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Revised draft gender pay gap reporting regulations to be laid before the UK Parliament

2016 has seen a greater focus on the economic benefits of reducing gender pay gap. Close the Gap published Gender Equality Pays, which sets out the evidence of the economic case for addressing women’s labour market inequality. A range of global business organisations including McKinsey and Co, and PwC have also published reports on the business and economic benefits of addressing the gender pay gap.

At the beginning of December, the UK Government published a revised version of the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. The regulations are still awaiting parliamentary approval, but are expected to come into force on the 6 April 2017 with employers in England, Scotland and Wales with 250 or more employees required to publish their first gender pay gap report before 4 April 2018.

In August the UK Government consulted on mandatory pay gap reporting in the public sector in England, and it is anticipated that similar regulations for English public bodies will be drafted in the due course.

What do employers need to do?

Private and third sector employers with 250 or more employers will be required to publish:

  • The difference between male employees’ mean average hourly rate of pay and female employees’ mean average hourly rate of pay, expressed as a percentage.
  • The difference between male employees’ median average hourly rate of pay and female employees’ median average hourly rate of pay, expressed as a percentage.
  • The difference between male employees’ mean bonus pay and female employees’ mean bonus pay, expressed as percentage.
  • The difference between male employees’ median bonus pay and female employees’ median bonus pay.
  • The proportions of male and female employees who were paid bonus pay.
  • The proportions of male and female employees in the lower, lower middle, upper middle and upper quartile pay bands.
  • Information must be published within 12 months of a single pay period around the ‘snapshot date’ of 5 April 2017. This means that the first pay gap report will be due by 4 April 2018, and on the same date each year after.

Which employees are to be included?

Pay gap calculations must be based on “full-pay relevant employees” which is defined as “a relevant employee who is not, during the relevant pay period, being paid at a reduced rate or nil as a result of being on leave”. “Leave” includes annual leave; maternity, paternity, adoption or shared parental leave; sick leave; and special leave.

This was an amendment following employer concerns that including female employees who were on leave with a reduced level of pay such as maternity leave would leave to an distorted pay gap.

Which elements of pay are included?

“Ordinary pay” means basic pay; allowances; pay for piecework; pay for leave; and shift premium pay.

“Bonus pay” means any remuneration that is in the form of money, vouchers, securities, securities option, interests in securities, profit sharing, productivity, performance, incentive or commission.

How to calculate pay gaps

The regulation includes helpful detailed methodology on calculating:

  • Gross hourly pay, using an employee’s normal working hours where applicable, and adopting a 12-week reference period for employees whose hours vary per week.
  • Mean and median pay gaps for ordinary pay and bonus pay.
  • The proportion of male and female employees according to quartile pay bands.

Under the Public Sector Equality Duty listed Scottish public bodies have had to publish their gender pay gap and occupational segregation since 2013. The regulations relating to the Scottish Specific Duties do not include any methodology which created some confusion, and contributed to poorer performance than anticipated which was identified in Close the Gap’s assessment work of the duty in 2013 and 2015.

How is information to be published?

Employers are required to publish the information with a written statement, signed by a director, on their website which is accessible to the public, and to remain there for at least three years from the date of publication.

How will it be regulated and enforced?

There are no penalties set out but this will be reviewed if levels of compliance are not satisfactory. The UK Government will “from time to time” carry out a review of the regulations and publish a report of its findings which includes whether the objectives of the regulations are achieved; assess whether the objectives remain appropriate and “is so, the extent to which they could be achieved with a system that imposes less regulation”. The first review must be carried out within five years, and future reports published at intervals of no more than five years after that.

The Explanatory Notes states that failure to comply with the regulations will constitute an “unlawful act” and empowers the Equality and Human Rights Commission to take enforcement action, although no specific provision to achieve this has been included in the regulations. There is no additional information as yet on the UK Government additional resource to the Commission to undertake compliance work. In our consultation response we called for the Government to ensure that EHRC was adequately resourced to carry out compliance and enforcement work, and that ring-fenced resources are allocated to the Commission in Scotland to undertake work with employers in Scotland.

