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Gender pay gap figures skewed by furlough

Yesterday (5 October) was the deadline for UK businesses to submit 2021's gender pay gap reporting, however furlough is expected to have skewed this year's figures.

Speaking to HR magazine Charlotte Woodworth, gender equality director at Business in the Community, said this year is the first time we will get an idea of how the pandemic has impacted gender equality.  

However, she added: “Frustratingly, today’s data won’t give us the full picture as the government has instructed employers to exclude furloughed employees from most of the calculations, meaning this is an incomplete and potentially skewed picture, especially since more women than men were furloughed.”

HMRC data from November 2020 showed that women were the majority (52.1%) of workers put on furlough across the UK between March and August 2020, equating to approximately 133,000 more women than men.

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Louise Mason, senior lawyer in the employment and incentives practice at Linklaters, warned that the disproportionate effect furlough has had on women, and how it impacted those on low pay, risks translating into an artificial increase in the average hourly rate of pay for women at some employers.

“To correct this misleading picture, employers should consider whether to prepare and publish a set of shadow statistics which could sit alongside the statutory report,” Mason told HR magazine. 

“The shadow statistics should include data for staff who had been furloughed at below their normal rate of pay to give a truer picture of the employer’s gender pay gap. 

"This data could be published using a snapshot date from the previous pay period (i.e. March 2020) or by including pay data from furloughed staff at their normal rate.”

In partnership with the Fawcett Society, the Global Institute for Women’s Leadership at King’s College analysed global gender pay gap reporting systems this year.

Though the UK ranked highlight for transparency, respondents to the report said the country needs more measures to make companies take action based on their gaps.

This year many critics are similarly calling on government to tighten mandates on companies.

Woodworth said: “The government must provide leadership by tightening the reporting regulations so that employers are required to develop clear gender pay gap action plans. Simply tracking the problem isn’t working.”

As of 5pm yesterday, 9,328 companies had reported their gender pay gap for the year 2020 - 2021, up from 6,844 when reporting was made optional in 2020 due to the pandemic.

Compared the pre-pandemic levels, another 1,499 companies would have to report to match the number who reported in 2019 (10,827).

Mason added: “The continued effectiveness of the gender pay reporting regime depends upon accurate reporting and the ability to compare datasets year on year. Best practice would be for employers to ensure that they produce a report each year using the same methodology. 

“Where the terms of the statutory regime give rise to a skewed or unrepresentative report, employers should produce a parallel report, factoring in corrective measures, to remove misrepresentation.”