More than half of gender pay gaps will worsen this year, data suggests

21 Mar 2019 By Emily Burt

Organisations 'not ready' to explain changes in figures and must use narratives to engage employees, experts say

Businesses are unprepared for potentially ‘radical’ year-on-year changes to their gender pay gaps, experts have predicted – with warnings they are not using accompanying narratives to contextualise their data.

Analysis by CIPD labour market economist Jon Boys suggests 52 per cent of firms who have filed second round figures so far have seen their pay gap increase in favour of men, compared with 40 per cent who have seen an increase in favour of women and 8 per cent who have seen no change.

So far, experts added, businesses are failing to take the opportunity to explain the changes, despite the suggestion that narratives impact the way employees and customers perceive the data.

As of this morning, with two weeks to go until the gender pay reporting deadlines of 30 March for public sector organisations and 4 April for the private sector, 2,885 organisations had filed data. 

An analysis of 1,146 private sector companies from the BBC last month highlighted firms including car repair chain Kwik Fit, which saw its median pay gap jump from 15.2 per cent in favour of women in 2017 to 14 per cent in favour of men in the latest round. 

Energy firm Npower’s gap moved from 13 to 18 per cent, while cereal manufacturer Weetabix also saw its gender pay gap almost double in the course of a year, from 4.9 per cent in 2017 to 8.7 per cent in 2018. 

“Some of our clients have been really surprised by the quite radical changes year-on-year when you compare 2017 with 2018,” Michelle Sequeira, UK diversity, inclusion and analytics lead at Mercer, told People Management

However, she stressed the importance of recognising minor changes within organisations could have a significant impact on the numbers: “One tech client has really focused on improving their pipeline of female talent in the past couple of years, but because these [women] are entering at junior levels, that has increased their gap.” 

Digital bank Monzo PLC reported the opposite effect, with the proportion of women working in its upper middle pay quartile jumping from 13 per cent in 2017 to 38 per cent in 2018 – helping narrow its gender pay gap from 48 per cent to 14 per cent.

Boys said the headline figures would not be sufficiently three-dimensional to highlight the complexity of changes happening within organisations. 

“The problem with reporting data is that it shows what is going on at a firm level, and it’s important to not attribute gender pay gaps to firm-level factors in every case,” he said. 

“It’s important not to overplay a firm’s agency in moving that number, rather than scrutinising the structural changes that we all have to accept responsibility for and work towards changing.” 

Ruth Thomas, senior reward expert and co-founder of gender pay reporting tool Curo, warned the main challenge for organisations would be explaining the narratives behind the data. “The risk is that organisations will run the numbers but not take the time to understand why they have changed, and therefore not feel able to explain them,” she told People Management

Providing a narrative alongside gender pay data is currently not a mandatory part of the reporting process, and government analysis indicated organisations were reluctant to offer context for their figures, with less than a third of organisations providing an explanation alongside their data last year. 

The second round of reporting has shown little improvement in this regard, with just 736 of 2,454 (30 per cent) organisations who filed data by 19 March including URLs linking to a narrative. “And some of those revert to their websites, or to last year’s gender pay report,” Thomas said.

She added: “Narratives have a notable impact on how people perceive gender pay data – and we know the majority of women now take a company’s pay gap into consideration before applying for a job there, according to research from the Equality and Human Rights Commission (EHRC). 

“Last year, just a third of the dataset provided any form of narrative, which was a real lost opportunity to quantify their numbers. Having that explanation is crucial.”

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