Employers struggling to close pay gaps despite reporting support, poll finds

Experts encourage firms to ‘look beyond’ data and focus on how culture and processes are hindering inclusion

Employers are finding it difficult to close both their ethnicity and gender pay gaps, despite firms overwhelmingly supporting efforts to improve equality.

A report from Mercer, which polled 130 UK employers, found that three-quarters (75 per cent) disagreed with the government’s decision to pause gender pay gap reporting in 2020 because of the coronavirus pandemic, while a similar proportion (74 per cent) said they continued their commitment to inclusion despite the suspension.

However, despite this support, almost half (49 per cent) of respondents said they saw little or no year-on-year progress when it came to reducing their gender pay gap between 2019 and 2020.

Just 1 per cent said they were able to reduce their gender pay gap over this period by more than 10 per cent, while fewer than a third (30 per cent) of respondents reduced their gender pay gap by more than 2 per cent.

In comparison, almost two in five (18 per cent) respondents reported an increase in their gender pay gap over this period.

Michelle Sequeira, diversity, equity and inclusion consulting leader at Mercer UK, said the research showed employers were struggling to close their pay gaps.

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“Key drivers of pay gaps range from issues with attracting and retaining women to failing to eliminate the barriers to career progression that prevent female and diverse employees from entering more senior roles,” she said.

But, said Sequeira: “There are employers who have also shown a willingness to change and they are encouraged to conduct deeper analysis to get to the root of the problem and put action plans in place.”

The same research found nearly two-thirds (65 per cent) of employers supported the introduction of legislation on ethnicity pay gap reporting.

Nearly half (45 per cent) of respondents said they already felt under pressure to conduct ethnicity pay gap reporting, while three-quarters (75 per cent) said they were already collecting data or were planning to do so.

A majority of employers (57 per cent) are carrying out ‘dry run’ analyses of their ethnicity pay gaps, and 31 per cent are already publishing or planning to publish their ethnicity pay gaps.

However, Sequeira said employers needed to “look beyond their pay gaps” in addition to collecting and analysing data. She encouraged employers to “widen the pools from which they recruit” and to take steps to reduce unconscious bias in their processes.

“It is futile to hire and train up diverse colleagues if they join a non-inclusive culture or are repeatedly overlooked for promotion,” said Sequeira. “Understanding your current state and engaging and upskilling senior leaders is so key to helping them realise where they are going wrong.”