The Ugly Truth About Gender Pay Gap Regulations and Statistics
Growth at Humaans
Paying men and women differently for the same or equivalent job is illegal. Yet, in many countries, women still earn less than men. That's the ugly truth.
According to the latest UK Government figures based on the median hourly rate, there is a 10.2% difference between salaries. This figure is 1% higher than the 9.3% reported in 2018.
Due to the pandemic, the 2019 British data reported by the Institute of Fiscal Studies are the most recent statistically accurate figures available on gender pay differences. Here are some of the other statistics:
- By the age of 25, male graduates earn 5% more per year than female graduates, even though females are more likely to achieve a higher class degree than males.
- The gender pay gap increases to 25% in the 30-age group when comparing people in the same line of work.
At face value, that's quite shocking. Imagine doing the same job, with the same skill level, but with a ¼ less reward. If the stats tell us anything, it's that, as a business owner, it's highly important to take steps to ensure the gap is eliminated.
This article looks at the gender pay gap statistics in Europe, the regulations introduced by governments, and how software can help businesses get rid of the gap for good.
Gender Pay Gap vs. Equal Pay Definitions
Before we dig into the article, let's take a moment to understand the two key terms — gender pay and equal pay. The gender pay gap and equal pay address disparities in salaries, but they are not the same. So, let's take a look at this gender pay gap information:
Equal pay is self-explanatory — men and women are paid the same for identical work or work of equal value. The issues around equal pay in the Equality Act of 2010 states that there must be equality for all employment conditions and work contracts. These include leave, bonuses and reward schemes, and pensions.
Gender Pay Gap
The gender pay gap takes the average earnings of male and female employees across an organisation, labour market, or subgroup within a fixed time frame and compares these earnings.
Each group can then be subdivided based on age or work situation, e.g., part-time workers. If an organisation undertakes gender pay gap reporting, it disregards the work role or seniority. An illustration of gender pay discrepancy would be a company that employed many more women in unskilled, low-paid positions than men.
A Snapshot of Worldwide Gender Pay Gap Statistics
Global gender pay gap statistics show that women earn 63% of what men are paid on average. The countries that are closest to achieving parity are Laos (91%), Barbados (87%), Bahamas (86%), and Sweden (80%).
These figures are interesting because there seems to be a smaller pay gap in countries with a larger percentage of manual labour workers on lower incomes. On the other hand, major cities in the world have the highest pay, and within this pool of high earners, the disparity between what women and men earn is much greater.
A working paper from the OECD found:
- There is still a 15% gap in hourly earnings between men and women of equal qualification in 25 countries in Europe.
- The gender gap is more prominent in older age groups than younger age groups, with considerable discrepancies in the over 40 age range.
- There is also a much more significant gender pay gap in the higher-earning career brackets.
- Older women face more educational, employment, economic, and health disadvantages than their younger colleagues.
- Part-time women earn 43% less than part-time men, on average.
The Reasons for the Gender Pay Gap
The data paints the picture, but do we understand the reason behind the numbers? If we can understand the nuances behind the stats, businesses can work with their employees to implement fairer wages for everyone. Let's look at the potential reasons behind the disparity.
Is It About Career Choices?
Historically, women were two-thirds more likely to take lower-paying jobs than men and may have been dissuaded in the past from entering the science, technology, engineering, and mathematics disciplines (STEM). For example, only 20 percent of people working in tech were women.
Females commonly take the roles of teachers, nurses, cashiers, salespeople, and administrative assistants. These careers often pay less than the male-dominated fields of medicine, dentistry, law, and accountancy.
Today, much of this has changed, and higher education institutions report that they enrol more female students than males and, in many areas, females outperform males. So this begs the question:
Do females choose lower-paying jobs, or does society undervalue the careers dominated by females?
In the EU, nearly 85% of all primary school teachers are female — a very poorly paid career in most countries. Yet it requires tertiary education and many skills to be a teacher. Teaching does have the benefits of some flexibility in the school holidays. Is that what attracts mothers to this role? Possibly.
One could argue that if more men entered the teaching profession, they would earn the same low wage. But the census report indicates otherwise — men still make more in these roles than their female colleagues.
Is It About Motherhood?
Many women enter the labour market later than men or interrupt their careers to have children. This interruption can affect their career growth, promotion path, and earnings.
