The Gender Pay Gap - Why Does It Exist?

29/08/17

Rebecca Gissing - Assurance Director at PwC

It’s been two years since the government announced plans to force companies with more than 250 employees to publish their gender pay gap.

The new rules came into effect in April 2017, however very few companies have published their data. Recently we saw the BBC, for the first time, take the unusual step of disclosing who their highest paid presenters were. This caused not only concern as to how TV licence payers’ fees were being used but also a potential backlash from female stars, as the figures revealed that of the 96 highest earners only a third were women with the top seven all being men.  

The requirement to publish gender pay data has been welcomed in many quarters as a positive step by the government which should in theory go a long way towards tackling both the symptoms and the causes of gender inequality in the workplace.

But why is there a gender pay gap, what’s the root cause and should all businesses be doing something to address this?

One of the predominant contributory factors as to why a gender pay gap exists is women managing the fine balance between the desire to have a family and have a great career, however in reality to manage both can often have a detrimental impact on someone’s career and subsequent level of pay. Having a family undoubtedly results, in most situations, in a substantial amount of maternity leave being taken with the norm being in the region of twelve months.

But should this still be an issue? Well simply the answer is ‘no’. Yes it is difficult to balance both – I should know being the mother of three children – but with the advancement in technology it is no longer the norm for people to spend their working day sitting behind a desk in an office. Many employers, including PwC, have flexible working policies which are designed to fit with ‘work life balance’. I’m not suggesting that women should dispense with maternity leave but instead employers should recognise that women who do decide to start a family can still contribute to the successful running of a business even if they are not physically in the office – an approach which helps to ensure that the brakes are not put on someone’s career and therefore helps to avoid any impact on career and possible disparity in pay.        

But should this be a concern just for large entities/organisations? If anything this is more of an issue for smaller businesses than larger ones. Larger businesses may well be better equipped to facilitate a more flexible approach to working, have the technology in place and have a structure which will allow both men and women to progress their careers on an equal footing.

Smaller privately owned businesses operate in a very competitive space and therefore distinct points of difference in how they operate can make a real difference in terms of attracting and retaining talent which can be a bigger issue to smaller companies. It is essential that smaller organisations are open and transparent on what they do to address the gender pay gap and there are distinct benefits in doing so. Rewards include loyalty of staff, the creation of a positive perception of the company and an increase in corporate reputation.

Today people value recognition and the visibility of a clear career path rather than a monetary value; gone are the days of people swapping and changing roles simply down to financial rewards. People today value what the company they work for stands for and how that company treats them as an individual – simply choosing a new role for an extra £5k is no longer a common motivation.

Smaller privately owned businesses need to demonstrate a passion and drive, creating a balance within how people work - flexibility - so people can manage both families and work and therefore be in a position to sustain a career and subsequently narrow and avoid the issue of gender pay gap.       

Publishing information on gender pay differences will create a strong sense of accountability needed for businesses to drive real action and to implement change. Organisations with high gender pay gaps may fear the reputational risk by disclosing their figures, but the key is to explain clearly why gaps exist and what is being done to address the causes and close the gap. Companies that do so are much more likely to be seen as taking it seriously and be viewed in a positive light.

PwC’s position:

PwC takes a leading stance in publishing its gender pay gap and is one of the first UK companies to voluntarily publish its gender pay gap analysis back in 2014 and has done so every year since in its annual report.

We review pay and bonus by gender, ethnicity and different working patterns – full to part-time. We constantly take action to address any gaps and to make sure our policies and practices are fair. This includes actively reviewing decisions on out of cycle payments, pay for new hires and our annual pay and bonus rounds.

We also report our gender pay gap adjusted for the different gender demographic across the grades as we still have more men than women at our most senior grades.

 

 

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