Will mandatory pay gap reporting realise change for working women?

The regulations are a welcome first step in addressing the systemic pay inequality that women experience in the labour market. It will ensure that accountability in the private and third sectors reflects accountability in the Scottish public sector where public bodies have been publishing their pay gaps since 2013. However, Close the Gap remains concerned that the threshold of 250 employees excludes SMEs which account for 99.9% of private sector companies, and most third sector organisations.

Women are more likely to work in smaller organisations, and smaller employers are less likely to have good equalities practice because they often don’t have a dedicated HR role within their business. Smaller employers are also less likely to have undertaken an equal pay review or taken any action to address pay gaps.

The regulations also don’t go far enough, as there is no obligation for employers to take further action on the findings of their pay analysis. Without this obligation there is a risk that employers will simply report their pay inequalities without undertaking actions to address the problems. It would be a costly exercise for employers simply to analyse and report, but fail to use their data to its fullest in developing concrete work to effect change. Only time will tell, and we will be keeping a close eye on this reporting.

You can read Close the Gap's response to the UK Government consultation on closing the gender pay gap here.

Equal Pay Day

Today marks Equal Pay Day in the UK when women will in effect be working the rest of the year for free. This day reflects that on average, women are paid less than men. In Scotland gender pay gap is 15%.

The pay gap is stubborn with little significant movement in recent years, reflecting the persistent and entrenched inequalities women face at work.

Women and men are still segregated into different types of work based on gender stereotypes, and despite post-recession rises in the female employment rate, women’s employment in general has become increasingly precarious. So-called ‘women’s work’ continues to be concentrated in low paid, undervalued roles such as care and cleaning with an increasing number being on temporary and zero hour contracts.

The gender pay gap contributes to women’s higher levels of poverty at a time when women’s economic independence is under attack by the UK Government’s ‘welfare reform’. 85% of the cuts implemented under the austerity agenda so far have come from women’s incomes.

 

 

In 2017 legislation will be introduced by the UK government that will require private and third sector organisations with more than 250 employees to publish their gender pay gap, and the gender gap in bonus earnings. This is a helpful first step towards increasing accountability within the private sector, and will align larger private sector employers with existing requirements for the Scottish public sector where organisations are already obliged to report their pay gap and occupational segregation information under the public sector equality duty. However reporting alone is not enough to realise change for working women. Close the Gap’s response to the UK Government consultation on the new measures sets out the imperative of employers taking action to address gender gaps and inequalities, and the new regulations do not require employers to do this.

The economic case for addressing women's labour market equality is clear: closing the gender gap in employment would add £17bn to Scotland's economy.

Close the Gap has created a free online tool for employers which enables business to identify the benefits of gender equality to their organisation. Think Business, Think Equality offers businesses a series of tests which lets them assess their current employment practice, and identifies small changes they can make to advance equality, while at the same time improving productivity.

Watch this five minute short film here on the business benefits, or take the Think Business, Think Equality test here.


October (& September) News Roundup

We've been busier than usual bees this past while, so we missed September's news roundup. Not to worry though - we've packed the very best (and worst) stories on women and work into this month's bumper edition. Recent headlines cheer on the (very small) decrease in Scotland's gender pay gap (helpfully using the full-time pay gap, which excludes over 40% of working women), alongside less welcome news that sexism and sexual harassment is considered "the norm" in schools, and TUC research which shows women earn £8500 a year less than men by the time they reach their 50s. Ugh.

Now October's over we're putting the finishing touches to our CtG Bunker, just in case the U.S. election goes belly-up. Who knows what November's newsround will look like. We hope it's pantsuits all round.

Women are the majority of public sector workers, future workforce strategies must have a gender analysis

‘Glacial’ pace of change on gender gap is costing country £17 billion, with comment from us

The pay gap is closing, but not fast enough

Women work 39 days a year more than men

The focus on full-time pay gap only is not helpful. 40% of working women are in (mostly low-paid) part-time jobs.

