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The Gender Pay Gap in 2019: What Employers Need To Know

Date: 22 January 2019

On 5 April 2017, Gender Pay Gap reporting regulations came into effect. With this year’s reporting deadline looming we recap the must-know aspects of the legislation, reflect on the impact it has had so far, and consider what the gender pay gap means for organisations in 2019.

The early origins of the gender pay gap

Before 1970, it was common for women working within UK businesses to receive lower pay than men. This was irrespective of skill level or experience. It was in 1968 that women machinists and employees at Ford’s Dagenham factory staged a strike in protest to the pay inequality. Fast-forward two years and, in 1970, The Equal Pay Act was unveiled.

Now, decades on, organisations continue to face equal pay challenges and must ensure they produce annual reporting that provides a detailed illustration of what they pay the men and women within their business.

Gender pay continues to be an important and evolving topic among organisations, government, and employees alike. With leading economists asserting that gender bias stems from our childhood educational settings and that such bias may impact future learning and career paths, the need for action to bridge the gap becomes all the more apparent.

However, the issue of gender inequality within the workplace has no quick fix. Organisations need to ensure they fully understand the requirements of gender pay reporting, and how they can execute long term actionable strategies to improve, and eventually balance, what they pay to men and women within their workforce.   

How is the gender pay gap calculated?

If you’re a UK organisation with more than 250 employees, you now need to prepare and submit your gender pay gap report annually.

You are required by law to publish the following data:
Mean gender pay gap in hourly pay
Median gender pay gap in hourly pay
Mean bonus gender pay gap
Median bonus gender pay gap
Proportion of males and females receiving a bonus payment
Proportion of males and females in each pay quartile

Data used is to be taken from what the government refer to as a snapshot date. For public sector organisations the date is 31st March; for businesses and charities, 5th April. Organisations are given one year from their respective snapshot date to publish their data. For example, a charity would need to submit by the 4th April.

Gender pay gap changes over time

Progress has been made since the gender pay gap was first challenged in the seventies: the gap has narrowed and retained stability. Data taken in 2017  shows women earned 18% less than men and, in 2016, the Office for National Statistics reported that women received an average pay that was 9.4% lower than men’s or – when part-time workers were included in the calculation – 18.1% lower. More recently, it was reported that 2018 data shows that full-time female workers were paid 8.6% less.

Why does a gender pay gap still exist?

The gender pay gap may continue to exist for a number of reasons: from teacher bias in childhood education to unconscious bias and gender discrimination during recruiting and onboarding processes.

Women are also more likely to take on caregiving responsibilities – for example, of a child or relative. This often results in the need to take an extended career break or to work reduced hours. These decisions can have an impact on promotion opportunities.

Looking ahead: The gender pay gap in 2019

Since publishing data reports in 2018, this legislation has undoubtedly already had a significant effect on the issue of pay inequality. Yet, it is tipped that 2019 brings with it refreshed expectations that organisations will take the lead and drive impactful change that will further address the pay gap issue.

In a recent Confederation of British Industry survey, 93% of businesses were proactively making changes to address the pay gap issue within their organisation - up 31% since 2017. Likewise, organisations are better understanding the value attributed to taking active steps towards further developing a fair and balanced workforce; 60% of workers say these are traits that help attract them to a new employer. Gender diversity in its broader sense is tipped to be an important topic throughout 2019.

As April 2019 draws closer, organisations will come under greater scrutiny for their in-house strategies and action plans for working to reduce their gender pay gap. 

Are you a hiring manager, looking for the latest information on gender diversity? Preparing a business case for diversity training in the workplace, or tasked with leading your company’s gender diversity strategy?

Get your free copy of Phaidon International’s ‘Gender Diversity: The Commercial Imperative’ here.  

You can also read the government’s Gender Pay Gap Actions guidance: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/731288/Gender-Pay-Gap-actions_.pdf

Sources:

Victor Lavy, Edith Sand, On The Origins of Gender Human Capital Gaps: Short and Long Term Consequences of Teachers’ Stereotypical Biases, 2015 <https://www.nber.org/papers/w20909?utm_campaign=ntw&utm_medium=email&utm_source=ntw> [accessed 7 January 2019].
  
Government Equalities Office, 2017, <https://www.gov.uk/guidance/gender-pay-gap-reporting-make-your-calculations> [accessed 8 January 2019]

Nikki Graf, Anna Brown and Eileen Patten, The narrowing, but persistent, gender gap in pay, 2019, <http://www.pewresearch.org/fact-tank/2018/04/09/gender-pay-gap-facts/> [accessed 7 January 2019]

https://www.bbc.co.uk/news/business-45977390> 2018 [accessed 7 January 2019]

Confederation of British Industry, Employment Trends Survey, 2018 <http://www.cbi.org.uk/insight-and-analysis/change-and-opportunity/> [accessed 8 January 2019]