Addressing the loyalty pay penalty

Another day, another income penalty faced by working women. First came the gender pay gap, then the gender pension gap, the gender bonus gap and the gender commuting gap. Just before Christmas came the latest – the loyalty pay gap.

According to a report on gender pay audits filed by Government departments, the gender pay gap is widening at five Whitehall departments. The biggest increase was in the Department for Digital, Culture, Media and Sport where the gap increased from 8.2% to 22.9%. This was blamed in part on external hiring of senior men and the need for people with more digital skills. The Department said women often suffered a “loyalty penalty” by staying with their employer and getting incremental pay rises instead of moving around and negotiating a higher salary in a new job.

It’s an interesting one because flexible working is a policy that has been promoted because it aids retention and women have traditionally been more likely to seek formal flexible working, particularly part-time positions. There is also still an issue with finding new flexible roles, especially at senior levels. Despite the work of organisations like Workingmums.co.uk, there is still a lot of work to be done to encourage employers to openly advertise flexible new roles, especially at higher levels. Yet women seem to be being penalised for not being able to move around and bump up their salary.

Until flexible working is normalised and it is easy to get new flexible roles this loyalty penalty will continue. It may also be time to rethink salary structures which reward people for only staying with an employer for a short time or provide other forms of reward for loyal staff, including proper career development structures.

Hopefully, greater transparency about pay will highlight all the various interconnected ways that women continue to be underpaid for their experience and contribution and will lead to more thought being devoted to how to address them.

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