Covid and the gender pay gap: positives and negatives

Will the Covid pandemic have a detrimental effect on the gender pay gap or could it drive progress? We spoke to Duncan Brown, a rewards expert who is a Principal Associate at the  Institute for Employment Studies and a Visiting Professor University of Greenwich.

He notes first the negative impact of Covid on women, for instance, the pushback on equality with the targeting of D & I workers in the public sector. However, he says that, while worrying, it makes no  practical sense during a tight labour market.

Policy-wise, he says Europe and the US are pushing ahead on gender pay gap issues. New York state will become the fourth US state to require salary ranges with job postings from later this year with New York City already mandating this. Europe is proposing a ban on asking job candidates for their salary history. Meanwhile, in the UK flexible working is only inching forward and gender pay audits, which only apply to larger companies, don’t come with any mandatory plan for how to address them.

One area where there are big gaps, which often get overlooked, is bonuses. For instance, in the finance industry – one of the top three sectors for gender pay gaps – firms are paying men, on average, almost 24% more per hour than women. Across all sectors, the gap is around 11.6%. However, when it comes to bonuses, women in finance earn 37% less than men in 2022, compared to 35% across other sectors. Action has been taken by some employers to tackle the bonus gap in recent years, but since Covid, non-guaranteed pay [of which bonuses constitute a big chunk] have been at a historic high in terms of the proportion of average earnings non-guaranteed earnings represent. Brown anticipates this will continue in an uncertain business environment.

What’s more, the use of bonuses is skewed heavily to the private sector and to certain industries such as financial services. Public sector organisations tend not to offer bonuses as much, but employ many more women. “Structurally there is less opportunity for women to get a bonus,” says Brown. Often in the private sector it is those in senior management or at partner level who most benefit from bonuses and those people are less likely to be female and he adds that there appears to be direct discrimination at play too where bonuses are based on individual judgement which may be subject to bias.

Brown said that without awareness of and action on the impact of bonuses on the gender pay gap the gap will widen so employers – and those scrutinising them – need to be on their guard.

He says that it’s important to note that Covid initially lowered women’s earnings in relation to men’s as the jobs they tended to do were more likely to be furloughed and not topped up from the 80% of salary government support. Moreover, gender pay gap reporting was suspended, just at the point when the gap had been reducing. Will the cost of living crisis add to the problems if more companies opt for one-off payments or bonus increases in an uncertain economic climate?

Optimism

Brown is optimistic despite all the problems because of the rise in employee ownership models of profit-sharing and the number of employers choosing to issue cost of living or Covid bonuses to all employees, with those on the least pay getting proportionately bigger increases in their incomes. He adds that some employers have chosen to target cost of living payments at the lowest paid, which will reduce pay inequality and the gender pay gap, given women tend to be more situated towards the lower end of the pay scale.

He also comments that the tight labour market will continue to mean diversity and inclusion are important for talent attraction and retention. In addition, Covid has brought progress on the menopause and highlighted issues such as the unequal burden of caring responsibilities and domestic abuse. More employers are addressing domestic abuse and seeing it as something that impacts on work. More employers are adopting equal parental leave policies too in a bid to boost equality.

Brown thinks there needs to be a review of maternity pay too. While the UK has a relatively long period of maternity leave, much of it is paid at a very low rate, much lower than the minimum wage and having longer periods out of the workplace makes it harder for women to get back at the same level, affecting their pay. Instead, he says, financial support should be targeted at encouraging women back to work and keeping them there.

While a lot of Government efforts seem to be focused on older workers who have dropped out of the workforce during Covid, Brown thinks it should be looking more at women in their 30s when it comes to issues such as financial wellbeing and helping them to progress and stay in work so they and their families don’t face financial issues now and further down the line.

“There are some easy wins that would have an immediate impact,” he says, mentioning ethnicity pay gap reporting and legislation on having salary bands stated in job adverts. Other countries have done this with few problems. He believes that the increased focus on financial wellbeing since Covid will make a difference and help to push things forward.

• Vote  
• 0
• 0
• You already voted!