New regulations introduced under the UK Equality Law came into effect on April 5th. Now compliant under the new act, companies in the UK which employ 250 or more people are required to report the disparities in compensation statistics of men and women. The truth is that everybody expected wage disparity between the two sexes. After all, it is a centuries-old tradition.
The only question that had loomed was, “How much?” And the answer to that question is what has still managed to surprise.
Some high-level numbers to denote the gap:
- Average median pay gap between men and women is 12%
- A total of almost 8 in 10 companies pay men more than women in the UK
- Men form the majority of the highest pay quartile in 19 of the 21 areas of the private sector
Many of the names that are featured as gender parity defaulters are the same names that the public is used to seeing in lists such as the Fortune 500, Most Innovative Companies, Great Places to Work etc. Apple (71% of top-earning employees are men), Ryanair (72% gender gap), Boux Avenue (75.7% less earning per hour for women on median basis), Telegraph Media (35% less pay to women), Conde Nast (36.9% lower mean pay per hour than men’s).
What is true is that the median pay gap is majorly because of the exemplary gap in the representation of women in senior (and high-paying roles), which skews the average pay in the favor of men. Also, employers aren’t required to reveal granular data for compensation for similar roles and segregate it by sex and show the number of women and men employees in their company.
This makes it difficult to underscore any gender disparity on compensation for the same work. Conde Nast, the parent media company for popular publications like Vogue, GQ, and Wired, has a total of 583 female employees against 203 male. Women are in majority in every quartile of the company (63% women and 37% men in the highest earning quartile), yet the earning of the 37% are so high that on an average, men’s compensation is more than women at Conde Nast. It is hard to determine whether it is because men are paid more for same roles or is the disparity because of the fact that the top 7 positions (Chairman and CEO, President and CDO, 5 Executive Committee Members) are held by men. What this does is that it introduces a case of introducing granularity in reporting so that assertions can be made and steps taken to achieve gender parity.
This small limitation shouldn’t shadow the novelty of the amendment in the act. U.K. is the first country in the world to have done this, and there is a thing or two to be learned from this legislation in the UK. What this has done is:
- Employers can’t discriminate
Laws exist to penalize discrimination on several grounds (gender/religion/caste). The US has the Equal Pay Act, Britain has the Equality Act, Article 14, Article 15, Article 39 of the Indian Constitution have been used to counter wage discrimination in the workplace in the past. However, there are situations when law abiding citizens aren’t always aware of the legal protection provided by the state for equal pay for equal work. Hence, not everyone moves the court for the existing discrimination. What this Act does is that it creates a certain level of transparency and then the required noise which can act as a deterrent for employers if they seek to discriminate.
- Women employees can negotiate for wages that they deserve for similar roles (and not be discriminated against)
Now that the data is clear about the level of gaps between the wages of men and women at the workplace, this gives women employees the power to negotiate for higher wages than they otherwise would. Since the benchmark has been set, they are now empowered to demand what their work deserves in accordance with the industry compensation standards. If women start at lower wages than men, the bridge keeps getting widened at every step of the career ladder. With complete information on the industry, employees can now make informed decisions.
- Employers have to come clean
Now that gender pay gap data is out in the public, it is important that employers come clean about the massive gaps that have been reported. Employers are under the scanner, and they know it. It doesn’t take long for facts to become keywords and hashtags in the world of Google and Twitter. And statements like, “Women employees earn 24% less than men at Apple” spread like wildfire in the jungle of Social Media. Apple quickly clarified that when all UK employees were taken together, the pay gap was 2% in women’s favor. But can a business ever be certain which of the two statistics will win the race of reach? Hence, employers are incentivized further to take steps to bring pay parity at their workplace – that includes eliminating any wage discrimination for similar work (if it exists) and increasing women representation in senior leadership. The Economist too, wrote a feature to explain that their wage gap is not unlawful and exists because of under-representation of women in higher-paying roles in the media group. However, it would want to change that when the data is submitted next. Because the world’s eyes would be on the company.
This Act may certainly have certain areas of improvement. A lack of data granularity may be one. But despite its shortcomings, it is a major step in the direction towards pay parity, and this Act can be a model for other states to follow to take the first step towards breaking that gender divide.