Issue Briefing - Gender Pay Gap Reporting

Sectors & Issues
April 11 2018 - ,

The 4th April 2018 saw the deadline for companies with over 250 employees based in England, Scotland or Wales to publish their gender pay gap reports. The gender pay gap reporting legislation requires that companies report their mean and median pay and bonus gaps, as well as the proportion of men and women who receive a bonus and the percentage of men and women in each pay quartile. The legislation covers both private-sector companies and public-sector organisations.

Key Findings

At the time of writing, over 10,000 organisations had published their gender pay gap figures. 78% of these organisations have revealed an average pay gap in favour of men. A further 8% reported no gender pay gap, and 14% reported a pay gap in favour of women. The median pay gap among all companies was 9.7% in favour of men. Around 1,500 companies missed the deadline and, as of 5th April 2018, were yet to report their figures.

What the data do and don't tell us

The gender pay gap reporting reveals the mean and median differences in earnings between all full-time male and female employees within an organisation. Since the data are not broken down according to roles within an organisation, the reporting does not show whether women are being paid less than men for the same work (covered by Equal Pay legislation). Nor does a significant pay gap necessarily stem from discrimination: one of the highest reported pay gaps was from the lingerie group Boux Avenue, where women account for 91% of the upper pay quartile. The company’s pay gap is explained by the fact that women account for 100% of staff in the other three quartiles, meaning that men receive higher earnings on average. Several companies also initially submitted inaccurate data, which were later revised.

Despite these issues the reports have generated some important findings:

  • A gender pay gap in favour of men exists in every job sector - the highest pay gaps were found in the construction, finance and insurance, and education sectors. The lowest gaps were found in arts and entertainment, health, and accommodation and food.
  • Most companies have more men in the highest paid positions - this leads us to question why women are generally under-represented in more senior roles, even in sectors where they account for the majority of the workforce.
  • Most bonus gaps are skewed towards men - again, this indicates that women are under-represented in the most highly-rewarded positions.

What next?

We have been analysing companies' gender pay gap reports as part of our work on the Sustainable Development Goals. So far, we have found significant variations in companies' contributions to Goal 5 - Gender Equality, of which the gender pay gap is clearly a part. At this early stage of reporting, we are examining companies' intended actions to address the gender pay gap. Of those most committed to closing their pay gaps and increasing female representation, we have noted the following actions:

  • Strong policy commitments - while many companies commit to gender equality as part of their wider equality and diversity policies, some have gone further in creating detailed policies to combat inequality issues. Intu Properties, for example, has an anti-harassment policy covering sexual and gender-based harassment, as well as a paternity policy highlighting father's rights to shared parental leave. Since the gender pay gap increases significantly for women who have children (from 10% to 33%, according to a recent Acas conference), we recognise efforts to support families in sharing childcare responsibilities as a positive indicator.
  • Clear targets - the best gender pay gap reports establish clear, time bound targets to increase female representation in senior positions. They also detail the measures in place to achieve this; for example, SSE has implemented a drive to recruit female graduates, and has established new flexible working policies.
  • Partnerships - several companies are working in partnerships to improve gender equality in their respective fields. Compass Group, for example, has launched the 'Women in Food' initiative to encourage female chefs into the industry. More broadly, The Royal Mail is a founding member of the EHRC 'Working Forward' programme, which aims to end discrimination surrounding pregnancy and maternity leave.
  • Signing relevant pledges - some companies, like Investec and Marks and Spencer, have joined the '30% Club', committing to achieving 30% female board representation. Companies in the finance sector can also sign the Women in Finance Charter, making a commitment to setting quantitative targets for female representation in senior management. Although non-UK companies are only required to report if they have more than 250 UK-based employees, there are indicators of good practice in other jurisdictions. For example, companies in the US can sign the White House Equal Pay Pledge, making a commitment to monitoring their gender pay data and to taking action to close the pay gap.

In Conclusion

Aside from the findings noted above, it is difficult to make many firm judgements based on this first dataset. Better understanding of the average figures, and what they mean in practice for different companies and sectors is still needed to assess the causes of, and best solutions to, the gender pay gap. However, we believe that the reporting process is ultimately useful, and has already highlighted a lack of female representation in the top-level positions. In future, the best performers and sector leaders will be distinguished by their ongoing efforts to increase this representation and reduce pay gaps. These efforts will be highlighted in the longer-term trends, and we look forward to the publication of future year's figures.

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