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“Very daunting”: that is how Helen Rose, chief operating officer at TSB, the UK bank, sums up the initial experience of being one of the 9,000 British companies that are obliged this year to reveal for the first time the average hourly pay difference between male and female employees.
As part of efforts to eradicate the UK’s persistent gender pay gap, all companies with 250 employees or more must publish the information by early April. This will enable staff, prospective staff and everyone else to pore over what has, to date, been sensitive, well-guarded payroll data.
The bank took the plunge well ahead of the deadline, when, last July, it revealed on the government’s data portal a median gap of 24 per cent. Ms Rose was nervous initially because the figure did not paint the full, nuanced picture of the reasons behind the gap. “One of the biggest challenges we faced was communicating a complicated story,” she says. The bank published extra analysis to explain that having fewer women in senior management positions was behind the gap, rather than discrepancies around equal pay for equal work.
The exercise will give employers the chance to produce a benchmark against which to measure progress, as public awareness of gender pay grows. Around 1,500 companies so far have published their figures.
The numbers are, on the whole, not pretty. Gaps vary but around half are in double-digits. This is not unexpected, since the UK’s overall median gap stands at 18.4 per cent, according to the Office for National Statistics. Among factors that affect the gap are that women tend to be under-represented at senior levels, over-represented in lower-paid industries and disproportionately bear childcare responsibilities.
Many employers fear that possible misinterpretation of top-line figures by the public could make recruitment harder, damage their reputations and even trigger equal pay claims.
Misinterpretation is just one of the problems thrown up so far in what has been dubbed a “blunt” reporting exercise by critics. For example, big professional services firms that have a partnership model have been able to exclude highly paid partners — mostly men — from the data as they are deemed to be owners rather than employees.
Meanwhile, those with family-friendly policies, such as flexible and part-time working, complain these can make the headline gender pay gap look worse.
Some organisations are still trying to establish what falls within the scope of reporting requirements, says Crowley Woodford, head of European employment law at Ashurst, the law firm. He points to confusion over whether to include certain types of staff. “[It] depends wildly on the type of business you are. If you rely on agency staff or consultants, there is an [extra] analysis to be done there.”
Errors on the part of some companies have already emerged. Financial Times investigations revealed anomalies in the figures of some of those that have reported — such as statistically unlikely zero pay gaps — prompting several companies to adjust their data.
Gender pay gaps are coming under an increasingly harsh spotlight, as critics globally call for more rapid progress. In the US, activist shareholders Arjuna Capital succeeded in January in pressing Citigroup to disclose its gap in the hope that this will compel other Wall Street banks to do the same. Managing partner Natasha Lamb called it “a win” for investors who understand the business benefits of diversity. “There really is a profit motive here as well,” she said.
In the UK, airline EasyJet has reported a 45.5 per cent median hourly pay gap across its British staff, leading new chief executive Johan Lundgren to take a self-imposed pay cut to match the salary of his female predecessor, Carolyn McCall.
Percentage of UK companies that have reported a zero gender pay gap on the government site
Some businesses are preparing their numbers at the last minute because they are disorganised, says Mr Woodford, but others are being tactical in holding back until the deadline comes into force. “We will see . . . a rush of disclosures and part of that may be [because] of a pack mentality,” he says. “If you can report together and if it’s a bad news story, your particular bad news story will be lost in the generality.”
Legal advisers recommend employers publish a narrative alongside the figures — though this is not mandatory — to spell out the reasons behind any gap and any actions they are taking, as TSB did.
This has become “almost a full-time job” for some human resources staff, says Stephen Ravenscroft, a partner at Memery Crystal, the law firm. He predicts “an uptick of equal pay claims from employees at organisations that publish with very large gaps or with very little explanation”.
Remedies set out by employers so far include better flexible working opportunities and setting aspirational targets for women in senior management roles.
“There is no quick fix,” says Dominie Moss, founder of The Return Hub, an executive search firm in the City of London. She urges employers to rethink hiring strategies and increase support for women throughout their careers, in particular on returning from career breaks.
However, she adds, “we are at a particular moment in time now where we do feel change is coming.”