Posted by Robert Half on 19 June 2014
Under the terms of the Equal Pay Act 1970, it is prohibited for employers to discriminate between the respective genders on pay and employment benefits. The legislation was introduced in a bid to ensure earnings parity between male and female professionals, ensuring all employees - regardless of their sex - receive the same level of pay for the same job.
But more than 40 years after the act entered into the statute book, the UK still has a significant gender pay gap. And not only that, but provisional results from the Office for National Statistics suggest it actually increased in 2012-13. The difference between median full-time earnings for men and women stood at 10.0% in April 2013, up half a percentage point from 9.5% a year earlier. How exactly can this be the case?
Why is there still a gender pay gap?
A key problem is the relative shortage of female professionals progressing into senior roles, those which by nature command higher salaries. Just a handful of women occupy FTSE 100 CEO positions, and only a fifth of directors are female. So while employers may not actively discriminate against women when it comes to pay, businesses need to help break the glass ceiling that is stopping the advancement of many women in their careers.
Some critics blame the 'old boys' networks for a lack of opportunity for talented women in business, with inertia making it difficult for them to secure promotions. At the same time, many female professionals may feel held back by family commitments, particularly if they have young children to look after. Considerably more women than men take parental leave, and similarly, more women choose to work part-time hours for additional flexibility.
Segregation in the labour market also reinforces the gender pay gap, with men and women tending to work in different jobs. In sectors with high female representation - such as health, education and public administration - average salaries tend to be lower than in those which are male-dominated areas - such as IT and engineering. Naturally, this has an impact on average earnings for the two genders.
In a recent study conducted by Robert Half, more than a third of women surveyed said they have experienced barriers to advancement during their career, a figure which rises to 42% in the 18-34 age category. Of those who feel they have been held back, 35% believe male colleagues at the same level earn more than they do. Three-quarters of respondents said they think a 'glass ceiling' exists for women, making it difficult for them to make the career progress they desire.
The CBI calls for action on gender pay gap
The gender pay gapis no doubt a complex issue, caused by a number of different yet interrelated factors. As such, there is no easy fix. However, the Confederation of British Industry (CBI) believes positive action can help bridge the gap between average male and female earnings, ensuring greater fairness in the workplace.
The organisation has issued a plea to the next government to set a national target for reducing the pay gap. It believes doing so can bring the issue sharply into focus, much in the same way that Lord Davies' review shone the spotlight on female representation in the boardroom. Reaching this target would then require progress in the areas which have a real impact on equal pay, such as improved careers guidance in schools, an increased understanding of the benefits of flexible working for parents and businesses, and affordable childcare, the CBI said.
In a recent paper, entitled 'Building on Progress', the CBI outlined an action plan for boosting gender diversity and ensuring equality of opportunity. Firstly, it called for public funding for a nationally-mandated, locally-run system to support employer engagement in careers services. The CBI also proposed that UK educational institutions set targets for female participation in key subjects, such as maths and physics, and then report back on their performance.
Next, the CBI urged businesses to commit to "meaningful diversity policies" and, where possible, aspirational targets. It said the focus needs to be on supporting women within the workforce, and re-integrating maternity returners effectively into their roles. Similarly, being more open to job-sharing in senior roles could enable more female professionals to rise up the ranks, the organisation claimed.
The CBI claimed the government has a role to play, by raising raise awareness and understanding of the benefits and options for flexible working. Providing better guidance for companies, and ensuring they understand the business case for flexibility, can have a positive impact, it claimed. The CBI argued that the provision of free childcare, where affordable, could also assist women with career progression.
Taking the right approach
While the gender pay gap remains a problem, there are some positives to take. Firstly, female participation in the workplace is at an all-time high in the UK, with more women working than ever before. And gradually, the number of women working in senior roles is increasing in UK business. The government has taken steps to promote flexible working and the sharing of parental leave - aiming to support career women who want to balance work and family life - and in the mid to long term this should have a positive effect.
So while action is needed, it is important not to take too heavy-handed an approach with employers. As the CBI noted, the key to making further progress is to address the causes of the pay gap, rather than ordering actions on a punitive basis. This approach could be counter-productive. While some may argue in favour of mandatory equal pay audits and company pay gap reporting, the CBI believes such measures are "disproportionate and burdensome".
It said the main priority for companies at present should be to ensure sustainable growth, as the economy gets back on its feet. Successful, forward-looking companies with a healthy bank balance are no doubt better-positioned to engage with the gender pay issue and embrace positive change.
Reducing the gender pay gap
So what should be the next steps? There are changes that can be made to bring average female earnings more in-line with their male counterparts, without adding to business costs, or distracting companies from the principle aim of growth and expansion. Robert Half UK director Estelle James said, first and foremost, giving talented women the career progression opportunities they deserve can make a real difference. She urged businesses to eradicate the 'old boys club' mentality and allocate "adequate resources to ensure the glass ceiling becomes the glass elevator".
"Offering the right career pathing and development opportunities, coupled with more flexible working options will result in a larger pool of women ready to take their rightful seat at the boardroom table," she stated. Ms James said respect, equality and fairness need to be embraced by all, with professionals judged solely on the skills they bring to the workplace. When this occurs, and there are more women earning high wages, the gap will begin to narrow.
Katja Hall, deputy director-general at the CBI, commented that gender should never define what people earn. "Currently, too many areas of work - often those with high pay potential - are seen as male-dominated, with women steered away from options that would give them better access to higher pay and seniority," she claimed. Where this is the case, change is clearly needed.
"We must focus on tackling the pay gap by providing the right careers advice in schools and boosting support in the workplace for career development," Ms Hall stated. "A future government should ensure an overall target for the reduction of the gender pay gap is set at a national level to raise awareness of this issue. This would mean we can clearly track if more progress is really being made on gender diversity."