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Closing gender pay gaps will not be a quick fix, experts warn

16 Apr 2018 By Emily Burt

Analysis finds construction and finance industries have the largest gaps – but differences within sectors are harder to explain

Construction and finance are the sectors with the largest median hourly pay gaps in favour of men, a new analysis of gender pay reporting has revealed.

Out of more than 10,000 public and private sector companies with at least 250 employees that published their anticipated wage data in time for the 4 April deadline, 78 per cent had a wage gap in favour of men, with only 14 per cent with a gap in favour of women.

The construction and finance sectors reported the largest pay gaps of all UK sectors, figures from Staffmetrix suggested, with median gender pay gaps of 22.1 per cent. Only 44 of the 743 firms that reported across the two sectors had a pay gap in favour of women, with financial services also reporting the largest median bonus pay gap of 35 per cent. 

By contrast, sectors with the smallest pay gaps included accommodation and food, at 1 per cent, human health and social work (1.6 per cent), and arts and entertainment, which had a median average pay gap of 3.7 per cent. 

Duncan Brown, head of HR consultancy at the Institute for Employment Studies, told People Management that the key challenge for organisations with significant pay gaps would be to proactively communicate about their causes, and how they would work to improve them. 

“We know there are elements of pay gaps by sector that come down to structure and composition of workforces, but while banks are going to have bigger gaps, for example, it doesn’t explain why some banks have twice the gaps of others,” he said. 

“There’s a communication challenge for organisations in explaining what these gaps are, why they exist and what action they will take, and it’s important for organisations to consider what they will say to their own staff, instead of just thinking externally.” 

Charles Cotton, the CIPD’s head of pay and reward, told People Management that sectors such as finance and construction have traditionally seen a lack of gender pay balance, and should be proactively seeking to attract more women. 

“This can mean challenging preconceptions about the nature of the work, and addressing historical issues with these industries being less welcoming to women and people from minority backgrounds,” he said. 

“For these industries, implementing changes such as increasing flexible working, addressing issues over team bias, and encouraging inclusive and encouraging practices are quite minor individually, but could be significant broadly.” 

Despite having a high concentration of female employees, the education sector reported a median pay gap of 19.5 per cent, with schools and academy trusts making up 40 of the 100 organisations with the largest pay gaps, according to analysis from the BBC. 

The Universities and Colleges Employers Association (UCEA) said it had been working with trade union bodies since 2015 to try and address issues with gender gaps in the industry, releasing regular gender pay toolkits and driving an ongoing dialogue around pay issues. 

A spokesperson told People Management: “All higher education institutions have been supportive of the UCEA’s past and ongoing joint work with the sector trade unions to develop a better understanding of practice and trends relating to gender pay gap issues, to explain the differences between equal pay auditing and gender pay gap action planning and to explore effective interventions. 

“There is of course more work to be done to continue addressing the multiple causes and find solutions to ensure that women can progress their careers and move into senior levels in their workplaces.”

One company praised by government ministers for taking action over its gender pay was SSE plc – formerly Scottish and Southern Energy plc – which has an individual gender gap of 19.3 per cent, and forms part of the electricity, gas, steam and air conditioning supply sector, which has an overall median gender pay gap of 16.2 per cent. 

SSE first published its pay data in 2016, and has rolled out multiple initiatives to tackle its gender pay gap since, including promoting flexible working, changing recruitment processes to include gender-neutral job posts, and promoting senior women in company adverts and reports and on its website. 

“Genuine transformation for SSE, and across the UK’s labour market, will require meaningful societal changes as well as improvements at organisational level,” John Stewart, SSE’s director of human resources, told People Management. “SSE is committed to being a leader for driving change in both of these areas.”

But experts warned that in the aftermath of gender pay reporting, organisations must seek to address their gaps or risk losing out on key talent. Cotton added that for many organisations the issues reflected wider problems with working culture, which are harder to tackle. 

“Many organisations are recognising the importance of the gender pay issue and putting plans into action, but it’s early days – and the danger is that these good intentions get bogged down by implementation and line manager attitude,” he said. 

“Making these changes must be seen as both an organisational change and a business need, rather than an add-on; it should extend to changing careers advice in schools, to be more inclusive of different sectors, implementing changes to childcare supported by the government, and addressing broader cultural attitudes around men and women in the workplace.” 

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