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Latest gender pay gap figures and what they reveal

Early last month, all companies, charities and public sector departments with 250 or more employees were required to submit their gender pay gap reports for the financial year 2020/2021. So what did the reports show?

Progress is slow

The initial analysis by the BBC showed little change since the last financial year. Whilst there were more businesses reporting in time for the deadline, this hasn’t affected the overall gender pay gap of 10.4%, which remains as it had been.

Out of the 9,628 firms that reported on time, only 770 showed no pay gap at all, 1,286 businesses disclosed a pay gap favouring women whilst 7,572 businesses reported a pay gap favouring men.

According to the BBC’s analysis by sector, there was an average 0% pay gap in the health and accommodation and food sectors. The largest sector pay gap was highlighted in the education sector which came in at an average of 26%, and perhaps less surprisingly (being traditionally male-led) finance, insurance and construction sectors followed closely behind with an average pay gap of 24%.

Part time and older employees suffer the biggest pay gaps

The Office of National Statistics (ONS) has also recently released its report based on the Annual Survey of Hours and Earnings which shows a breakdown of the gender pay gap by age, part-time/ full-time hours and occupation in April 2021. The full report can be found here.

In April 2021, there was a 15.4% pay gap for median gross hourly earnings across full-time and part-time employees combined showing an increase in the pay gap since last year (although this is still lower than the 2019 gap). This figure is impacted by the fact that more women than men generally work part-time and their hourly rate is generally lower. Looking at that separately, the full-time pay gap is a much lower 7.9% and the part-time pay gap has crept up slightly and become -2.7%.

The ONS report also shows that the gender pay gap for full-time employees aged 40 years and over is much higher than for employees aged below 40 years. This perhaps indicates a change towards greater balance amongst the future workforce and highlights the problem amongst a particular generation.

The impact of furlough

The ONS uses data that take into account any pay reduced because of absence or furlough leave and at the time the data were collected (during the pay period covering 21 April 2021), approximately 3.7 million employees had been furloughed.  As a result, the figures have been skewed by furloughed employers receiving lower pay during that period of time. Similarly, for the national pay gap reporting figures, all those employees on furlough were in fact discounted from the data calculations at the snapshot date so their data have not been included at all.

Women remain more likely to be carers for children or vulnerable adults and therefore were more likely to take advantage of furlough leave – or ultimately had to leave work – during the last financial year. In both reports, this will have had an impact on the overall data – either by completely removing a higher number of furloughed women from the data or showing a greater number of women in receipt of reduced pay.

As such, we continue to see varying outcomes being released (for example the Financial Times shows a pay gap of 13% overall, with some data excluded from that figure). These figures should therefore be taken with a pinch of salt and may not be overly helpful to assess whether there has been a change in the pay gap this time round.

Other problems with the current reporting regime

There is another question that remains unanswered - what about those that don’t fit neatly into the category of male or female? The government’s gender pay gap report only accounts for male versus female in the workplace but does not account for those individuals who identify as non-binary. The government published guidance on this suggests that those who identify as non-binary should simply be omitted from data calculations, but perhaps rather than encouraging exclusion they should be considering how to include all genders in the pay gap report to provide a more accurate, and up to date picture that reflects our society. Perhaps this is a change we will see in a few years.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.

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