Recent analyses have suggested that women are paid less than men at four out of five employers in the UK. For full-time employees, the GPG actually increased between 2021 and 2022, shooting up from 7.7% to 8.3%.
As a result of Brexit, the UK won’t be required to adopt the EU Pay Transparency Directive. So, what is the British government doing to address the persisting gender pay gap in the UK?
Going back to 2010, The Equality Act mandated that organizations with more than 250 employees must publish their Gender Pay Gap annually. In 2023, 10,427 companies disclosed this information.
This pressure to be transparent enforces accountability as organizations must measure, acknowledge and publicize their pay discrepancies. But as inequity persists, is airing their dirty laundry really making companies commit to tackling the problem?
In its Spring Budget this year, the government announced that it will extend 30 hours of free childcare for working parents in England to cover one and two-year olds. This will help to address one root cause of the gender pay gap - the fact that women pause their careers to care for children more often than men.
Yet, it’s clear that the brunt of the responsibility for tackling the GPG falls upon individual companies. They must analyze the metrics behind their pay inequalities to effectively address them. If not? British companies may risk falling behind as organizations in Europe and beyond make progress in eradicating the gap.
The United States
The gender pay gap also has an enduring grip on the US. In fact, the gap has barely closed in the past two decades. In 2022, American women typically earned 82 cents for every dollar earned by men,
Whilst the UK’s legislative response to the GPG has remained relatively stagnant, some states in the U.S. are shaking things up with new pay transparency laws.
The regulations that have swept into Colorado, New York City, California and beyond require companies to disclose salary ranges for open positions. The overarching aim? To reduce pay disparities based on factors like gender, race and ethnicity.
For companies, the stakes are high. Non-compliance can lead to employers being fined up to $250,000 if they continually omit meaningful pay ranges from job postings.
Yet, evidence suggests that many companies were unprepared for the new rules. After the law was implemented in Colorado, many junior level jobs were still being posted without a salary range. In the pharmaceutical industry, only 5% of pharmacy technician job posts included a pay scale.
As more states turn to transparency and employee attitudes around pay shifts, American companies need to be ready to justify their pay practices and squash any discrepancies.
The average difference in earnings between men and women in Germany has been stuck at 18% in recent years. This is significantly larger than the EU average and, in 2020, gave Germany the undesirable title of second-worst country for pay equality in the bloc.
In 2017, in an attempt to bridge its worrying gender pay gap, Germany introduced the Transparency of Pay Act. One of its key aspects? To give individual employees the right to information about remuneration paid to peers of the other gender, including the criteria used to determine it.
The uptake on the individual right to information had a relatively quiet start. Initially, when the new regulations were proposed, there was a fear that employees would be overrun with eager requests.
Yet, whilst employees didn’t sprint to HR en masse, German companies need to ensure they have the bureaucratic structures and objective processes in place to be able to respond to employee requests. The deadlines for providing the information are tight, so companies will find themselves in a tough spot if they need to start the process from scratch.
With the implementation date of the shiny new EU Pay Directive fast approaching, German companies need to work hard to address pay inequality. With an 18% gap nationwide, there are clearly a lot of employees who could - under the new regulations - be empowered to take their employers to court for unfair pay.
Spain has also mandated pay transparency with the goal of eliminating direct and indirect pay discrimination. Back in 2021, the Royal Decree 902/2020 came into effect, seriously shaking up how many organizations in the country approached compensation.
As well as an employee's right to information, the decree also mandated that companies with 50 or more employees must have a job evaluation system. The JE system is intended to establish equal pay for equal value, ensuring that job classifications are objectively based and do not perpetuate discrimination.
For the many companies who’d never had a formal JE system in place, the new regulations came as a serious shock treatment. Organizations quickly realized that they needed structure and order in their job architectures in order to start tackling unequal pay - and avoid hefty fines.
It seems that a systematic approach to pay equity is working. In 2022, Spain’s gender pay gap was sitting at 8.6%. Considering that the country’s GPG was 20% just a decade ago, this shows significant and promising progress
If one thing is clear in 2023, it’s that pay equality is a global priority. As new legislation pops up in all corners of the world, pressure is mounting on organizations to get serious about structuring their job evaluation and compensation processes. The upcoming EU Pay Directive is sure to only further illuminate the pay discrepancies that have, for decades, been hiding in plain sight. The gender pay gap is closing - make sure your organization isn’t caught in the middle.
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