Charles Cotton, the CIPD's Senior Policy Adviser on performance and reward, looks at how the gender pay gap varies by sector and employer size, and asks why more employers aren’t being open about their pay practices
CIPD analysis found that the median gender pay gap among the employers submitting their gender pay gap data for the reporting year 2022/23 was 9.4%. In other words, for every pound a man earned, a woman earned approximately 91 pence.
As Table 1 shows, this is down on the 9.7% recorded for last year, but is the same as the gender pay gap reported back in 2017/18, when large British employers were first required to disclose their gender pay gap data.
In addition, the mean is also down, from 13.4% in 2017/18, to 12.8% for 2021/22, and to 12.3% for 2022/23.
Table 1: Median and mean gender pay gaps by reporting year
However, both the median and mean figures disguise some wide variations. For example, Table 2 shows that the largest gender pay gaps in the British nations and regions are among those employers based in London (11.6%), the southwest (11%) and southeast (10.3%) of England. By contrast, employers based in Wales (5.6%) and Scotland (5.9%) have the smallest gaps.
Table 2: 2022/23 median gender pay gap by nations and regions
Similarly, when it comes to employer size, Table 3 shows that those organisations that employ more workers tend to have lower pay gaps than smaller employers. For example, the median gender pay gap among those workplaces with between 250 and 499 workers is 10.1%, while among those employing between 5,000 to 19,999, it’s 8.7%.
In addition, this year, 429 employers with fewer than 250 staff also voluntarily disclosed their gender pay data. Among this group, the median was 9%.
Table 3: 2022/23 median gender pay gap by size of workplace
By industrial sector, Table 4 shows that the widest gender pay gaps are in the financial and insurance activities (22.1%), construction (22.1%), and education (20.4%) sectors. By contrast, the gender pay gap is narrowest in the accommodation and food service activities (1.1%), and human health and social work activities (1.9%) sectors.
Table 4: 2022/23 median gender pay gap by industrial sector
One possible explanation for the lack of progress in reducing the pay gap since 2017/18 is that employers might now be giving less priority to creating a gender balanced workplace. When disclosing their pay data to the official gender pay gap reporting website, organisations can upload a link explaining the reasons behind the size of the gap and any actions that they might be taking to tackle it.
As Table 5 shows, in the first year of reporting, 74% of employers that had submitted their gender pay gap data also gave a weblink to a narrative explaining their figures and any plans they might have to create a more equal workplace.
By 2022/23, however, this proportion had slumped to 56%, possibly indicating that some employers no longer feel the need to justify their figures or actions.
Table 5: Percentage of employers submitting a link to explain their gender pay gap data
Such an attitude might be misplaced. As a recent CIPD podcast on pay transparency discussed, there are many reasons why employers might to give more consideration to being more open about their reward decisions.
As well as gender pay gap reporting in the UK, we are seeing initiatives encouraging more openness around salary both in the EU and the US. In the aftermath of the pandemic, investors and customers are also asking questions of the organisations that they invest in, or buy from, in terms of how they reward all their workers, not just those of senior staff.
Having a narrative to explain reward will not only help employers in dealing with their external stakeholders, it could also help internally. For example, employers should be in a better position to explain to staff what needs to happen for them to get a pay rise or a bonus. Such openness about an organisation’s reward fairness strategy should also help in terms of improving the attraction and retention of talent and improve or maintain performance.
While not a silver bullet, the CIPD believes that at a time when the labour market is tight and economic growth low, having a fairness strategy could help create a competitive advantage for those employers that adopt one. In addition, it could also help create a more equal society. Also, if the number of employers publishing an explanation of their gender pay gap figures continues to drop, then we might see UK Government intervention and a requirement to publish a narrative.
Charles has recently led research into the business case for pensions, how front line managers make and communicate reward decisions, and managing reward risks, as well as the creation of a good practice guide on the annual pay review process. He is also responsible for the CIPD’s public policy work in the area of reward and is a Chartered Fellow of the CIPD.
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