Gender pay gap reporting - what do the published statistics tell us so far?

We have taken a look at the latest results from the gender pay gap database to see what the data from this year and previous years is telling us about employers’ approaches to resolving gender pay gaps.

We made a comparison of how each employer’s gap changed from year to year, in order to see what the trends are and consider whether gaps are reducing. We compared like with like: rather than simply looking at the whole pool of data, we examined how each employer’s statistics changed from one year to the next then calculated averages from these figures.

Pay gaps lower because of furlough?

The graph below shows how the mean and median gaps changed from one year to the next. It shows that mean pay gaps were on average 0.73% lower in 2020 than in 2019, while median pay gaps were 0.48% lower in 2020 than in 2019.

The change in mean and median pay gap is, so far, greater in 2020 than in previous years. There may be two factors explaining this.

The first factor is simple: as mentioned above, only around 25% of employers have published their gaps so far. There may therefore be considerable publication bias. Employers with better stories to tell have been more willing to publish their figures earlier, rather than holding off and waiting until later. If this is the case, we would expect to see the average change in gap reduce as more employers publish.

The second factor is one we’ve discussed previously: Covid-19. The use of furlough means that many lower-paid individuals will be taken out of the calculations for 2020. Since women tended to be more likely to work in furloughed roles, mean pay for women would be higher and hence gaps lower. This early data could be revealing that effect, but it is probably too soon to tell.

The two graphs below look at how gaps have changed by company size. They suggest that smaller employers generally seem to be making greater progress on reducing their gender pay gaps than larger ones.

Bonus gaps

The chart below shows that bonus gaps are much more changeable than pay gaps. Because bonuses are more related to business performance than pay, they will fluctuate from year to year as business success varies. In addition, bonus gaps are based on a smaller sample: only those who received any bonus are included in the calculation. So, for example, choosing to remove a low-level cash bonus paid predominantly to women might help reduce a gap by taking lower earners outside of the calculation.

On average, bonus gaps have fallen in 2020 compared to 2019 - the first year in which they have done so. In fact, the 2020 figures so far show that the gap between male and female bonuses has narrowed, although this is only based on employers who have reported to date.

Bonus gaps rose by a large amount in 2018 compared to 2017. The data used in the 2018 figures related to bonuses paid between 6 April 2017 and 5 April 2018. During that time, few gender pay gap figures had been published – most employers published their 2017 data in the few weeks before 5 April 2018. The figures might suggest that employers started giving greater thought to bonus awards after the first round of gender pay gap reporting.

Quartiles: employers continue to increase proportion of women in best-paid roles

Employers have had, on average, more women in the highest-paid (upper) quartile but roughly similar numbers of women in the lowest-paid (lower) quartile over the past three years.

This data, when combined with the data showing decreases to gaps, suggests that employers are generally likely to be reducing their pay gaps by increasing the number of women in the best-paid and most senior roles, rather than by increasing the number of men in the lowest-paid roles.

It is good to see that most employers are employing more women in roles in the upper quartile. For continued progress on gender pay gaps, however, employers will need to give more thought to achieving greater gender balance in the lowest-paid roles in their business. Too often, this is an area that is overlooked when considering how to reduce gaps. Elimination of a gender pay gap can only be achieved if all areas of a business are balanced, not just the most senior roles.

In many industries, lower-paid roles will tend to be female dominated. This can be for many reasons, but often it is related to childcare. Lower-paid roles may offer the greatest flexibility which, with women still bearing the brunt of child rearing, is highly valued. Moreover, the “parenthood penalty” caused by time away from work could affect women’s ability to progress into better-paid roles.

Because of these societal pressures, achieving a greater balance may prove difficult. Without state action to encourage more men to take a greater role in childcare, gender pay gaps may continue for generations to come.