Scotland's gender pay gap remains stubbornly high at 15% - blog

Icelandic women leaving work at 14:38 today - the time in a work day when they effectively stop being paid

More than 40% of young women believe their gender will count against them during their careers

Asda workers win major step in equal pay claim battle

Report shows sexism & sexual harassment against girls is a daily occurrence & the norm at school

"I’ve had several of them touch my bum ‘for a laugh'": tradeswomen share their stories

TUC research shows women earn £8500 a year less than men by the time they reach their 50s

Charity launches Building Equality project to tackle roots of domestic abuse

On International Day of the Girl, this film shows how girls face discrimination even before they are born

Over on the blog today we're all about #AdaLovelaceDay #ada16

Girls do 50% more chores than boys which has "lasting effects on [girls'] self-esteem and sense of self-worth"

Campaigners call for Scotland's new social security system to have women's equality at its heart

New research by Family Friendly Working Scotland finds just 12% of parents and carers feel they're got the right work-life balance

Within a generation or by 2069? Getting rid of the gender pay gap poses difficult questions

Coalition of businesses unite to end pregnancy discrimination in workplaces, supported by EHRC

Today on our blog Francis Stuart of Oxfam Scotland asks what does decent work mean to women?

Just £189m of £329m childcare fund given by Scottish Government to local authorities has been spent delivering childcare

Glasgow firm Pursuit Marketing, one of the first businesses to use our Think Business, Think Equality tool, moves to 4 day week, maintaining salary levels. Already productivity is up & sickness down.

Emails reveal toxic sexist workplace culture at Apple

TUC Equality Audit 2016: 46% of unions reported bargaining gains for women

Engender’s gender edit of the 2016 Programme for Government

Oxfam Scotland’s Decent Work research - useful data on low-paid women and work, and highlights some gendered differences in what makes decent work

New Gender Pay Gap Remains Stubbornly High

Close the Gap has calculated the difference in pay between women and men working in Scotland using the latest Annual Survey of Hours and Earnings (ASHE) tables released from the Office of National Statistics this morning.

2016 has shown the stubborn nature of the pay gap with the overall mean figure remaining just below 15% with a slight increase of 0.1% on the 2015 figure, now sitting at 14.9%.

Similarly women working full-time now earn 10.7% less than men working full-time, also an increase of 0.1 percentage points.

2016 did however see a decrease of 1.3 percentage points on the part-time figure to 32.2%, when comparing women’s part-time average earnings to men’s full-time average earnings. This could be partly due to the impact of the introduction of the living wage by a number of Scotland’s public sector employers. Women are more likely to work within the public sector and be concentrated in part-time work in undervalued, low-paid jobs such as cleaning, admin, caring which would benefit most from the introduction of the living wage.



Sector

Overall pay gap %

Full-time pay gap %

Part-time pay gap %

Public

12.1%

7.3%

26.8%

Private

23.6%

19.6%

40.6%

Third sector

15.6%

11.9%

38.6%

 

Source ONS (2016) Annual Survey of Hours and Earnings Table 25.6A (Accessed OCT 2016.)

 

The public sector overall, full-time and part-time pay gaps are lower than the national averages, whilst the private sector pay gap is considerably higher for each group. The Public sector pay gap also decreased by 0.9% which may have contributed to the overall reduction in the part-time pay gap. For the first time the new ASHE release has allowed for pay gap’s in the third sector to be calculated. The figures for this sector were all higher than the national averages for Scotland.

Despite there being little change in the Scottish pay gap for 2016 the new figures for Scotland continue to remain lower than the UK overall figure of 17.3% and for the full-time (13.9%) and part-time pay gaps (32.7%).


 

Scotland

UK

Overall pay gap %

14.9%

17.3%

Full-time pay gap %

10.7%

13.9%

Part-time pay gap %

32.2%

32.7%


Source ONS (2016) Annual Survey of Hours and Earnings Table 3.6A (Accessed OCT 2016.)


