Positive shifts, persistent problems: an assessment of five years of employer gender pay gap reporting

It’s now five years since the introduction of gender pay gap reporting for large private and third sector organisations. We’ve published our latest employer assessment today, which looks at the reports of 50% of Scottish employers covered by the reporting regulations. It presents an in-depth analysis of reporting in 2021 and 2022, and compares this with previous reporting to identify if progress is being made.

The reporting regulations were introduced following a UK Government initiative – Think, Act, Report – which sought to encourage employers to report their pay gap voluntarily. Of almost 300 employers who signed up, only seven reported their pay gap, demonstrating the need for mandatory reporting.

In 2018, organisations published their first reports. In this year, and every year employers have reported since, Close the Gap has completed an assessment of the extent and standard of reporting, and whether it is creating change for women in the workplace in Scotland.

Despite some positive shifts, there remain persistent problems. More employers are taking action, but the majority of that action remains small-scale and untargeted, which is simply not enough. Too many employers point to gender inequality at a labour market and society level as a reason they’re unable to create change in their organisations, instead of taking action. We found some great examples of employer action that are included in the report, and prove that progress is possible.

First Bus (FirstGroup) has taken long-term action to attract more women and has doubled its female workforce since 2017. A significant contributor to this has been a trial of part-time bus driver roles (15-25 hrs per week) which has resulted in 50% of new hires being women, up from 2%.

Natural Power have introduced a scheme to contribute to the cost of childcare for employees returning to work after maternity or parental leave, which pays returners a £400 bonus payment per month for 12 months.

Calmac Ferries has established a working group to identify barriers to working at sea faced by women, including around caring responsibilities and returning from maternity leave. They have held focus groups with female employees to understand their experiences and identify how they can improve practices.

Despite this positive change, we’re still a long way from seeing the level of consistency and commitment needed to tackle women’s inequality in the workplace.

The key findings of the assessment are as follows:

• There has been little progress made in narrowing the gender pay gap: the average pay gap of employers assessed remains stubbornly at 12%. In 2022, the vast majority of employers (80%) have a gender pay gap in favour of men, up from 78% in 2021.
• The prevalence of bonus gaps has not changed, however the average bonus gap itself has narrowed significantly from 33% to 11%. It’s possible that bonuses may be generally lower in 2022, resulting in a drop in men’s bonus pay with a smaller or no drop in women’s bonus pay. It’s also possible that organisations reduced some of their highest bonuses, which are more likely to be paid to men, due to economic uncertainty arising from the pandemic. However, as most employers did not describe any changes in their approach to bonuses, it was not possible to identify why this gap has narrowed.
• In 2021 there were high pay gaps of up to 60% in male-dominated sectors such as sport, construction, finance and manufacturing, and up to 80% in the same sectors in 2022. The average pay gap in the most male-dominated organisations in 2022 was 24%. This is double the headline average of 12%, and an increase from 21% in 2021.
• There remain very high bonus gaps of up to 100% in male-dominated sectors such as sport, manufacturing, wholesale and retail trade, and transport and storage. This aligns with existing evidence on the causes of the gender pay gap. In the wider labour market female-dominated organisations generally do not have high pay gaps.
• Since 2018 there has been a significant increase in the proportion of employers publishing a narrative report alongside their pay gap information, up from 30% in 2018 to 48% in 2022. This is positive, as publishing data alone will not lead to change. However, the vast majority of analysis (76%) was found to be of poor quality, indicating employers may still need to build their understanding of how to use their data.
• The proportion of employers that have committed to action to tackle their pay gap has almost doubled from around one in five (19%) in 2018 to more than a third (36%) in 2022. Encouragingly that the quality of actions has also increased with just over a fifth (21%) considered satisfactory and another fifth (21%) considered good. There has also been a doubling in the proportion of employers setting targets, albeit from a very low base, from 5% in 2018 to 11% in 2022.

When the gender pay gap reporting regulations were first introduced, Close the Gap highlighted a fundamental weakness: they require employers to report their data, but they do not mandate them to take action. The UK Government asserted that organisations would be motivated to take action voluntarily by their pay gap data, despite the results of the Think, Act, Report initiative indicating otherwise. It is clear that this theory of change is flawed and is simply sustaining the gender pay gap and women’s inequality at work.

Extensive evidence from Close the Gap, along with international evidence on pay gap reporting regimes, shows that reporting alone does not create change. In 2023, we’re calling again for a strengthening of gender pay gap reporting regulations to require organisations to use their data to develop and publish an action plan, and to report on progress against it. If the regulations remain the same, it also means more of the same old gender inequality for women at work.