The Office for National Statistics (the ONS) has published statistics on the gender pay gap for 2022 as part of its Annual Survey of Hours and Earnings. The good news is that, overall, the gap between the average pay for men and women continues to close. Since 2012, it has reduced by a quarter. However, there has been an increase in the pay gap over the last 12 months.
The ONS report should not be confused with the mandatory gender pay gap reporting that large organisations are required to carry out. The ONS calculates the pay gap as the difference between average hourly earnings, excluding overtime, of men and women as a proportion of men’s average hourly earnings. The reporting is based on all jobs in the UK. It does not take into account the difference in pay between men and women for comparable jobs.
We consider the findings of the ONS, as well as the broader repercussions of pay gap reporting and steps employers can take to minimise the pay gap.
The key findings in the ONS report are:
- the gender pay gap for full-time employees in the UK currently sits at 8.3%. This means that the average woman earns 91.7% of the average male salary.
- the 2022 figure for full-time employees reflects a slight increase in the gap from 2021, which was 7.7%.
- the data for 2020 and 2021 should be treated with caution as it was likely affected by the COVID-19 pandemic. During that period, data collection was impacted by the furlough scheme, and there were lower response rates.
- crucially, the overall pattern is positive. The gap for full-time employees continues to narrow from the 2019 figure of 9.0% and has declined by approximately a quarter since 2012.
Factors identified by the ONS which impact on the pay gap include:
- Age – the gap increases from 3.2% for employees aged between 30 and 39 to 10.9% for employees aged between 40 and 49. It is thought that this is because fewer women move into more senior positions after the age of 39 as compared to men.
- Occupation – the managers, directors and senior officials’ occupation group saw the largest fall in the gender pay gap since 2019, falling from 16.3% to 10.6%. This was a group that was identified as previously having a notable pay gap.
On the whole, the findings show that progress is continuing to be made on the issue of the gender pay gap. Though work clearly remains to be done to tackle the issues causing the pay gap to remain, the fact that the trends remain positive is welcome.
Expanding pay gap reporting
As mentioned above, while not connected to the ONS, there is an obligation on large organisations to publish their data annually on the gender pay gap. Employers with 250 or more employees must publish their gender pay gap information online annually and keep it available for three years. The minimum requirement is for the gender pay gap, which is calculated by the same method used by ONS, to be published alongside a written statement of accuracy. However, many employers also choose to accompany it with a narrative which may help to explain the reasons behind any disparity in pay. Since its introduction in 2017, this obligation has largely been seen as a welcome introduction to help understand the reasoning behind gender inequality and to assist in alleviating it.
Recently, the topic of ethnicity pay gap reporting has also moved back into the spotlight. Supporters have advocated that to help promote fairness in the workplace there should be compulsory reporting obligations on employers in respect of the ethnicity pay gap, in the same way that there is for the gender pay gap. However, mandatory pay gap reporting has been ruled out for the time being, on the basis that it:
- may not be the most appropriate tool to tackle inequality in the workplace; and
- raises several issues for employers, including how to collect the data and where to report it. This could increase strain on businesses who are emerging and recovering from the COVID-19 pandemic. It has been viewed that imposing new reporting burdens on recovering businesses is not the correct measure at this time.
It remains to be seen whether ethnicity pay gap reporting will become a legal requirement in the future. In the meantime, some employers are looking at the issue from a moral and ethical perspective, and are collecting and publishing the data voluntarily. By doing so, they hope to achieve a better understanding of inequality in the workforce and the steps that can be taken to eradicate it.
How can employers reduce the pay gap?
Following on from the publication of the ONS data and conversations regarding the ethnicity pay gap, many employers are seeking guidance on the best ways to reduce both the gender and ethnic pay gaps in their businesses. The gender pay gap service highlights positive action employers can take, which largely centres on recruitment and promotions. Making it standard practice to ensure that women are included in shortlists for promotions increases the likelihood of higher-paying positions being filled by those who are currently less likely to receive such promotions. In addition to this, reviewing the recruitment process to ensure that a skills-based approach is at the forefront, as well as asking uniform questions to all candidates, decreases the chances of biases influencing the decision-making process.
Another area which can help employers to reduce their pay gap is to regularly review their pay and reward processes and ensure transparency. This can include encouraging staff to have conversations about salary with their bosses and being clear on what criteria qualify candidates for a pay rise or bonus.
Finally, creating a genuinely diverse and inclusive workforce is the most effective way to reduce the pay gap. If women and minority candidates feel that their work will be appreciated by their employer, and do not face discrimination in the workplace, it is much more likely that the company will be able to attract the top talents to the most senior roles. For larger organisations, hiring a diversity manager or creating a diversity task force can be a useful way to understand how a business can improve in this regard.
If you would like any guidance on reducing the pay gap, or on inclusion in the workplace, our PRM team would be happy to help.