The UK – Where it pays to be a man

October 1, 2018

In March 2018, the Business, Energy, and Strategy Industrial Committee launched an inquiry into the aspects of executive pay and gender pay gap in the private sector. It required over 250 employers to report their gender pay gap data. In August of this year, it published its findings.

The report showed that the UK has one of the highest gender pay gaps in Europe. This demonstrates the current lack of fairness and diversity in the workplace. It found that 13% of employers who reported figures to have gender pay gaps in favour of men of more than 30%. The report found that median pay across the economy is 18% in favour of men but gender pay gaps of more than 40% are “not uncommon” in some sectors. Almost four in five organisations have revealed gender pay gaps in favour of men and almost 9 out of 10 women work for a company that pays them less than their male equivalents. This is evident in several well-known companies with recent findings showing that:

• Apple’s figures reveal that 71% of its top-earning employees were men;
• Boux Avenue lingerie group reported that women on average earn 75.7% less per hour than men on a median basis – taking the midpoint of all the hourly rates for women and comparing it with the midpoint for men. The gap, the biggest for a well-known company, reflects the fact that the vast majority of the retailer’s staff are female shop workers; and
• Ryanair revealed a gender pay gap of 72% making it the worst in the airline industry.

The report linked the gender pay gap to poor economic performance. The UK economy is stunted by weak economic productivity, growth and skill shortages and this failure to utilise the female talent of the workforce represents a major cost. It is suggested that completely removing this disparity could add 150 billion pounds to the British economy by 2025 by boosting female participation, encouraging them to work longer hours and moving them into more productive jobs such as in science and engineering.Encouraging more females to work full time through incentives, retraining, better pay and removing the stigma around male-dominated professions will be a step in the right direction to help the British economy, something more pertinent in the wake of Brexit. But, what other steps can we take?

• The Financial Reporting Council’s (FRC) proposals due later this year should include reference to ensuring that gender diversity is properly reflected throughout companies, notably at board level.
• Introduce key performance indicators for reducing and eliminating gender pay gaps.
• Urge the FRC to monitor the quality of reporting on gender diversity and the pay gap in annual reports and to press for improvements where necessary.

Nearly 50 years on from the enactment of the Equal Pay Act 1970, we still live in a society that has historical notions of the female role within it. The Trade Union Congress published findings showing that women effectively work for free two months out of the year due to the pay disparity. It should be noted that it is positive to see the British Government have taken steps in the right direction. The UK is one of the first countries to introduce gender pay gap reporting under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 which will shine a light on where employers need to take action to allow them to address the gaps. Reporting gender pay gap data is not optional. The law now requires employers and companies to submit all data and failure to comply could result in legal action from the Equality and Human Rights Commission.

This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Corporate Team at Cleaver Fulton Rankin for further advice or information.

Rachael Clements, Solicitor, Corporate / Commercial, Cleaver Fulton Rankin Solicitors.