Caution urged on interpreting gender pay gap figures out of context

Employers should commit to publishing narrative reports alongside their pay gaps, rethink promotion and pay negotiation and encourage more men to work flexibly if they want to tackle the gender pay gap, says a new report.

The report, The State of Pay: Demystifying the Gender Pay Gap, by the IPPR think tank, says that gender pay gap figures can often be misleading with some firms having a large gender pay gap, although they are working hard to promote gender equality while others with a small gap pay women (and men) poorly. It points out that some measures to promote gender equality may increase the pay gap in the short-term – for example, the recruitment of more female graduate trainees.

It states: “We should therefore be cautious in attributing too much importance to the pay gap data in isolation. We would encourage more firms to publish short, accessible narrative reports alongside their pay gap results in future.”

Therefore it recommends that employers publish narrative reports alongside their gender pay figures to put them in context and allow a more balanced discussion on which employers are truly making progress.

The report also recommends that employers should rethink policies around pay negotiation since women have a lower propensity to negotiate salary. It says they could rule out the possibility of negotiation altogether, state explicitly in job advertisements that salaries are negotiable, offer successful candidates the option of a colleague to negotiate on their behalf or mirror or match salary offers, ensuring that all employees on the same level earn at least as much as any new recruit.

Career Progression

The report says employers should introduce a more structured approach to progression since women are less likely to put themselves forward for promotion. That would include automatically considering employees for a step up after a given length of time in post.  It also recommends that employers should encourage more men to work flexibly and to take time out for caring responsibilities. It says: “Changing men’s working behaviour is a crucial component of closing the gender pay gap. To reduce the gender stratification of full and part-time roles, and reduce the maternity penalty, employers could look to introduce dedicated, paid paternity leave offered on a ‘use it or lose it’ basis, to advertise roles as flexible by default, and to encourage men to partake in job share arrangements.”

The report highlights that the gender pay gap is complex and is about the jobs women tend to do, the sectors they tend to work in, the lack of women in senior roles, the maternity penalty, discrimination and bias and the part-time penalty in addition to unequal pay. Several of these are linked. The complexity of the issues means that employers alone cannot eradicate it, although they can go some way to reducing it.

It notes that the pay gap tends to be lower when pay itself is lower and says this means that tackling the pay gap in isolation will not be sufficient to ensure that women are engaged in good, well-paid work.

The pay gap is largest for women over the age of 40, and persists for the rest of a woman’s working life.

The 10,019 employers that have reported have an average pay gap within their organisations of 12 per cent, with 78 per cent reporting a pay gap of some level, says the report. The most common strategies employers put forward to reduce their pay gaps were: upskilling and in-work training; reviewing recruitment policies; and facilitating flexible working.

It adds that there is a danger employers will game the system, for instance, by outsourcing low paid work, and that this could be detrimental to women. It states: “The pay gap is a blunt instrument, which should be interpreted in context and with caution.”

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