U.K. Companies Are Disclosing Gender Pay Gaps and They’re Huge

  • Numbers underline how men dominate top ranks while women lag
  • Gaps would be smaller if adjusted for job, rank, education

What's Behind the Gender Pay Gap?

As British companies prepare to make public the difference between what their male and female employees earn, early reports from a handful of companies have revealed pay gaps as high as 36 percent -- twice the national average.

Virgin Money disclosed that men who work at the bank earn, on average, 36 percent more than women. At asset manager Schroders Plc, the pay gap was 31 percent. Utility SSE Plc reported an average pay gap of 23.4 percent, and consulting firm PwC said it found a 15 percent difference in pay.

The companies released the numbers ahead of a new law that requires companies to calculate the difference between the average and median hourly pay rates for all male and female employees, with and without bonus. All companies will be required to publish the results of their pay-gap analysis on their websites by April 2018, a measure that supporters say will help close the gulf in compensation.

The national pay gap is a little more than 18 percent, according to government statistics. That’s a blunt average, though, and reflects a slew of factors, including the fact that men hold a bigger proportion of senior jobs and high-paying roles. Throughout the U.K., women hold 60 percent of the lowest-paying jobs, while men make up 60 percent of the top paying posts, according to data from the Confederation of British Industry.

Job Functions

“The way men and women are segregated into different job functions is the biggest driver of the gender wage gap,” said Andrew Chamberlain, chief economist at Glassdoor Inc. The job search site uses self-reported data from the thousands of job seekers, then looks at job title, experience, education and other factors to understand how men and women with similar backgrounds are paid.

When adjusted for these factors, men in the U.K. still earn 5.5 percent more than women, compared with a 5.4 percent gap the U.S., he said.

For Virgin Money, the 36 percent pay gap it discovered wasn’t out of whack with the rest of the financial services sector, where the average pay gap is around 34 percent. Still, said Matt Elliott, the company’s people director, “It isn’t something that we can accept.” By other measures, the company is ahead of some of its peers: Four of its 10 corporate directors are female, including its chief executive officer.

Service Roles

Looking deeper, Virgin found it still had too few women in senior roles. It also lacked men working in customer service. As a result, men make up 67 percent of the best-paid employees and just 26 percent of lowest-paid.

“We need to make consumer-service roles more attractive to men,” Elliott said. “I don’t think we’d have been looking at this without the pay gap work.”

Virgin is also trying to provide more support for women as they move up through their careers. The company has a maternity mentoring program, as well as an app that lets women keep in touch with their colleagues when they’re on leave.

SSE’s internal review also revealed discrepancies that went deeper than its overall average (which is about average for its industry). At the company, 34 percent of men received a bonus, compared to 12 percent of women. And among those who got bonuses, men’s awards were on average 32 percent bigger.

Women’s Paths

The company says its pay gap reflects that it has fewer women in operational roles -- the result of a gender gap in science and technology education. It also said that publishing the data helps inform business and address pay disparity overall.

Not everyone agrees. The CBI opposed the new regulations on the grounds that the numbers don’t give a complete picture, and also that there are many causes for the pay gap, many of which are out of companies’ control.

In a report prepared for the employers group, Anthony Fincham, a partner at law firm CMS, explained why the new requirement is unfair. "If employers are not responsible for all the problems, they cannot be held accountable for all the solutions," he wrote. Affordable child care, better career advice and education are all needed to bring women’s compensation in line with men’s, he said.

Still, U.K. workers support disclosure. In a survey by Glassdoor, 58 percent said the government should force employers to reveal salaries in order to combat unequal pay. Shareholders have also begun to pressure companies to reveal -- and close -- gender pay gaps. Firms that can do so will have an advantage both with investors and in recruiting.

“Most talented women are not going to want to work at a company with bad numbers -- it will be a turnoff,” said Avivah Wittenberg-Cox, who consults on diversity at global companies. “Companies need to adapt their cultures to a more gender-balanced world.”

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