In April 2017, the “Gender Pay Gap 2010 (Gender Pay Gap Information) Regulations 2017” legislation was enacted in the UK, requiring employers with at least 250 employees to analyze their gender pay gap according to specific criteria (more information here). Briefly, the rule requires covered employers to annually report gender differences by (1) hourly pay as of April 5 and (2) bonuses received in the preceding 12 months. Employers spent the last year conducting the required analyses, the results of which were published on their own websites and the designated government website (https://gender-pay-gap.service.gov.uk/) by the April 4, 2018 deadline.
Over 10,000 employers reported their gender pay gap data, including 256 who self-reported as not meeting the threshold for required reporting (i.e., those with fewer than 250 employees). Reporting employers represented many sectors (e.g., Construction, Wholesale and Retail Trade, Public Sector, Real estate, Manufacturing, Finance, Education, Arts, Agriculture), with nearly 70% of them having fewer than 1,000 employees.
Noteworthy results include the following:
- The typical hourly pay difference favored men by 10-15%.
- The percentage of bonus difference varied widely across employer sizes and almost certainly includes errors in reporting (e.g., reporting of percentage differences in the thousands).
- As pay quartiles increased, female representation consistently dropped (i.e., in the lowest pay quartile, female representation averaged between 50-60%, whereas it averaged between 35-45% in the highest pay quartile).
For two reasons, we recommend interpreting these publicized numbers with caution. First, the data appear to include errors, such as percentage difference values that are improbable (e.g., percentages in the thousands) and a Standard Industrial Classification (SIC) code that is invalid (i.e., 1). Given that the numbers represent the first year of reporting, it is not surprising that there are hiccups, and some employers may have miscalculated or misunderstood the required calculations.
Second, it is important to remember what these metrics tell us, all reporting errors aside. The reported gender differences in compensation do not account for any legitimate, non-discriminatory factors that influence compensation (e.g., type and level of work, tenure, performance). The comments and materials linked to the reported numbers, that many employers provided, clarified that seemingly large differences are explained by legitimate factors. The most striking illustration of this relates to football clubs in which large reported pay gaps evaporate when football players (the highest paid talent in these organizations) are separated from other organizational positions like trainers, marketers, etc.
DCI will continue evaluating and analyzing the 2017 data and will report out on more formal insights later – stay tuned!
By Kristen Pryor, Associate Principal Consultant and Kayo Sady, Ph.D., Associate Principal Consultant at DCI Consulting Group