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Gender pay gap reporting - it's not all bad news.

Jun 01, 2020

Katy Bennett, Director at PwC, comments on PwC analysis showing gender pay gap has reduced slightly - for those who have reported: 

"In March, the Government Equalities Office announced that they were suspending the deadline for 2019/20 gender pay gap reporting due to the impact of the Coronavirus (COVID-19) on employers. 

"Whilst recognising that this suspension supports the many employers who were significantly impacted by COVID-19, we continue to encourage all employers who can do so to continue to report, demonstrating their ongoing commitment to tackling the gender pay gap and promoting gender balance in their workforce. 

"Our analysis shows that approximately 48% of organisations continued to voluntarily report their pay gap in 2019/20 (although some had already submitted this data before the reporting requirement was suspended). Of those who disclosed, medium to large sized employers were the most likely to continue to disclose, with 70% of the FTSE 100 continuing with disclosure. Unsurprisingly, we have also observed significant variation in disclosure rates across industries, with financial services (and in particular banks) being amongst the most likely to continue with disclosures. 

"Of those who did disclose, the median of the mean pay gap reported was 13.7%. On the face of this, this suggests an increase compared to the median mean last year of 13.1%. However, this trend may well be misleading due to the significant number of companies excluded from the 2019 data set. If we compare like to like data (i.e. only look at companies who disclosed in 2018 and 2019) we actually see a small decrease in the gap of (0.5%). Although it is positive that this suggests that overall the year on year trend continues to be downward, it should be noted that the change remains small. Organisations will need to continue to focus hard on improving the balance of men and women in their organisations, particularly at senior levels, before we see a significant change to the overall pay gap."

Comparison of those companies who reported their gender pay gaps both this year and last:

Gender pay gap reporting - Comparison of 2018 v 2019 - PwC UK

From the companies who have disclosed this year, there is movement (albeit slight) in the right direction: 

Gender pay gap reporting - change to quartile representation - PwC UK

Comments on impacts of delaying the gender pay gap reporting deadline – Katy Bennett, Director at PwC

"While the immediate impact of Covid-19 on gender pay gap reporting was the suspension of the April 2020 deadline for companies to report their 2019 data, there will inevitably also be an impact on future reporting.

"The Government decision to suspend the gender pay gap deadline allowed many organisations to delay reporting their 2019/20 data, while they focused on the immediate response to Covid-19. However, it’s encouraging to see that almost half of in-scope organisations went ahead with reporting.

"This shows that many companies had already completed their analysis by the time of the announcement. It also shows that increasing numbers of employers are taking their diversity and inclusion commitments seriously. For those able to report, this voluntary approach offered an opportunity to reinforce to staff and stakeholders the company’s continued commitment to closing their gender pay gap.

"The Government has not yet announced when the new deadline for 2019 reporting will be in place. Companies whose business operations have been significantly impacted by Covid-19 are likely to delay their reporting until hard deadlines are reintroduced by the Government. However, other organisations should consider carefully the balance between the work required to report and the potential reputational impact of not reporting voluntarily, particularly where competitors have done so. 

"Pay gap data is collected by companies from April payroll data, meaning that for 2020/21 reporting, the "snapshot" of April 2020 will be skewed for many organisations, making comparisons with previous years (and therefore measurement of progress) difficult.  Specifically, we would anticipate that for many companies we may see:

  • Reduced numbers of staff included in the April 2020 snapshot. Under current regulations it’s likely that staff who are on furlough, are being paid a reduced salary or are on certain types of leave will not be included in gender pay gap calculations. This will mean that the number of employees used to calculate gender pay gaps may be significantly different between 2019 and 2020. 
  • We anticipate reductions in bonuses in some companies due to Covid-19 – and therefore we will probably see YoY changes to bonus gaps - the impact of this will vary significantly depending on when an organisation assesses and pays bonuses. We would expect to see reductions in bonus payments (and therefore an impact on bonus gaps) with the impact being seen in some companies next year and in others the year after. This will make year on year changes in bonus gaps as well as comparisons between different organisations difficult.
  • Other anomalies in pay, such as pay increases for certain key workers. This will have a knock on impact on the pay numbers used to calculate the pay gap. 

"All of these factors could impact an organisation's gender pay gap, depending on the gender balance of the employee base overall and how far Covid-19 has impacted individual companies. At this point it is uncertain whether or how the Government Equality Office will adapt current reporting requirements to address these challenges (and indeed when the current suspension on the reporting deadline will be ended).

"Ultimately, it would be difficult to adapt the existing regulation in a way that would fully or considerably address these anomalies without considerable complication, whilst changing the snapshot date to another month would potentially bring in other complications or inconsistencies. At the same time, it seems unlikely that the Government (and organisations who are committed to improving their gender pay gap) would wish to remove reporting requirements completely for a full year of reporting. As such, we expect that, unless directed otherwise by the Government, organisations that are able to report will continue to do so based on the existing regulations (potentially on a voluntary basis if the suspension of the deadline continues).  Where possible, companies should consider, on a voluntary basis, identifying and communicating any major staffing and pay inconsistencies caused by Covid-19 by presenting additional voluntary figures assessing their impact." 

 

Ends

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Ellie Raven

Ellie Raven

Senior Manager, media relations, PwC United Kingdom

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