Since April 2017, UK employers with 250 employees or more have been required to publish their gender pay gap data annually. With the publication of the second set of data, analysis by the BBC has found that fewer than half the UK’s biggest employers have succeeded in narrowing their gender pay gap.
Across 45% of firms, the discrepancy in pay increased in favor of men, while at a further 7% there was no change. Of those that published data, 78% of companies had a pay gap in favor of men, 14% favored women and the rest reported no difference.
Overall, the median pay gap in favor of men lowered slightly to 9.6% this year from 9.7% last year. This suggests that UK businesses have a long way to go to equalize pay between men and women. However, this figure is considerably lower than the 20.8% unadjusted gender pay gap estimated by Eurostat for enterprises employing 10 or more employees in 2017.
According to Eurostat, the UK has the fourth-highest gender pay gap compared with other EU countries based on the 2014 data of the Structure of Earnings Survey. Across EU countries in 2017, women’s gross hourly earnings were on average 16.0% below those of men in the European Union (EU-28) and 16.1% in the euro area (EA-19). Across EU member states, the gender pay gap varied by 22 percentage points, ranging from 3.5% in Romania to 25.6% in Estonia.
Mandatory gender pay gap reporting is now law in at least 11 European countries, including Austria, Belgium, Denmark, Finland and Sweden. In 2017 both the UK and Germany introduced obligations on large companies to audit pay. France introduced legislation last year requiring employers of at least 50 employees to publish information on their gender pay gaps. And Ireland has published draft legislation similar to the UK, but it will apply to more employers and the sanctions will be tougher with potential fines of €5,000.
But are any of these initiatives working?
UK and Germany. Both the UK and Germany have sanctions for having a gender pay gap, but they have not yet been fully enforced. In the UK, it is the impact of bad publicity that is forcing companies to take steps to improve their gender pay gap, as the companies must publish an annual report on their websites and providing information to a government register.
France. In France, there is a detailed methodology for calculating the gender pay gap and the annual score must be published on the company’s website. A financial penalty may be applied if a certain score is not reached in three consecutive years. In parallel, the employer must provide a detailed breakdown and explanation of the results to its works council, as well as the labor authorities. This may lead to some difficult conversations with workers during collective bargaining negotiations.
Portugal. Portugal is also introducing a requirement on employers to submit an annual assessment of the salaries of their male and female employees to a government agency. If wage inequalities are detected, the employer will need to justify those salary differences or implement an action plan for eliminating any unjustified gaps during the coming year. Gender pay differences that are not corrected or justified will be presumed to be discriminatory and companies will face penalties for non-compliance.
Closing the Gap
The UK’s Government Equalities Office has recently published two sets of guidance to help employers understand, address, and close their gender pay gap:
- “Eight Ways to Understand Your Gender Pay Gap,” which aims to help employers understand the root causes of pay discrepancies between male and female staff in their organisations (from recruitment to termination); and
- “Four Steps to Developing a Gender Pay Gap Action Plan,” which is based on feedback from employers with effective action plans in place, and specific steps for developing a gender pay gap action plan.
As the most recently published data shows, there is still a long way to go, but there are tangible efforts across Europe that indicate pay discrepancies will no longer be acceptable without a very good explanation.