Gender Pay Parity – Does it really make a difference?

There have been recent, significant initiatives around the world designed to tackle the gender pay gap. In February, Iceland became the first country to legally enforce equal pay; Hollywood’s Time’s Up movement highlighted the problem of unequal pay in the film industry; and the UK’s gender-pay gap reporting legislation came into force this year. A panel of experts from Hong Kong’s PR, legal and financial services industries came together for BritCham to discuss the impact of this recent move to bridge the gap. Is pay parity possible? What should Hong Kong do to follow the lead?

Equal pay vs. pay parity

 The UK has had equal pay legislation in force since 1975, the principle of which is that men and women should receive equal pay for equal work. Pay parity, on the other hand, aims to achieve zero difference between men’s and women’s average earnings across an organisation or the labour market as a whole, without consideration of role, grade, seniority, experience, etc. According to Kathryn Weaver, Head of Employment Law at Lewis Silkin’s Hong Kong office, this “is an absolute system of absolute equality,” cautioning that “whilst it is a nice concept, you have to get over so many societal hurdles in order to get to there.”

Hong Kong’s gender pay gap

Following recent initiatives in Europe and the US to close the gap, the discussion has now turned to Hong Kong. According to international management consultant, Deirdre Lander of Willis Towers Watson, Hong Kong, organisations typically consider four principals regarding pay: 1) is the amount fair; 2) is it market competitive; 3) does it encourage performance; and 4) is it easy to manage.

While large companies tend to be more systematic in their approach, in Asia however there are many family owned companies “where the founder tends to believe pay is at their discretion,” Deirdre said.

“In Hong Kong there is no legislation for equal pay; however, we have discrimination ordinances on gender and family status, which have a regulatory impact on employment,” added Kenneth Leung, a member of Hong Kong’s Legislative Council. He then explained how the government publishes quarterly statistics on the average pay for every male and female worker across almost every major sector and is also looking into improving family leave legislation to encourage equality in the workplace.

In Hong Kong, male salaries are typically 22% higher than females. The reason for that, according to Kenneth, may be mostly due to the discretionary bonus which is “very common in the financial services and legal industries.” He posed the question: “How can we determine discretion in a rational way?”

Treating the symptoms

There are many popular resources which companies use to help establish an equal pay structure, especially around base pay, but according to Deirdre, the difference arises from other factors. “It is a structural issue about a dominance of females in some roles and not in others, with the incentives on top differentiating widely between roles. It is also very much about career-progression opportunities and that is the biggest issue of them all.”

There are other issues that create inequality in the workplace. “Looking just at pay feels like we are treating the symptoms rather than the illness and if you realise that, you realise we don’t have a pay problem, we have a meritocracy problem,” said Adrian Warr, Managing Director of Edelman’s Hong Kong office. He then explained how the focus should be about changing the processes that determine career progression rather than pay, which just looks at the outcome.

Kathryn added: “The focus should not be on how we get equal numbers of men and women into roles but on ensuring women have no barriers in the workplace.” She spoke about how this starts with educating girls around “anything is possible” and then carrying this mentality into the workplace. Kenneth agreed with this statement, adding that in Asia, social and culture norms still shape a women’s perception of her career.

Negotiating, mobility and the ‘mum bias’

Panel moderator Avril Parkin, Director of Client Technology for Thomson Reuters in North Asia, posed the question of whether men are better at negotiating their salaries than women. One member of the audience commented that on this score women can be as good as men, but they are too often labelled as aggressive rather than simply as good negotiators when they do this.

Adrian shared a new initiative that Edelman is building into its review process that encourages employees to negotiate their pay. “They are given an offer, then a cooling-off period before they need to respond, which allows those who don’t like negotiating, more of an opportunity do so.”

Kathryn raised the point around the perception of career mobility that men seem to have: “Speaking in stereotypes, men often feel they don’t need the same level of work stability as women; they move around more and when they do, they ask for more pay.”

“I think the mum bias also plays a huge part,” added Adrian. He spoke about how there is a lot of evidence out there around women taking time off from their career to have children and how their salary never recovers to the same level.

What will be the impact of the UK’s new gender pay gap legislation?

When the discussion turned back to the UK and the impact of the new legislation, Adrian shared his concern that with the principle of naming and shaming, if everyone is reporting poor figures, then “there is safety in numbers.”

The panellists also spoke about the absence of a penalty and incentives. According to Kathryn: “The Equality and Human Rights Commission (EHRC) has stepped in and has written to the 1,500+ companies who did not report on time, to request that they do so by a certain deadline”, though she added that with no penalty in place, there is not much the EHRC can actually do to these companies.

To conclude the discussion, the panellists agreed that one way the legislation could have a positive impact on closing the gender pay gap is to offer a tax or other incentive to companies who are showing an improvement.