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Will it really take 45 years to close the gender pay gap?

We are in the seventh year of mandatory gender pay gap reporting. Progress is being made, but it's painfully slow. Recent analysis into the 2023/4 figures by PwC suggests that if the pace of change doesn't pick up, women will wait a further 45 years for the gap to close.

How big is the current gender pay gap?

The gender pay gap measures the difference between average (median) hourly earnings of men and women, usually shown by the percentage men earn more than women. The figures for 2023/24 reveal:

  • a slight decrease in the median hourly pay from 9.1% to 9.2% (down 0.1%); and
  • a slight decrease in the mean hourly pay from 12.2% in 2022/23 to 11.8% in 2023/24 (down 0.4%) 

Just over 58% of organisations reported a decrease in their pay gaps, but these were small - generally under 0.2%. 

The largest organisations (those with 20,000 employees or more) generally have the lowest mean hourly pay gaps, while smaller organisations display higher levels of volatility in mean pay gaps.

The bonus gap saw larger decreases with the mean bonus gap down by 2.1% from 31.7% to 29.6%, and the median bonus gap decreasing by 1.2% from 15.6% to 14.4%. 

Which sectors have the highest and lowest gender pay gaps?

The Financial Services sector continues to report the biggest gender pay gaps, but has the biggest decrease compared to the previous year. Public Administration, Health, Hospitality, and Leisure sectors report the lowest mean hourly pay gaps.

Why do organisations have pay gaps?

The gender pay gap has deep roots. It was usual for women to be paid less than men in the 60's and 70's. At that time women's work was generally considered to be less important than work performed by men and that bias was reflected in their pay packets. 

These days the size of the gender pay gap is affected by:

  • Age: there is little difference in median hourly pay for male and female full-time employees aged in their 20s and 30s, but a substantial gap emerges among full-time employees aged 40 and over. This links to parenthood – the gap between male and female hourly earnings grows gradually but steadily in the years after parents have their first child.
  • Occupation: the gap tends to be smaller for occupation groups where a larger proportion of employees are women;
  • Industry: the pay gap is largest in the financial and insurance industry, and smallest in the accommodation and food services industry;
  • Public and private sector: for full-time workers, the pay gap is slightly smaller in the public sector than the private sector. There is a negligible gender pay gap for part-time workers in the private sector, which contrasts with a large part-time pay gap in the public sector;
  • Region and nation: the full-time gender pay gap is highest in the South East and London and negative in Northern Ireland;
  • Pay: the highest earners have a larger pay gap than the lowest earners.

How do you reduce your gender pay gap?

You need to understand the particular drivers at play in your organisation and identify interventions that have led to change and where you need to focus your attention going forward. According to PwC, the level of external scrutiny and stakeholder pressure is increasing rapidly and is fuelled by the evolving reporting landscape which includes, ESG, pay transparency and fairness, and wider diversity reporting. Shareholders want to see more than the data - they are increasingly demanding to know the reasons for the gap and what the business doing to close it. 

Will a new government increase the pace of change?

Time will tell. If the Labour party form the next government, it said it will “finish the business of ending pay discrimination at work” by:

  • Requiring those businesses who have to publish their gender pay gap data to also publish and implement actions plans to close these and include outsourced workers in their reports
  • Introducing mandatory publication of ethnicity and disability pay gaps for employers with more than 250 staff
  • Requiring employers with more than 250 staff to produce menopause action plans setting out how they will support employees going through the menopause
  • Requiring public bodies to comply with the socioeconomic duty under S1 of the Equality Act 
  • Encouraging employers to sign up to the Dying to Work Charter
  • Implementing a regulatory and enforcement unit for equal pay with involvement from trade unions

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