The pay gap between women and men is coming under the spotlight in the U.K. New rules require firms with 250 or more employees to calculate and report any disparity in wages between male and female workers by April 2018. As the first releases trickle in, there’s been a wave of controversy sparked by the nation’s public broadcaster, the BBC, which disclosed a wide gap among pay for presenters.
1. What prompted the rule?
David Cameron, who served as prime minister from 2010 to 2016, made addressing the gender-pay "scandal" part of the Conservative Party’s agenda. By shedding light on the issue, the government hopes employers will consider ways to remedy the situation. Announcing the new disclosure rules in 2015, Cameron said they would “cast sunlight on the discrepancies and create the pressure we need for change, driving women’s wages up.” By the time the rules took effect this year, Cameron was out of office, replaced by the U.K.’s second female prime minister, Theresa May.
2. How wide is the gap?
The pay gap was 18.1 percent in 2016, including both full-time and part-time workers. That’s down from 27.5 percent in 1997, according to the U.K’s Office for National Statistics. The agency says the gap is caused, in part, by women working part time more often than men. The disparity is also the result of women tending to work in occupations with lower pay and taking time out to have children.
3. Why does this matter?
Fairness isn’t the only consideration. Eliminating the difference could add 150 billion pounds ($196 billion) to annual gross domestic product by 2025. Output would grow by boosting female participation in the workforce and by encouraging women to work longer hours and to move into more productive jobs such as those in science and engineering, according to a study by consulting firm McKinsey & Co.
4. What are companies required to report?
They must calculate what, if any, difference there is between the average salary and bonuses of their male and female employees, the proportion of each gender receiving a bonus and the proportion of men and women in each pay quartile. Those findings must be published annually on both the government’s and the company’s websites -- and kept there for at least three years. Companies are also being encouraged to publish “action plans” showing how they will attempt to close any gaps.
5. What do the reports show so far?
Of the roughly 9,000 companies large enough to fall under the rule, just a select few have so far published their figures -- which haven’t been encouraging in terms of pay equity. Virgin Money said that men earn, on average on an hourly basis, 32.5 percent more than women. Asset manager Schroders Plc reported its pay gap as 31 percent. At Deloitte LLP, the number is 18.2 percent. (The gap is much wider when it comes to bonuses -- 45.3 percent at Virgin Money, 66 percent at Schroders and 50.9 percent at Deloitte.) Because these headline figures are based on the sums of male and female wages, they don’t necessarily reflect the differences in paychecks received by men and women doing the same job at the same company.
6. How did the BBC become part of the story?
The British Broadcasting Corporation released a pay report on July 19 that went beyond the government requirements and revealed the names and salaries of its top stars and executives. It showed that, of the BBC’s highest-paid employees in 2016-2017, just under a third were women. Also, the top 14 on-air earners included only two women, Claudia Winkleman and Alex Jones. Though the report caused an outcry, the BBC’s director general, Tony Hall, said the overall pay gap was 10 percent -- better than the national average. The BBC can also boast of its decision to feature, for the first time, a woman in the role of time-traveling Dr. Who in the network’s long-running cult sci-fi series of the same name. She’ll have pay parity with the last actor to play the role.
7. Who’s leading the outcry?
Critics of pay inequality include the Women’s Equality Party, which was founded in 2015 during the Women of the World Festival in London and had a membership of more than 65,000 as of a year ago. The party fielded candidates for London mayor and for Parliament in the June general election, giving it airtime on the national stage.
8. Are other countries doing this?
Yes. Australia passed a similar law in 2012, and Germany is implementing one. Austria and Belgium were other early adopters. The U.S. last year began requiring companies with at least 100 employees to disclose pay data, broken down by race and gender, to the Equal Employment Opportunity Commission, though that information won’t be released publicly unless the federal agency files a discrimination lawsuit.
The Reference Shelf
- A Bloomberg Businessweek article asks why companies can’t just fix the gender wage gap.
- The U.K. government’s website on the rules for reporting and its page explaining the wage gap.
- The McKinsey report, "The power of parity: Advancing women’s equality in the United Kingdom."
- A report by the Center for American Progress on approaches to closing the gender wage gap around the world.
- Data on the global wage gap from the Organisation for Economic Cooperation and Development.