As the clock struck midnight on 4 April 2019 the deadline for the second year of gender pay gap reporting closed, with 10,428 employers publishing the difference between the pay of men and women in their organisations as it stood on the snapshot date of 5 April 2018.
Year one of the regulation last year (which applies to employers with 250 or more employees, including public sector organisations who reported by 30 March) revealed some huge pay gaps, with many firms criticised for their approach to the process itself. Around 1,000 waited until the final hours to publish and 1,500 missed the deadline altogether. Then there was the matter of dodgy data, with some mathematically-impossible numbers reported – including, at one company, a baffling 320% gap.
So have these teething issues been ironed out, and gender pay gaps narrowed? Have lessons been learned the second time around?
Looking at this year’s figures it seems not. Around a quarter of firms left it to the final 36 hours to publish and an estimated 500 failed to report on time.
As the results filtered through talk turned to lack of progress. Nearly four-fifths (78%) of companies had a pay gap in favour of men, an exact repeat of the 2017 figure reported last year. At almost half (45%) of organisations the gender pay gap actually widened further in favour of men. One example was easyJet where, after recording one of the biggest 2017 gaps at 45.5%, the figure increased to 47.9%.
This year’s lack of progress is “disappointing” but “not surprising”, says Sam Smethers, chief executive of The Fawcett Society. “I think we’d have seen a more positive picture and been ahead of where we are if we’d placed emphasis on taking action to close the gap,” she says. “Organisations are still stuck in learning how to report and not really moving on to learning what to do about it.”
But, according to co-founder of Everywoman Karen Gill, a more significant shift wasn’t expected at this stage: “Progress is going to be slow. We need to strive for change over the long term and stop the year-on-year expectation that we’re going to resolve hundreds of years of entrenched policy, infrastructure and women not being on an equal footing overnight, as we won’t.”
Some even feel that wider gaps this year are a positive sign. “If it’s gone up slightly rather than down that’s a good thing as it shows firms are investing in the future, by getting more people in at the bottom to then push through,” explains Hannah Mahon, partner at GQ|Littler.
She points to easyJet: “Not enough female pilots were joining so easyJet recruited a huge number last year, which has caused the gap to widen before they rise up the ranks.”
So does this cast doubt on the success stories that have emerged this year? For example Mitie, whose gap shrank from 31.4% in 2017 to 5% in 2018, and Newsquest – from 7% in favour of men to 82% in favour of women.
Independent statistician Nigel Marriott is certainly suspicious of such dramatic change in such a short amount of time. “We can compare the two years, meaning it’s easier to spot mistakes in the data. In some cases the change is so large it’s completely improbable – companies have either got the data wrong last year or this year.”
Marriott estimates that between 5% and 15% of this year’s data is incorrect. “Most HR people haven’t had calculation training so if the government wants HR to be statisticians they should offer training opportunities,” he says, warning that if data continues to be incorrect it will be impossible to monitor progress over time: “It totally discredits the whole enterprise if people can’t trust the figures.”
EHRC CEO Rebecca Hilsenrath reassures that the organisation took enforcement action against 100 employers that submitted “dodgy data” for 2017 and will do the same again for 2018 data. More long term though, organisations need to move on from data transparency to taking action to narrow the gap if there is to be greater progress over the coming years, advises Hilsenrath.
Much focus has been placed on the need for companies to publish action plans. “Anyone can report something, but it doesn’t mean they’re doing anything,” says Gill. “Data is just one dimension so it’s important we don’t get hung up on it but use it to uncover the issues in each business. Peel back the onion and look at all the multi-faceted layers of the gender pay gap.”
The problems in organisations vary, comments Mahon, so HR can’t take a “blanket approach” to action plans. GQ|Littler’s review of action plans from law and accountancy firms this reporting season uncovered a range of efforts, including gender-balanced shortlists, sponsorship programmes and overhauling parental leave policies.
“Basically, action plans should fall into two buckets – the organisation can’t get enough women to join so needs to devise incentives to attract them, or the organisation can’t retain women so needs to look at things like encouraging return to work after having children,” says Mahon.
Despite her initial scepticism that the reporting would become a “box-ticking exercise”, Clyde & Co’s HR director Pauline Caldwell says it is helping drive diversity initiatives. “It has provided us with a chance to do two things,” she says. “One, really dig down and interrogate the data to understand what’s causing the gap, and two, consciously step back each year and review and assess what we’re doing to address these issues across the firm.”
Unfortunately proactive employers are currently in the minority. EHRC research found that just one in five employers published an action plan alongside their 2017 report. And HR magazine uncovered serious caginess among those who reduced their gaps this year when asked to share their positive stories for this piece – backing up concerns that action plans and clear narratives are once again in short supply.
The EHRC and The Fawcett Society have both called for action plans to be made mandatory by government. Currently the regulation – and as such the EHRC’s only enforcement action – is around failure to report. And with no fines issued yet for this some believe stricter sanctions are necessary for companies not taking the matter seriously.
Smethers says: “There should be a tougher mechanism so you have a way of quality-controlling what companies are doing. Then it’s more about the action they’re taking and less about the numbers.”
She believes a selective enforcement method by the EHRC could be feasible and would act as a “lever” to get organisations to take action.
In the absence of any regulatory change Hilsenrath encourages employers to voluntarily comply: “The more organisations publish action plans and show that they work [the more] it will become the norm and others will follow suit.”
But, even then, will this be enough to drive real change? Mahon believes the problem is more “deeply entrenched in society”.
“It’s not as simple as saying you need to report your action plan and put policies in place as that doesn’t change the fact that women have children, are still the main carers, and men tend to be the higher household earners,” she says.
“Society itself needs to change how it views women’s role and companies alone can’t do that. It’s a vicious cycle and until we change that it’ll be very difficult to wipe out the gender pay gap.”
This piece appeared in the May 2019 issue. Subscribe today to have all our latest articles delivered right to your desk