February 18, 2016

Does the gender pay gap still exist?

Earnings have certainly been under the spotlight recently. Firstly, the government announced new reporting rules for large employers regarding their gender pay gap. Secondly, the CIPD’s latest Labour Market Outlook (LMO) survey revealed that wage inflation is expected to fall again this year.

Let’s look at the new gender pay gap reporting rules first. From 2018, any organisations with more than 250 employees will have to make their gender pay gap publically available online on an annual basis in an attempt to achieve gender pay parity. Organisations will also have to publish how many men and women are in each pay range.

When the reporting rules come into effect, it will lead to new league tables detailing those companies that are failing to tackle gender pay differences.

The government also plans to highlight the worst offenders, those sectors that have the biggest discrepancies.

In order to help businesses introduce the new regulations, the government has pledged a £500,000 support package that includes UK-wide conference events, free online software, targeted support for predominantly male sectors such as STEM, and the publication of a report showcasing businesses leading the way in this area.

So what is the current gender pay gap? According to the latest Office for National Statistics Annual Survey of Hours and Earnings, there is a gender pay gap of 19.2% for full time and part time employees. ONS research shows that men in full time employment earn on average £567 a week, compared to £471 a week for the average female in full time employment.

However, part time female workers earn more than part time male workers, with a 6.5% difference.

The gender pay difference is most notable in skilled trades, where there is a 24.6% discrepancy. Sales and customer service report the lowest discrepancy at 4.3%.

There has been little progress on achieving pay parity since figures first started being reported on in 1997. Unless the current rate of change picks up, then the TUC predicts that it will take almost 50 years until men and women are paid the same wage in the UK.

But, according to the latest LMO report, neither men nor women should expect to enjoy significant pay increases this year. Its survey of more than 1,000 employers indicates that median basic pay will rise by just 1.2% over the year. Why? An increase in employment costs is partly to blame, including pension auto-enrolment. This was cited by 17% of employers as the reason why pay rises would be less than 2% this year.

The current rate of inflation is a contributory factor for many – 17% cited it as an important factor, a 4% rise over the past three months.

Also, 14% of employers said increases to the national minimum wage, effected in October 2015, had limited pay growth.