Boosting pay without boosting gender inequality

Pay has not risen in line with inflation for the vast majority of people, but some employers have been boosting pay through bonuses, But could this have implications for gender equality?

Child hold woman's hand at a table. She has her head in her hands and there is an open purse on the table with just a few pence spilling out of it.


The latest ONS statistics show that pay, excluding bonuses, rose by 4.7% in April and June this year. Adjusted for inflation at 9.4% pay fell by 3% – a record fall and things are likely to get much worse. Private sector pay rose significantly more than public sector, with wholesale, retail, hotels and restaurants, where there have been big staff shortages, seeing the largest growth rate.  This was followed by the finance and business services sector and the construction sector. The ONS says this growth is in large part due to strong bonus payments.

Commentators say that employers may be trying to control wage rises by using bonuses to boost pay as the cost of living crisis bites. The problem is that the gender bonus gap is much larger than the gender pay gap so, depending on the type of bonus, one wonders what the impact might be on equal pay. If it is a cross-company bonus, for instance, in recognition of the cost of living crisis or Covid efforts, that is one thing. If it is an increase in existing bonus schemes or based on a percentage of existing pay that may be another thing entirely.

The reason the gender bonus gap is higher than the gender pay gap is partly because women are less likely to work in the kind of jobs that attract the big bonuses [for instance, in 2019 Barclays has an overall 40.2% gender pay gap, but a 73.7% mean bonus pay gap, although more women received bonuses than men]. Even when women do get bonuses they often tend to get smaller bonuses than men – there may be all sorts of reasons for this which each company needs to investigate and question.

The Equality and Human Rights Commission advises employers to check that their bonus policy is not discriminatory by ensuring they have sound criteria for awarding bonuses and that everyone is aware of the decision-making process, by ensuring the bonus is clearly defined and people know what they have to do to get it and by checking that any employees who don’t get it are not excluded because of their gender but for a genuine business reason. It warns that having different bonus schemes for different types of workers can lay an organisation open to equal pay or other claims.

Inflating pay through bonuses may serve to keep regular pay down and allow employers more flexibility in turbulent times, but does it work in the long term when it comes to pay equity?  Some employers have been taking different approaches to pay increases and bonuses, for instance, boosting pay for the lowest paid who are most affected by the cost of living crisis. This is also a good way to tackle gender pay gaps, given women are often among the lowest paid.  Lloyds Bank, for instance, announced earlier this year that staff would receive a bonus in their August wage packet, but that senior managers and executives would be excluded from the pay boost.

Employers may argue that retention is a key issue when it comes to pay and that they need to incentivise people at the top or in middle management to stay. In the last few months there has been a lot of talk of the so-called Great Resignation and of people threatening to walk if they don’t get a pay increase. But there are now some signs that things are shifting more in favour of employers, with employees fearful about losing their jobs in the event of a recession. Yet at the same time there continue to be many areas of the economy with job vacancies, with Brexit playing a significant role in this. Whatever happens, things are extremely turbulent and employers need to be cognisant of the impact of pay decisions across the board.

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