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These were the words of Theresa May in her first statement as Prime Minister; words which are backed up by a report this week from the Institute for Fiscal Studies on ‘The Gender Wage Gap’, which highlights the significant gulf in salary between men and women.

The report found that hourly wages of female employees are currently about 18% lower than men’s on average. The good news is that this gap appears to be closing, albeit gradually.

The report sets out that the hourly rates for female employees were 23% lower than men in 2003 and 28% lower in 1993. However, only among the lowest-educated individuals has the gender wage gap continued to shrink over the past two decades. The gap has not been narrowing among those with higher educational attainment. For the mid-level and highly educated, the gender wage gap is essentially the same as it was 20 years ago.

The most alarming stat is in respect of the pay gap for mothers. The report sets out that there is, on average, a gap of over 10% even before the arrival of the first child. But this gap is fairly stable until the child arrives and is small relative to what follows: there is then a gradual but continual rise in the wage gap and, by the time the first child is aged 12, women’s hourly wages are a third below men’s. This signifies a huge pay penalty for mothers.

It is suggested that the pay gap for mothers who return to work is, at least in part, because they often do so in a part-time capacity and miss out on subsequent wage progression and opportunities for promotion. This results in the hourly wages of men (and of women in full-time work) pulling further and further ahead. This may explain why the wage gap is shrinking in respect of the lowest-educated individuals, who may have fewer opportunities for wage progression, but not for those with higher educational attainment, who are usually seen to have greater progression opportunities. The difference then appears not to be primarily about men and women being paid differently for doing the same job, but rather a lack of opportunity for promotion and pay rises, which, in turn, results in a far higher male presence in the upper echelons of organisations. Indeed a separate report from the Chartered Management Institute recently found that the difference in promotion rates between men and women was one of the main causes of the gender pay gap.

As well as highlighting the gulf between men’s and women’s earnings, in her first statement as Prime Minister Theresa May also she vowed to create a “Britain that works for everyone”, while former Prime Minister, David Cameron, had previously vowed to “end the gender pay gap in a generation”. As part of the government’s apparent efforts, new rules will shortly come into force which will create mandatory gender pay gap reporting for large employers (those with at least 250 employees).

These rules were discussed in our previous article (see ‘Insight: Exposing the Gender Pay Gap’; http://www.stronachs.com/news-insights/insights/53-employment/128-exposing-the-gender-pay-gap).

It was originally expected that the regulations would come into force on 1 October 2016 however that timescale has now slipped and the rules are now expected to be brought into effect by April 2017 with the implication that relevant employers would require to publish pay gap reports by 29 April 2018. .

The likely impact of the impending gender pay gap reporting obligations is questionable. The aspiration is that it will force employers to analyse any discrepancies in the salaries of their male and female employees and attempt to develop a better culture with greater opportunities for progression for women. However, it remains to be seen whether and to what extent this will have that effect and whether the new regime will be a sufficient motivator for employers to make real changes to their recruitment, pay, promotion, flexible working and family-friendly practices.

Although the first gender pay gap reports do not have to be published until April 2018 there are several steps that employers should consider to prepare for the new regime. If you would like to discuss these, please contact a member of the Stronachs Employment Team.

Rowan Alexander, Solicitor

 

Chambers UK 2018

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