The case for Gender Pay Gap reporting
Why measurement and reporting should stay at the top of the business agenda
In light of the COVID-19 crisis, the UK government has suspended the requirement for companies to report their 2019-2020 Gender Pay Gap. Despite the suspension coming less than two weeks before the deadline of 4 April 2020, this resulted in a significant drop in reporting. About half the organisations reported, compared to the two years prior to the scheme. Measurement data becomes available to reporting organisations one year before the deadline and this is the third year of the scheme. Therefore, the number of non-reporters – which includes multiple FTSE 100 organisations – comes as a surprise.
The repercussions of the pandemic on equality may be felt for years to come
Women at increased risk from COVID-19
The repercussions of the pandemic on equality may be felt for years to come and to understand and remedy them, we need to measure them. The UK Gender Pay Gap increased during the 2008 financial crisis¹ and there is evidence that the COVID-19 crisis is already impacting women in a disproportionate way. A recent briefing by the Women’s Budget Group² highlighted that:
- over three quarters of healthcare workers are women, putting them at the frontline of the crisis
- young women are disproportionately likely to work in sectors hardest hit by the lockdown
- women are more likely to carry out unpaid work and 69% are low paid earners.
In the context of business, the issue is rendered further challenging by reactive measures, taken by companies to cut costs and secure their operations in the short term. Measurement and monitoring is now more important than ever. Now, as well as during the recovery phase, attraction, recruitment, retention and career progression are being fundamentally affected by the crisis. How will time lost during furlough be considered in performance reviews? How do increased caring responsibilities affect women’s ability to work around a fixed schedule? Are decisions around retention and recruitment having a disproportionate impact on some groups?
Progress is slow to come but the same should not apply to action
In an issue area where the lack of measurement has underpinned the lack of decisive action, now is not the time to be complacent. Organisations that elect not to measure their 2019-20 gender pay gap will be missing out on valuable information around their progress in achieving pay parity. Those that do not report altogether, may face increased stakeholder scrutiny in the longer term.
Data alone does not mean much however, unless it is used to inform strategic action. A survey by CIPD in 2019, revealed that less than 10% of organisations had taken action as a result of measuring their pay gap in the first year of reporting³. And while the UK pay gap measured by the Office for National Statistics has decreased year on year, the latest reported data shows an increase compared to the first year of reporting. This indicates that progress on such a challenging issue will not come overnight and requires persistent engagement and action.
COVID-19 is a grim downturn for equality but the outlook is not bleak
While the crisis may well lead to the gap widening even further, undoubtedly the most positive development of the past three years is the unlocking of corporate dialogue on pay parity, across not only gender but as a wider issue. With ethnicity pay gap reporting guidelines soon to be announced by the UK government, an increasing number of businesses have started to think about unequal pay across a range of demographics, triggering wider discussion about the root causes and what effective action looks like. Business in the Community (BITC) is working hard to support our members to effectively analyse and unpick their pay gaps, helping them share and roll out effective interventions.
In order to sustain and accelerate this momentum, the issue must remain at the top of the business agenda. In these uncertain times, one thing is certain: we must keep moving forward because we simply cannot afford to slow down.
Business in the Community has been working with organisations to help them progress towards Equality for the past 40 years. We can help you take effective action to measure and close the Gap.
- Gender pay gap in the UK: 2018 (2018); The Office for National Statistics; available at ons.gov.uk
- Crises Collide: Women and Covid-19 (2020); Women’s Budget Group; available at wbg.org.uk
- Not just a number: lessons from the first year of gender pay gap reporting (2019); CIPD; available at cipd.org.uk
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