There is an unequal distribution of unpaid home care responsibilities, where females tend to take more than their fair share of these duties. This gender role stereotype filters into the workplace and affects women's career paths and wages.
Research shows a significant pay gap between childless women in the workplace and mothers. This gap is greater than the gap between men and women. This pay gap is well known, and many researchers have tried to explain it.
One explanation is that mothers lose their skills when they leave the workplace to look after their children. The second theory ties in with women's career choices, and the third theory is that mothers are less invested in their careers. For most women, these are merely assumptions.
A summary of the statistics and research that we have seen so far from several different sources indicates that the two main reasons organisations pay women less than men are occupational segregation and slowed career progression because of time out of the workplace.
The Introduction of Gender Pay Gap Regulations
The reasons behind the gender pay gap are not completely clear, but the statistics depict a global gender pay gap problem, and governments are reacting. Countries are introducing regulations to resolve this problem, although the solutions vary widely between nations and the results are not yet clear.
Let's find out how each country deals with the gender pay gap.
Gender pay gap regulations were introduced in the UK in 2017 to encourage companies to understand their diversity pay gaps. The UK Government's Equalities Office has issued several documents to assist with reporting requirements.
The Government Equalities Office states that all UK businesses employing more than 250 people must report and comply with gender pay regulations and publish annual figures of staff salaries and gender pay gap data.
There are two sets of regulations; one for public authorities and one for private businesses and voluntary sector employers. The calculations are obtained from payroll data using a snapshot date. The employer's reports are published the following year.
Belgium was at the forefront of advocating gender pay equality in Europe. In 2012, the Belgian Government passed a law that made it mandatory to audit gender pay, and Federal Labour Services must sign off job classifications based on gender neutrality. Companies in Belgium with more than 50 employees must report on their gender pay gap every two years.
Germany's gender pay gap reporting began in 2017, and companies with 200 employees must provide remunerations and justification for discrepancies. A gender pay audit every three years is required for companies with over 500 employees.
A new bill passed in 2018 made Iceland the first country to introduce legislation requiring companies with more than 25 employees to prove that they pay men and women equally for a job of equal value.
Portugal requires companies with over 200 people to submit an annual assessment of the gender pay gap, an action plan to be compiled within a year if the gap increases, and a progress report on the previous year.
Spain used to be a country with a significant gender gap in the previous decades, which might surprise some. In fact, according to Eurostat, in 2017, women’s gross hourly earnings were 15.1% below those of men. Yet, now, Spain requires more than 50 employees to complete a professional category and gender wage register. This reinforces the right to equal treatment and non-discrimination between women and men regarding remuneration.
In 2018, men in France earned 15.2% more than women for a job of equal value. To counter this, France advocated for transparency on gender pay gaps for companies with over 250 employees, and in 2020 the country reduced this to companies with more than 50 employees.
Finland's New Government Programme in 2019 promised amendments to gender equality laws, including laws regarding pay transparency and equal family-related leave. However, this didn’t have any effect, and in 2020, Finish women still earned 17.2% less than men, according to the Organisation for Economic Cooperation and Development.
New efforts are carried out, day by day, to close the gender gap in Finland, with Katarina Murto, director at Akava, the Confederation of Finish Unions for Professional and Managerial Staff, stressing that “closing the gap requires a change in attitudes and therefore it is necessary to change the law to change the culture.”
How Startups Manage Gender Gap
According to a McKinsey study on 1,000 large-scale companies, gender equality can improve company performance. It seems that companies, startups included, with women in executive roles are likely to be more profitable.
Startups report that women seem to be a better fit than men. Why? Considering that startups set up unrealistic and conflicting expectations, it may be down to the fact women are more accustomed in their life to conflicting expectations about who they are supposed to be and how they are supposed to act.
Gender Pay Gap Reporting Tool
Considering what we’ve seen so far, gender pay gap reporting is essential, not only for being compliant with regulations, but it ensures that organisations pay people equally and fairly, resulting in job satisfaction that jump-starts women into a positive working experience. Happier employees stay in the company longer, which reduces personnel turnover and ultimately creates a closely-knit team.
Using Humaans, you can automatically calculate the current pay gap in your company and follow trends and changes in the last 12 months. You can choose date ranges to get comparisons, and you can monitor if you are heading in the right direction.
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