Gender pay reporting starts in the UK from 6th April 2017 for firms employing over 250 individuals. According to a recent survey reported by the Chartered Institute of Personnel & Development (CIPD) at least one fifth of UK businesses admitted they are not prepared for the new legislation.
Confidence is low amongst business leaders as to whether the reporting requirement will make any substantial difference to the gender pay gap, with only 20% believing it will close the gap. The gender pay gap in the West Midlands is higher than the national average at 26%.
The benefits to the UK economy of closing the pay gap are quite clear and substantial. Global consultants, McKinsey estimates that closing the gender gap will provide an extra £150bn for the UK economy on top of GDP-forecasts in 2025. Without taking any action, PwC warn that it is likely to take until at least 2041 to close the gap at current rates of progress.
The thinking behind the reporting requirements (employers are obliged to publish specific data on a government website and also publish this information publicly, such as on their own website) is that it will force employers into taking action to improve their pay gap for fear of reputational damage. A PR disaster can be averted by carefully creating action plans to close the pay gap, holding leaders accountable for delivering on them and reporting annually to show improvements.
There are two components in being prepared for gender pay reporting:
- Having the numbers ready to report – there are 6 precise calculations to be made from your existing payroll/HR information
- Offering a commentary on the reported numbers based on what your business is planning to do to close your gender pay gap. Whilst this information needs to be posted publicly, it would be advisable to communicate this internally within your organisation too.
Fixing the pay gap is not so simple and straightforward – it raises many complexities. Getting behind the reported figures to understand and target specific measures to close the gap is key. Understanding the dynamics of the supply and demand for labour in your industry and the gender differentials is important. Closing the gap will involve a range of actions – some may include quick-fix, low cost changes to how things are done currently (e.g. shifting to more gender neutral recruitment practices) as well as addressing deeper, more ingrained organisational culture over the longer term.
If you are feeling a sense of relief because you lead a business employing less than 250 people, and therefore avoid these new reporting requirements, think again!
Gender balanced businesses (regardless of size) outperform those that aren’t. Having a gender split of at least 70/30 at all levels and across all functions is widely-understood to be the tipping point for gaining the benefits of gender balance.
With the larger employers increasing their focus on closing the pay gap, invariably improving their attraction, retention and development of talented women, make sure you don’t get left behind – take action now to make sure you are also gaining the business benefits of improved gender balance.
Supply of Women
It can be argued that there has never been a better time for women to flourish in their careers. The CIPD also reported research that attributes blame for the pay gap on women themselves, citing personal decisions to take a career break, work part-time, failure to push for salary increases or lack of ambition for senior roles. Instead of blaming women for the choices they make, we need to look at the structural barriers in our labour market that see far too many women working below their potential and address these barriers. For example, part-time work shouldn’t just be consigned to low-level, low-paid jobs.
If gender pay reporting fails to generate the necessary changes to close the pay gap, tougher regulations will be enforced. The national and local economy needs a higher level of economically active and engaged women to compete on the world stage.
Career-Mums Partnership supports employers to attract, retain and develop more women. We are the gender diversity specialists in the West Midlands and, between the two partners, have over 40 years of hands-on resourcing, development and HR experience. We understand the complexities of creating a gender balanced organisation and can help you create cost-effective action plans to make a difference. Contact Sally Dhillon on 0773 6066262 to request a free Gender-Balance audit of your organisation.