure progression for a diversity of women
You can read the full report here.

1 March 2017

Employers urged to report race pay gap data

The Government should legislate to ensure that all listed companies and businesses employing more than 50 people publish workforce data broken down by race and pay band, according to an independent review.

The review also calls on public bodies employing more than 50 people to publish a breakdown of employees by race, ideally by pay band, on and include it in departmental reports.

The Baroness McGregor-Smith Review, which is published today, has found that people from black and minority ethnic backgrounds are still being held back in the workplace, costing the UK the equivalent of 1.3 per cent in GDP each year.

The recommendation comes just one month before new Regulations come into force obliging larger employers to disclose their gender pay gap data, but the metrics proposed by the McGregor-Smith differ substantially from those being introduced by the government.

How much more helpful it would have been to have called on the government to add race into the gender reporting requirements, something many contributors to the consultation on gender pay gap reporting recommended in their own submissions. We could all then have sung from the same hymn sheet, with a much greater chance of success, if not now, then in preparation for the first five year review of the gender pay gap reporting regulations.

Of course employers should be reporting on race, but let’s make it easy, and have one set of metrics.

You can read the McGregor-Smith Review here.