- Places the pay gap for full-time workers at 8.6%, in favour of men;
- Places the pay gap for part-time workers at – 4.4%, in favour of women.
Problems with the pay gap reporting measures
No like-for-like comparisons
- The government’s reporting measures do not take into account key differentials, such as job, background, education or degree level, age, or years of experience
- The measures do not distinguish between full-time workers and part-time workers
- They do not take into account ‘number of hours worked’, which renders the bonus pay gap statistics meaningless
Unnecessary reputational damage for organisations
Despite the inability of the new pay gap figures to reveal sex discrimination, employers are facing reputational damage, threats of boycotts and possibly fines because of these figures.
- EasyJet and Virgin Atlantic are criticised for large gender pay gaps, which result from hiring a majority of women into their largest internal jobs sector.
- Npower and Thomas Cook report higher gender pay gaps, partially because of the salary sacrificing benefits they offer, to give employees more flexibility and control over their work life.
- The National Health Service has been flagged to have a problematic gender pay gap, despite using a national pay scale, which all but completely removes questions of gender discrimination in wage-setting.
The poor incentives created by the gender pay gap reporting measures may be particularly damaging to younger women who are seeking their first job after graduation.
Employers publishing their pay quartile statistics – under the assumption that a higher percentage of women in lower quartiles is a bad result – may feel pressured to hire more men in the lower quartile pay range, denying entry level positions to more qualified women.
Commenting on the report, author and Associate Director at the Institute of Economic Affairs Kate Andrews said:
“While many are waking up to the reality of this abysmal pay gap reporting exercise, it is still defended on the grounds that it encourages us to think more carefully about women’s experiences in work. But bad statistics cannot inform good policy.
“We would not condone teaching a child that 1+1 = 3, for the sake of increasing her interest in maths. We do not praise flat earth theorists for getting people talking about the health of the planet.
“Why should we give credence to meaningless and often deceptive gender pay gap statistics, which have us tackling women’s issues from completely the wrong direction?
“If we care at all about women in work, we must dramatically reform or scrap these pay gap reporting measurements, which incentivise employers to prioritise useless figures over organisational policies that actually benefit working women.”
Notes to Editors:
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To download the IEA’s briefing “The Gender Pay Gap Reporting Measures: 2019 Update” click here.
This briefing is an updated version of “The Gender Pay Gap Reporting Measures” published in 2018.
Author Kate Andrews is Associate Director at the Institute of Economic Affairs.
For more IEA briefings on the gender pay gap, click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
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