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Why is the gender pay gap still an issue

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Recently, Prime Minister Teresa May spoke of her ambition to create a country ‘that works for everyone’. But clearly there are lots of people for whom Britain does not work: those on poor pay, zero-hours contracts, those in the ‘gig economy’ and female workers.

The Equal Pay Act has been in effect for over four years and successive government’s initiatives have tried to deal with the underlying issues of unequal pay. Initiatives such as flexible working, improving part-time worker rights, more affordable childcare and shared parental leave in response to concerns childcare responsibilities impact on female careers.  These actions will be joined by upcoming rules forcing larger employers to analyse and publish pay gaps – as transparency is a great driver of equality.

The recent research on gender pay gaps is a ‘curate’s egg’. The IFS shows a decline in the gender wage gap among the lowest-educated. However, the pay gap widens after having children. For part-time workers there was a cumulative negative impact and for the more academically qualified there was no change from 20 years ago, as women with degrees still earned 20 percent less, and those with A-levels 25 percent less, than similarly qualified men. Likewise, the CMI and ONS show the good news of smaller pay gaps at younger ages, but widest at the top of the corporate ladder. While this could indicate a new, more equal cohort rising through the workplace and organisational hierarchy, therefore, eroding gender pay gaps over time. It could also reflect the fact that that careers and pay diverge when women have children.

Another reason for the pay gap is the continued gender imbalance in senior posts and promotions. This reflects our own research, which shows career barriers are due to poor ‘signalling’ of success for female directors and structural issues. This signalling comes in the form of: networks and nomination process bias; role model and mentor shortages; work–family balance; legal ambiguity and policies and cognitive behaviour. All of this is worrying. Research shows gender diversity actually delivers better financial results, organisational cultures and decision making. The benefits of part-time working should be recognised, measured and rewarded better by management, in terms of pay and supporting career paths and patterns that are not the typical ‘linear’ ones.

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