Mind the Gap
No single statistic can tell the whole story.
From 2017, organisations with 250 or more employees must publish specific figures about their gender pay gap.
Defining the gap
The gender pay gap is the difference in average pay of men and women, expressed as a proportion of male average pay.
Organisations must calculate their gender pay gaps for hourly pay, where ‘average’ pay is defined as:
- the mean: add up the values for all people in a group, then divide by the number of people in that group;
- the median: order the values; if there is an odd number of people: pick the middle one (if there is an even number: calculate the mean average of the middle two).
These reported figures are for the whole organisation, and there are no adjustments for the type of role, background, age or experience.
Equal pay legislation makes it unlawful to pay men and women in the same employment differently for the same work. This has been the case in the UK since the Equal Pay Act 1970.
Gender pay gap reporting must not be confused with unequal pay or wage discrimination.
Distributions
In an organisation that has equal pay policies, the gender pay gap (whether the mean or median) is reflective of the hourly pay distribution of men and women across that organisation.
Alongside the headline gender pay gap measures, organisations must also publish the gender pay gaps in bonus pay (mean and median), the proportion of men and women receiving bonuses and the proportion of men and women in each pay quartile.
To use an example institution, Barclays UK has a median gender pay gap of 14%, and women outnumber men in every pay quartile except the highest.
Collider Variables
The consultancy firm Korn Ferry calculated the British mean gender pay gap in 2016 was 0.8% for jobs at the same level, company and function.
There are issues with this analysis, called ‘collider bias’.
Discrimination and structural barriers caused by gender may be present when accessing certain occupations or job roles.
The current gender pay gap reporting reflects the distribution of men and women in an organisation, and is not a proxy for wage discrimination.
It is important to recognise why gender pay gaps develop, to better understand what public policies and cultural changes may be required to reduce those gaps.