The gender pay gap: at a glance

  • The mean average overall gender pay gap is 14.9%.
  • Women working full-time earn 10.7% less than men working full-time.
  • Women working part-time earn 32.2% less than men working full-time, showing that part-time work continues to be characterised by low pay.
  • The mean is calculated by adding all employees’ hourly rates of pay together and dividing by the total number of employees. This includes those on the highest and lowest rates of pay. As those with the highest rates of pay tend to be men, and those who receive the lowest pay are more likely to be women, the mean captures a more complete picture of the gender pay gap.
  • The median is calculated by finding the midpoint in all employees’ hourly rates of pay and discarding the lowest and highest rates of pay. The median is not skewed by very low hourly rates or pay or very high hourly rates of pay, but this method can obscure gendered pay differences

While we're developing our updated annual paper on gender pay gap statistics, if you want to know about the key indicator of women's labour market equality, you can find out more from our 2015 paper.

Happy Ada Lovelace Day!

The second Tuesday in October – today – is Ada Lovelace Day, an international celebration of women in science, technology, engineering and maths. Augusta Ada King, Countess of Lovelace, to give Ada her full title, was born in 1815 and is considered to be the first computer programmer. A gifted mathematician, she received instruction from an early age from a series of noted scholars, including Mary Somerville, a Scottish astronomer and mathematician who was one of the first women to be admitted into the Royal Astronomical Society.

Ada Lovelace day aims to highlight the contributions of women across the STEM fields, and encourage and inspire girls and women to pursue study and careers in science and technology. This is important for a number of reasons. The majority of women with qualifications in STEM subjects do not work in STEM areas; 73% of female graduates do not go on to have a career in STEM. This is a huge waste of women’s skills, talent and contribution, which is bad for women, and bad for Scotland’s economy. STEM occupations see some of the most significant patterns of occupational segregation, and it is no accident that this corresponds to some of the highest skills shortages. Work to enable women to participate fully in STEM study and careers has the potential to plug this gap and stimulate innovation, productivity and economic growth.

But how do we encourage women to work in STEM? Gender stereotyping works covertly and overtly from a young age to set out that science is for boys, not for girls. The tech sector in particular has long been a hostile environment for women, with many women working there experiencing sexism on a regular basis. We have also seen recent media coverage of the scale of sexual harassment and gender violence by UK university staff; with the combination of this and the effects of gender stereotyping throughout the education and skills pipeline, is it any wonder the number of female professors, particularly in STEM subjects, remains so low? Attitudes which allow women to be treated like this contribute to an environment which also allows women to be paid less and passed over for promotion, and the constraints on women’s lives which prevent them from equal participation in the labour market apply in STEM occupations just as much as in others.

And yet, change is possible. The Scottish Government’s Developing the Young Workforce strategy makes specific commitments to address gender segregation in education, with a focus on STEM subjects, and its ‘Returners’ project aims to support women to update their skills and knowledge after taking career break, so they are more able to return to work at the same level, encouraging employers to support and retain these skilled employees. Our own Be What You Want project works in schools to tackle gender stereotyping through building capacity among teachers and young people to identify and challenge it. And, celebrating their ten year anniversary this year, Equate Scotland works to promote, develop and support women in STEM. Their work includes providing career development sessions, delivering training on assertiveness, returning to work and developing employment skills and creating networking opportunities with STEM employers.

Work to address gender stereotyping which sees girls and young women funnelled away from STEM subjects must be combined with work to address sexist attitudes and environments in further and higher education, and in workplaces, which prevent women from making the most of their skills and talents, and staying in these subject areas. Alongside this work must also continue to address women’s wider labour market inequality, including expansion of accessible and affordable childcare, and increasing access to flexible work, particularly in senior and specialist roles – a key problem in the STEM sectors.

In her work, Ada Lovelace theorised a method for a machine to repeat a series of instructions, a process known as looping that computer programs use today. We already have a series of instructions for increasing women’s participation in STEM subjects and careers – we just need to follow them.

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