The Gender Pay Gap in Britain Gets Another Look

(Bloomberg) -- The U.K. is the biggest country yet to examine the explosive topic of the pay gap between women and men via mandatory annual disclosures. For a second year, employers with at least 250 workers in Britain have reported gender wage data, after the results from a debut survey in 2018 produced widespread criticism. In aggregate, the gap is little changed from the previous year, highlighting again how women are under-represented in higher-paying roles, and why it will likely take years to narrow the difference.

1. What do the latest numbers show?

About half of private employers saw their pay gap narrow, while half said the difference was worse or there was no change, according to preliminary data from the Government Equalities Office. Analysis of 10,455 filings by Bloomberg shows the overall figure was little changed, with a mean pay gap of 14.23 percent on April 5, 2018, compared with 14.21 a year earlier, based on all types of organizations. The median difference was 9.6 percent, compared with 9.2 percent. The disparity in bonus payments however widened to 15.7 percent from 8.4 percent. Men in aggregate were paid more at 88 percent of companies and public-sector bodies, according to Bloomberg.

2. How is the gap measured?

Employers had to submit a blunt, uniform assessment of the gap between what men and women earn on average in their workforces by April 4. The numbers don’t measure the pay of men and women in the same job or attempt to adjust for any other characteristics. Specifically, companies must report any difference between the salary and bonus of all male employees and all female employees on a mean and median hourly basis, the proportion of each gender receiving a bonus and the proportion of men and women in each pay quartile. Publication of an “action plan” showing how employers will try to close any gap is encouraged, but not mandatory, with the Equalities Office saying about half of private firms put one in place in the last year.

3. Does that mean companies ignored the feedback?

Not necessarily. The latest figures are based on a snapshot on April 5, 2018. Any changes made in the last 12 months won’t show up until next year’s report. Many of the plans in place will take time -- building a pipeline of senior female employees can mean hiring more women at all levels. On the other hand, some reports have raised concerns about the trajectory of change in certain companies: HSBC Bank Plc’s gender pay gap, for instance, actually got worse. It widened to a mean 61 percent, in part because just one-third of its highest-paid employees were female. In the financial-services industry overall, the average difference held at 26 percent in the latest figures.

4. How far is the U.K. from ‘equal pay for equal work’?

That’s hard to say. The phrase refers to the idea that men and women doing the same job at the same company should receive the same salary. The disclosures by U.K. companies don’t provide employee-to-employee comparisons. Reporting on a so-called adjusted basis -- taking into account job title, seniority, geography and other factors that can affect compensation -- is more popular among U.S. companies that have chosen to disclose their pay gaps under pressure from activist shareholders.

5. What’s been the reaction in the U.K.?

The annual nature of the reporting has already helped build greater awareness and understanding of the gender pay gap. There’s been criticism over the lack of women in more senior -- and thus well-compensated -- positions. The disparity in financial services was described as “astonishing” last year by Nicky Morgan, a member of Parliament and chair of its powerful Treasury Committee. She was also among politicians demanding that some law and accounting firms revise their figures after they classed their top-earning partners as owners, who are excluded from the calculations, and thus potentially understated the gender wage difference.

6. At what point does a wage gap violate the law?

That remains to be seen. The data could potentially provide fodder for existing or future lawsuits under the U.K.’s 2010 Equality Act. The law gives women and men the right to equal pay for equal work, and there’s a framework for comparing jobs by effort, skill or decision making. In early 2019, thousands of women working for the Glasgow City Council in Scotland reached a financial agreement over pay discrimination after fighting for more than a decade and staging what is believed to be the U.K.’s biggest-ever strike over equal wages.

7. What prompted the U.K. to disclose the pay gap?

David Cameron, who served as prime minister from 2010 to 2016, made addressing the gender-pay “scandal” part of the Conservative Party’s agenda. Eliminating the difference could add 150 billion pounds ($196 billion) to annual gross domestic product by 2025 by boosting female participation in the workforce, encouraging women to work longer hours and moving them into more productive jobs such as those in science and engineering, according to a 2016 study by McKinsey & Co. It’s also a question of fairness. The U.K.’s Office of National Statistics, which publishes its own analysis, says the gap is caused, in part, by more women working part-time, clustering in occupations with lower pay and taking time out to have children. The discrepancy widens with age, and women’s pay stops climbing at a younger age than that of male colleagues.

8. Are other countries doing this?

Yes. Australia requires firms with more than 100 employees to report on gender annually and publishes reports on their equality objectives, while Germany has implemented new rules around the issue. Austria and Belgium were other early adopters, though they don’t force companies to release figures publicly. Meanwhile, the U.S. has moved away from requiring more uniform or transparent disclosures to the federal government.

9. Where is this heading?

After the first round of reporting, a group of U.K. lawmakers suggested ways to make the figures less blunt, to bolster enforcement and to require remedial action, but the government rejected the recommendations in order to maintain consistency and comparability from one year to the next. The government has also declined to increase the number of organizations required to file reports. However, it is considering the possibility of mandatory pay reporting by ethnicity to expose the pay gap for citizens of “Black, Asian and minority ethnic,” or BAME, origins. A public consultation ended in January and already some firms, such as Deloitte, KPMG and broadcaster ITN, have voluntarily decided to release their numbers.

The Reference Shelf

• A Bloomberg graphic of the 2019 U.K. Gender Pay Gap Report.
• The government website with each company’s pay gap disclosure.
• "A Practical Guide to the Law of Gender Pay Gap Reporting" by Harini Iyengar.
• A Bloomberg Businessweek article asks why companies can’t just fix the wage gap.
• The U.K. government’s website on the rules for reporting and its page explaining the wage gap. 
• Parliament’s Business, Energy and Industrial Strategy Committee report on the first year of mandatory reporting.
• A research paper and Freakonomics Radio episode on "What Can Uber Teach Us About the Gender Pay Gap?"
• A QuickTake explainer on the global pay gap.
• The McKinsey report, "The power of parity: Advancing women’s equality in the United Kingdom."
• Data on the global wage gap from the Organisation for Economic Cooperation and Development.

--With assistance from Hayley Warren.

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Andy Reinhardt, Leah Harrison Singer

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