Although there continues to be an impassioned debate around work place equality and pay, government data reveals that women still earn on average 7% less than men. It has been over fifty years since the Equal Pay Act passed and in 2022 gender parity continues to be a challenge. While the gender pay gap has been slowly narrowing over the last fifteen years, a report by the World Economic Forum suggested that ”another generation of women will have to wait for gender parity”.
The latest figures highlight that the time to achieve pay equality has increased from an estimated 99.6 years in 2020 to 135.6 years in 2021. Significant action is needed to close the gap and companies play a vital role in advancing this change.
So, what exactly causes the gender pay gap, and more importantly, what actions can companies take to reduce it?
What is the gender pay gap?
The gender pay gap measures the difference in the median hourly earnings of men and women across roles. It serves as a high-level indicator of a women’s position in the economy compared to men.
According to official ONS Data, the gender pay gap for all employees currently stands at 15.4%, meaning women earn 15.4% less than their counterparts for carrying out the same role. A further 27 of the 30 jobs recorded by ONS were found to pay men more than women for carrying out work of equal value.
Whilst it is purely based on financial figures, there are a lot of social factors involved as well.
What are the causes of the gender pay gap?
There are a whole host of reasons that can explain the gender pay gap, but Fawcett Society, the UK’s leading membership charity campaigning for gender equality, boils it down to four main areas:
- Discrimination and bias
- Divided labour market
- Unequal care responsibilities
- Men in more senior roles
Discrimination and bias
Overt discrimination and unconscious bias in hiring, promotion, and pay decisions, including bonuses, continue to be major drivers. Although the 1970 Equal Pay Act made gender pay disparity illegal, inequalities still exist. For example, the Department for Education found that “In 2021, men were more likely to receive a bonus than women and on average, the amounts awarded to males were higher.”
Divided labour market
According to Forbes, one of the issues that creates the gender pay gap is women being steered away from certain careers, from as early as childhood. Alongside this, careers that are dominated by women tend to be underpaid. And just to top it off, men in female-dominated careers tend to be paid higher than their female counterparts.
Women are also discouraged from entering male-dominated fields by a lack of role models. And even when they do enter these fields, women tend to be paid less. Figures from Statista show that higher-paying male-dominated sectors experience the largest gender pay gaps. The financial, insurance, scientific and technical industries have the widest gender pay gaps at 30%, 21.9%, and 19.9% respectively.
Unequal care responsibilities
The division of childcare responsibilities within the home can often shape job opportunities. In order to balance child-care responsibilities, women often have to find part-time positions which can limit progression and pay advances. A report by the Government Equalities Office found that “women who had never worked part-time reach career levels very similar to men.” Whilst parental leave can now be shared, there’s still stigma around taking it.
Men in more senior roles
Women remain underrepresented across the corporate ladder and are less likely to be promoted than men in the same position. According to the Government Equalities Office, only 1 in 3 leadership roles and 25% of executive committee roles are held by women. Studies show that gender diversity across senior roles can only benefit an organisation, increasing staff retention, performance and generating a better financial return for businesses.
The solution to the gender pay gap
As the causes of the gender pay gap are so varied, the possible solutions are equally varied. There’s no one-size-fits-all approach to fixing the gap; each company which currently faces a gender pay gap will need to take different steps in order to close it.
We’ve detailed below some objective steps that can help reduce the gender pay gap.
Be transparent about promotion, pay and rewards
A benefit of this is employee value and appreciation. “A lack of equal pay measures can create an unmotivated workforce, a negative bias towards management, and overall lead to an unhealthy and lackluster workforce” (HR Search and Rescue). Things to be avoided at all costs.