Every year, many businesses across the globe promote their work to support women on International Women's Day, thus turning attention to the gender pay gap.
Let's take a look.
Before we get into what the gender pay gap actually represents, we need to get one thing clear: equal pay (i.e., paying men and women the same amount if their work is similar or the same) is mandatory in the UK.
This falls under the Equality Act 2010.
When we talk about the gender pay gap, many people think this relates to discrepancies in pay between men and women who do the same job, but that is inaccurate.
The gender pay gap calculates the median pay difference between all men's and women's incomes in the workforce. It's calculated by working out the difference between the average hourly earnings of men and women as a proportion of men's average hourly earnings. The calculation excludes any overtime and is a measure used across all jobs in the UK. Beyond the UK, it's also used all around the globe to measure women's position compared to men in the economy.
However, it doesn't consider role or seniority or look at the difference in pay for men and women who do the same job. This makes it problematic.
Although the gender pay gap is commonly used as the go-to number when discussing gender equality in the workplace, it's not an accurate measure of equal pay.
While we fully support a standard global measurement to help identify and track gender pay differences, the current gender pay gap calculation has room for improvement. Gender pay gap statistics tend to be thrown around in the media and by politicians, without much scrutiny of the factors that impact this figure or discussion about what isn't measured.
The way it's currently calculated can provide ineffective and often misleading visibility about gender equality in the workplace. The measurement takes a very narrow view of earnings for men and women. It doesn't consider various societal impacts that typically affect women more than men. For instance, the current calculation is based on full-time employment average weekly earnings. It doesn't consider that only 59% of women in the UK are in paid full-time work. When comparing men's and women's work patterns in the UK, women make up 74% of the part-time workforce, 54% of temporary employment, and 59% of part-time self-employment.
Every year, on March 8th, many companies launch marketing campaigns to mark International Women’s Day (IWD).
These campaigns often feature images of happy working women, and messages of support and empowerment from their employers. In 2022, things went down a little differently in the UK: a Twitter bot, aptly named Gender Pay Gap bot, retweeted every company’s IWD message with their gender pay gap figures, causing embarrassment to many brands.
The couple behind the buzzworthy bot used the publicly available gender pay gap figures to put facts at the centre of the conversation, asking us to consider are organisations doing enough to truly support women in the workplace? More and more, discourse is moving toward facts, rather than intent.
Through the bot, the gender pay gap figures were used to challenge organisations’ genuine commitment to achieving gender pay equality. The only problem, the gender pay gap is not an appropriate metric to measure that.
Committing to building a diverse and inclusive workplace can't be passive; it needs to be centred on a proper diversity and inclusion strategy. Alongside it should be a meaningful measurement of performance and progress. If you can't measure it, you can't improve it. So, how can organisations improve the gender pay gap measurement to get closer to assessing pay equality?
Looking at like-for-like roles can become too narrow (especially in smaller organisations), which means they could quickly lose any statistical significance. Instead, we suggest organisations expand their gender pay gap calculations by framing them at pay levels. Pay levels refer to compensation structure, which can be different across each organisation. Pay level usually mirrors the hierarchy of an organisation, meaning pay is determined on aspects such as level of job, responsibility, position, experience, or accountability.
Making this change may seem like a small step, but assessing gender pay gaps by pay levels, can be a far more helpful calculation because it presents a much more granular picture of what’s happening across different levels of seniority, especially as women are less likely to be in the highest-paying senior roles. For example, The Economist reported that only 20% of females make it to the top quarter. Approximately 30% of a company's gender pay imbalances relate to the share of women who work in low-paying roles.
Improving the calculations is one thing, but we also need to improve how we talk about pay gaps in organisations. Educating our leaders about the difference between equal pay and the gender pay gap and the impact on their female employees is essential.
While the current measures used for the gender pay gap are inefficient, that's no reason to eliminate it. An imperfect measure is a good starting point to raise awareness and provides opportunities for workplaces to build on and improve how we measure and track gender equality. Diversity and inclusion in workplaces matter, but it's no longer enough to talk about what we're doing. We need to measure it effectively, share the results, hold businesses and leaders accountable, and continuously work towards creating workplaces that genuinely support equality.