The United Kingdom has mandated that all companies with 250 employees or more must publicly disclose their gender pay gaps by April 2018. More than 9,000 companies, which together employ some 15 million people, will have to measure and report how they pay their male and female employees. Some companies have disclosed figures early: Virgin Money has reported a 36% pay gap between its male and female workers, with men holding 67% of the best-paid jobs.
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Results & Impact
About 9,000 employers with 15 million employees will have to report on the pay gap between their male and female employees by April 2018. The government aims to close the country's persistent pay gap by forcing companies to be more transparent about salaries and bonuses.
UK Government Equalities Office, 9,000 businesses
The Government Equalities Office legislation will affect private, public and non-profit employers in England, Scotland and Wales. Every UK business with 250 employees or more must publish their median gender pay gap, mean gender gap, the proportion of men and women in each quartile of the pay structure and the difference between bonuses paid to men and women. Employers are required to disclose pay gaps both on their client-facing website and the government’s own reporting service.
Cost & Value
Will begin in April 2018
Critics of the policy have argued that the private sector should not be held accountable for correcting gender discrimination in the workplace, arguing instead that the public sector should address the problem through better education and affordable healthcare. Others have said the law does not take pay gap reporting far enough, and suggested the government compile more granular data on age, ethnicity and disability status, to account for even wider pay gaps among minority and disabled women. A recent survey suggested that UK employers are not prepared for the legislation, as 82% of 142 companies surveyed do not currently review equal pay and gender equality policies.
In a world first, Iceland introduced a bill that would require public and private businesses to prove they pay men and women equally. If the legislation passes, all companies with 25 employees or more will have to undertake certification of their equal pay programs. Austria, Finland, Sweden, Germany and France all have various pay gap reporting laws.
The United Kingdom will require all companies with 250 employees or more to publicly reveal the pay disparity between their male and female employees, in an effort to close the country’s stubborn 9.4% wage gap.
The 9.4% figure represents the disparity in average pay between male and female full-time employees in 2016, and has changed little in five years, when the pay gap stood at 10.5%. The pay difference between full- and part-time workers was 18.1% in 2016.
The UK is one of the first countries in the world to mandate pay gap reporting for employers. The law, introduced by the Government Equalities Office in April 2017, extends to private, public and non-profit employers in England, Scotland and Wales. It will affect about 9,000 businesses, which altogether employ some 15 million people. The aim of the legislation is to help employers isolate the barriers that prevent women from advancing in the workplace. The hope is that by compelling the private sector to be transparent about salaries, companies will take action to correct imbalances.
As businesses only have to report by April 2018, few companies have yet to publish pay gap statistics. One that has taken the initiative is Virgin Money, which reported a 36% pay disparity between its male and female workers. The financial services firm admitted it has too few women in senior roles (men hold 67% of the best-paid jobs), and too few men in customer service. In its annual report, Virgin Money said it will aim to make customer-facing jobs “more attractive to men.” The company acknowledged that it would not have come to that realisation without being required to compile and report pay gap data.
Several other companies have reported early, including asset managers Schroders plc. (with a 31% gap), energy company SSE plc. (23.4%) and professional services multinational PricewaterhouseCoopers (15%).
Employers are required to report both on their client-facing website and the government’s own reporting service. Businesses must publish the following: the median gender pay gap (using the wage of the middle earners); mean gender gap figures (which takes the company’s full earnings distribution into account); the proportion of men and women in each quartile of the pay structure (the makeup of men and women at various salary levels); and the gender gap for bonuses. The latter measure targets the financial services sector, where the average pay gap is about 34% for full- and part-time workers.
According to the government, eliminating the gender gap could add $192 billion to the UK economy by 2025. Legal experts have said that a law mandating salary reporting will do more to reduce the gap than the last four decades of gender equality legislation, and McKinsey reports that diverse companies are 15% more likely to have better financial results than their competitors.
However the legislation – which was delayed two years after the previous government failed to push it through in 2016 – has seen its share of criticism.
The Confederation of British Industry opposes the new regulations on the grounds that the private sector “cannot be held accountable” for the many causes of the pay gap and therefore should not be compelled to be part of the solution. It encouraged the government to provide affordable childcare and better education for women in place of the measure.
Others argue the legislation does not go far enough. Women’s rights non-profit the Fawcett Society said the figures could be easily manipulated, as they do not include critical differentiations, such as full- or part-time work, sector or geographic location. The Fawcett Society suggests the figures should be more granular; broken down by age, ethnicity and disability status in addition to gender. For example, the non-profit found that black women working full-time earn just 80.4% as much as their white male counterparts. The pay gap between disabled and non-disabled women, meanwhile, is 22%. Taking these factors into account, the current method of pay gap reporting may leave questions unanswered.
A survey of 145 employers by employment agency Totaljobs found that British companies may not yet be ready for pay gap reporting legislation. Totaljobs found that 82% of British companies are still not reviewing their equal pay and gender equality policies, and 58% do not keep complete salary information across roles and gender. More than a third were failing to review salaries at all.
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