Gender pay gap data 2020/2021 – why firms haven’t improved and what they need to do

The average pay gap of all firms that submitted their data is the same as the last financial year

Here, DiversityQ examines the results of this year’s gender pay gap submissions, why firms aren’t confident enough about submitting their data, and what can be done to close the gender pay gap.

Following raised awareness about sexual violence and harassment against women, other factors of women’s inequality are also being discussed, including the gender pay gap. But with news that the gender pay gap hasn’t improved for this year’s 2020/2021 reporting deadline, we need to explore what businesses are doing wrong.

This year’s findings

According to the BBC, the average gender pay gap of all the firms that reported their gender pay statistics in the past financial year is 10.4%, the same as the average of all firms reporting in 2019/2020.

This year’s results reveal that the pay gap continues to overwhelmingly favour men compared to women (7,572 vs 1,286 firms). What’s more, only 770 firms reported having no pay gap.

A firm’s gender pay gap can be caused by the lack of women in senior roles and more women working in part-time jobs due to many having additional roles as caregivers.

However, the good news from this year’s reporting deadline is that more organisations reported in time which amounted to 9,628 companies compared to 6,945 in 2019.

This means that the Government’s decision to extend the deadline from April to 5 October 2021 has worked to some extent, but there are still not enough firms reporting their data.

A major external factor as to why the gender pay gap hasn’t closed can be seen in the impact of COVID-19 on businesses; however, beneath this, gender bias lurks.

COVID-19 and the gender pay gap

There’s a concern that furlough has compromised the reliability of data submissions. The Government told firms to exclude furloughed employees from most of the calculations. With women being more affected by furlough due to their high representation in badly hit industries such as retail, the data among some firms could be inaccurate.

Unequal treatment during COVID-19 also plays a part in the enduring gender pay gap, according to new research by the ADP® Research Institute called “People at Work 2021: A Global Workforce View.”

The study that involved female and male workers across 17 countries found that women were less likely than men to have received monetary rewards for taking on new roles and responsibilities during the pandemic. This amounted to around half of women in Europe, North America, and Latin America that were rewarded financially compared to around three in five men.

The study also looked at the UK in isolation, where 68% of women received a pay rise or bonus for taking on new roles and responsibilities during COVID-19 compared to 76% of men.

However, there could be other reasons to explain the lack of improvement in the gender pay gap, including a lack of understanding among firms about what the gender pay gap is.

1. Lack of knowledge and understanding

The gender pay gap is not about unequal pay, which is paying women less for the same work as a man, which has been illegal since the Equal Pay Act of 1970. Instead, it relates to the differences in pay between men and women across an entire organisation.

Reporting a firm’s gender pay gap can be achieved by reporting its median pay gap, such as pay disparities between a middle-ranking woman in an organisation and their male counterpart.

Calculating a mean pay gap is also an option, which is the difference between a company’s total wage spend per woman versus per man which is achieved by “taking the total wage bill for each and dividing it by the number of men and women employed by the organisation.”

Aside from a lack of knowledge about the gender pay gap, firms may feel they can get away with not submitting data. Organisations may also be unsure about how to report on underrepresented groups.

2. Lack of regulatory advice and discipline

There’s been an absence of regulatory advice about how firms can make calculations for staff that don’t fit into the female or male genders, such as non-binary employees.

Firms may also be hesitating to submit their data due to an absence of sanctions from the Government, where, as a result, gender pay reporting has likely slipped further down their list of priorities.

The Equality and Human Rights Commission (EHRC) had promised “unlimited fines and convictions” for firms that failed to report their data. Back in 2019, The Guardian discovered that zero companies had been fined for this, showing that there’s a legacy of lack of inaction by the Government in forcing the issue.

Internally, businesses may also fear the repercussions of publishing poor gender pay gap figures, including the possibility of damaging their brand and looking unattractive to job-seekers.

3. Fear of brand damage

Firms could be reluctant to publish their gender pay data in case they open themselves up to criticism and damage their brand in an era when job-seekers increasingly want to work for an organisation that prioritises diversity and inclusion in their workforce.

However, by publishing figures, firms can measure and improve them where there is clear business evidence for pursuing gender diversity, especially among leadership teams which will be outlined below.

Why firms should want to close their gender pay gap

According to a well-known McKinsey study entitled “Diversity wins: how inclusion matters”, firms in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile.

Generally, the study found a correlation between improved business performance and gender, ethnic and cultural diversity in corporate leadership, where diversity of background, perspectives, and experience can fuel problem-solving and drive innovation as well as stop the prevalence of groupthink, where homogenous teams can make poor decisions due to lack of diverse thoughts and perspectives.

From a recruitment perspective, firms that have a greater gender balance across all levels of their organisation will appear more attractive to younger job-seekers, such as the diversity and inclusion-minded Gen Z, who will soon account for the majority global population and want to work for organisations that evidence their commitment to creating a fairer and more inclusive workplace.

However, to be fully attractive to this growing employee population, firms will have to ensure that they hire more women with an intersectional lens, including appointing women of colour, women from the LGBTQ+ community, those with disabilities, and more.

These businesses should also remember that increasing diverse representation in job positions won’t ensure inclusivity. Policies must be implemented so groups such as women feel they belong in the workplace which can help retention rates, such as providing flexible working styles for working mothers.

Early-stage recruitment processes should also be re-examined like ensuring job postings have gender-neutral language and removing names from the first CV sift.

Dr Jo Kandola, Psychologist and Head of Digital Solutions at workplace psychology consultancy Pearn Kandola suggests that gender stereotypes could play a role in stopping women from progressing in their careers, meaning a lack of women in senior roles and, therefore, an enduring gender pay gap:

“It’s disappointing, yet unsurprising to see that the gender pay gap hasn’t improved this year. We know that the gap is caused by a lack of women in senior roles, so what’s causing this?

“During the promotion process, when the number of people who can move up is restricted, the questions shift to ‘who is the most competent?’ And, when considered amongst men, due to gender stereotypes, women are viewed as having less competence. Consequently, having more women within an organisation is unlikely to transition to a higher number of women in senior roles.

“A common suggestion that many think will help to reduce the gender pay gap is to increase the presence of women on recruitment panels. That’s because where there is gender disparity, there is an assumption that it is caused by men. But, what if women, including myself, are explicit in our own subordination? Our research at Pearn Kandola has found that women more easily associate men with competence than they do women. So, having gender-balanced panels is unlikely to lead to different outcomes.

“The common misconception is that women need to up their game, and make more effort – to negotiate salary, or develop new skills – to get into senior roles. But, actually, the true cause of the gender pay gap that we see today is gender stereotypes. To tackle these, we need to fix the system, not women themselves. Offering better leadership and negotiation training isn’t the solution. Instead, we need to tackle the problem at its root; we need to reject the belief that men and women are different in terms of their skills and abilities. And this first starts with widespread education.”

In this article, you learned that:

  • The average gender pay gap of all firms which reported their gender pay statistics in the past financial year is 10.4%, which is the same as the average of all firms that reported in 2019/2020.
  • In the UK, a new study has found that 68% of women received a pay rise or bonus for taking on new roles and responsibilities during COVID-19 compared to 76% of men.
  • The gender pay gap is not about unequal pay, which is paying women less for the same work as a man, and has been illegal since the Equal Pay Act of 1970.

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