How to reverse the broadening of gender pay gaps caused by the pandemic and narrow them further
According to the Office for National Statistics’ own data, the Gender Pay Gap (GPG) stood at 27.5% in 1997 and much has been done to redress the imbalance. In 2016 the ONS figure had fallen to 18.1%. A year later it was down to 17.4% and in 2000 – going into the pandemic – it stood at 14.9%. In 2021 the figure had risen slightly to 15.4%. Why?
The Furlough scheme provided a solution to a national crisis but largely accounts for the slight GPG increase. In 2020, more men than women were furloughed and experienced reduced pay, and the gender pay gap shrank that year by the largest amount recorded. In 2021 we saw the reverse: although fewer workers were furloughed, more of them were women and so the gap expanded again. In theory, we should see it correct itself organically by furlough finishing, although that will only become clear when the ONS 2022 gender pay gap report is published.
To understand how to reverse the trend further, we need to take in the broader picture and all the nuance it presents. Firstly, in general, women fill more part-time jobs, which have lower hourly median pay than full-time jobs. Secondly, in terms of education, women are still less likely to study subjects that traditionally lead to higher-paid jobs in science and tech, engineering or maths. This has also led to a normalisation of women being concentrated towards lower paid or more junior roles, for example secretarial (92% women) and childcare assistants (94%) as opposed to the proportion of architects (20%) or engineers (7%).
Age is also a telling factor: since 2017, in those under the 40s, the GPG for full-time employees has sat at just 3%, while for those over 40 it is around 12%. ONS studies have also flagged a lower incidence of women moving into higher-paid managerial occupations after the age of 39 years, at which point pay in these roles increases.
For businesses to collectively narrow the gap further into 2023 and 2024, leadership groups can consider three key pillars:
Robust reporting and analysis
Only by adequately analysing the figures can businesses understand the data, take the measures they need to stay open and transparent and act on any trends affecting equality. A GPG Report is beneficial - and a legal requirement for companies with over 250 staff – but the numbers only go so far.
Innecto’s additional Gender Pay Gap Reporting outlined in our Gender Pay Brochure goes deeper and provides context and narrative to enable companies to understand more clearly their distribution of women and men: the roles they hold; their relative opportunities for progression; any limitations that may exist for either gender and the reasons for those. Often, only by digging deeper through proper qualitative analysis can companies start making the right kind of changes.
Open up new progression opportunities
Gaps in gender pay are generally caused by the underrepresentation of women in highly paid or senior roles. Armed with the right data and analysis, businesses and bosses need to look at new strategies to recruit, retain and promote more women, creating new pathways and removing barriers.
In the recruitment process, these might include looking beyond normal advertising channels, using gender-neutral language in adverts, including multiple women in shortlists and having gender-balanced selection panels. Looking more broadly at company culture, strategies might involve mentoring and networking, a greater emphasis on diversity training and the setting of transparent targets for GPGs.
Tackle the Parenthood Penalty
Statistically, women take more time out from work to have children and then bear the brunt of childcare responsibilities. With a lack of quality flexible working opportunities at the senior level, childcare remains a big hurdle.
Research on the ‘parenthood penalty’ shows that by their early 40s women who have children before their early 30s will earn less than childless women. However, those who have children after their early 30s will be earning more than childless women. This suggests that women who prioritise their career before having children do better in the long run. Those women who have children early are more likely to leave the labour market entirely, often due to the cost of childcare, and if they do return are twice as likely to experience discrimination.
Some more enlightened employers are actively looking to enable change here by providing better paternity leave benefits for men, encouraging them to shoulder more of the childcare duties. Ironically, by improving men’s benefits they can help women in the long run by neutralising the parenthood penalty.
Although the short-term impact of the pandemic has been to increase gender pay gaps, in the longer term the pandemic could lead to better options for women. Mass home working proved that many roles can be performed with flexibility. Moving forward, employers should see benefits in attracting untapped female talent with clever hybrid working models.