Last year, the UK’s public sector gender pay gap was 15.5 per cent versus the private sector of 9 per cent. In anticipation of the Office for National Statistics’ full breakdown of the 2021/22 gender pay gap figures, a first glance at the data suggests little hope for improvement. For example, Bolton NHS Foundation Trust’s gap actually increased from 12.9 per cent to 14.8 per cent, as did Carlisle City Council from 9.2 per cent to 11.7 per cent. A slight closure was seen for Birmingham Women’s and Children’s NHS Foundation Trust from 17 per cent to 16.3 per cent. Women make up around two-thirds of public sector employment. So, why are men being paid so much more by organisations predominantly filled by female employees?
Factors affecting the gap
In the UK, companies with more than 250 employees must annually publish their gender pay gap, which is the difference between the average earnings of men compared to women.
The main reason for the gap is that more women than men are taking lower-paying public sector roles and do not appear to be progressing into higher-paid roles. This is perhaps due to stereotyping and bias in task assignments, but there could be several factors at play. Statistics have shown that female healthcare workers were concentrated in lower-paid roles such as nurses, whereas men heavily outnumber women in senior roles such as physicians. With senior positions seemingly being targeted at men across the public sector, there are fewer women in the pipeline for promotion to senior level.
Another factor is that many public organisations appear to see gender pay gap reporting as a tick-box exercise, sometimes simply providing a link to out-of-date data rather than actual figures.
What should public organisations be doing to close the gap?
Public organisations need to increase female participation at the highest levels and not just from an ESG perspective. A report by McKinsey & Company found that for every 10 per cent increase in gender diversity on the senior executive teams in their dataset, earnings before interest and taxes (Ebit) rose by a glaring 3.5 per cent.
The bare minimum is ensuring that pay is numerically equal, but organisations should be taking the time to understand how their operations affect the potential for women to progress to the most senior levels. They should be putting in place appropriate retention and development programmes for female workers. Any such initiative will only work if there is focused recruitment and positive action targeting female talent at the top.
There are many initiatives put in place by private sector organisations to combat the pay gap, including ‘Close Your Pay Gap’, a tool designed for organisations and companies that are reporting their gender pay gaps and to make the process more seamless and efficient, giving organisations tailored advice, and Women in STEM Week, attracting women to stereotypically male fields. Public organisations need to champion similar initiatives where they are not doing so already.
Public organisations are facing a number of challenges following the pandemic – simply recruiting anyone with the required skills (regardless of gender) being one of the biggest. It is easy to understand why closing gender pay gaps may not be top of the agenda. Nevertheless, it remains an important issue.
Hopefully the added pressure on public organisations will help close the gap and improve employee engagement, productivity and give access to a wider, and previously overlooked talent pool.
Alex Christen is an employment lawyer at Capital Law