Explaining the Gender Pay Gap: Why is it happening and what can be done?

May 17, 2019

2 min read

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What's going on here?

Littler Mendelson (the largest US-based employment law firm) released an article discussing what positive steps firms can take to battle gender inequality.

What does this mean?

Large companies (which includes most of the city law firms) now have to disclose all of their gender pay information every April. This year across all large companies, it has been shown that in the UK, the pay gap increased from 9.2% in 2017 to 9.6% in 2018. The law firm Littler Mendelson has tried to figure out why this has happened and what can be done to counteract it.

What's causing it?

There are many complex reasons why the gender pay gap numbers are still unsatisfactory. However, there are two factors that experts believe are greatly impactful.

  1. Lack of sanctions
    The Equality and Human Rights Commission (the EHRC) is the body responsible for enforcing the gender pay gap rules in England and Wales. In 2018, it sent over 1,400 letters to companies asking for their pay data. While all of then responded, many of them gave data that was clearly wrong. Yet those wrong figures are still visible on the government’s website. The EHRC said that they’re not pursuing these companies. So other than pressure from the public and from journalists, there’s no real crackdown from regulators.

  2. More time needed
    While companies may report small positive changes (or even no change), this doesn’t necessarily mean that no progress is being made. For example, if a law firm brings in a lot of female trainees (at the lower rung of the pay ladder), the pay gap could be skewed further if many of the higher earners in the company (for example, the partners) are male. This demonstrates how the numbers don’t always match up to the reality. But in time, these problems should disappear.

What can be done?

Sam Smethers (CEO of the Fawcett Society, a UK campaign group for women’s rights) says that it’s “time for action plans, not excuses”.

Top things that a company can do to remedy the gender pay imbalance are:

  • Recruitment: Introducing blind recruitment processes can help to reduce any unconscious bias.

  • Promotion and career development: After looking at the senior, high-paying roles in the organisation, companies should assess whether there is a balanced gender representation in the pipeline.

  • Examine pay and bonuses: Carrying out a “pay audit” can improve transparency and give a firm a better understanding of where the issues lie.

  • Family-friendly rights: Firms should have a look at their family-friendly policies. It should be culturally and financially viable for men and women to take periods of leave while not feeling that their careers will be jeopardised.

Ultimately, to make a real difference, companies need to play the long game. While regulatory punishments seem nonexistent, there is significant publish pressure on all big companies (including law firms) to up their game. In time, positive changes should be seen.

Report written by Idin S

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