The European dimension

As employers in the UK prepare to publish their gender pay gap, we thought it would be interesting to briefly look at the duties placed on employers across Europe to do the same.

The latest figures available from the EU in 2013 disclose an average pay gap figure of 16.4% across member states. As the table below demonstrates, the figure varies considerably: Estonia’s pay gap sits at 29.9% in contrast to Slovenia which has a significantly more modest 4.1%.

The old adage about statistics is, of course, true. Figures alone can be blunt instruments in the absence of context. Italy, for example, has a low pay gap figure, yet this is partly because of low female participation in the workforce. When age is factored into the equation, the UK average figure of 19% drops to 1% for women under 40. This pattern is replicated across member states where relatively low pay gaps exist at the start of working careers and rise dramatically post-35. In addition the pay gap tends to be higher in the private sector and in particular industries such as finance.

What are the causes of the gender pay gap?

There are a number of factors which influence the gender pay gap. Pay discrimination, motherhood and an unequal division in caring responsibilities, women clustering in low paid roles (horizontal occupational segregation) and low female participation in senior roles (vertical occupational segregation) all play their part.

The results can be staggering: according to the UK’s Equality and Human Rights Commission an average woman, working full time from age 18 to 59, will earn £361,000 less in gross earnings over her working life compared to an equivalent male.

The UK approach

From April 2018, UK employers with more than 250 employees will be required to publish their pay and bonus gender pay gap figures, in addition to salary quartiles and the percentage of employees who receive a bonus. As the prospective position stands currently, there will be no formal enforcement mechanism. The current regulations (which are in draft form) do not require employers to produce a narrative explaining the reasons for any pay gap or to provide an action plan to describe remedial action. The UK’s current average pay gap sits at the higher end of the scale in Europe at 19%.

How do other countries approach the gender pay gap?

Many EU countries have gone further than simply a duty to publish, by also imposing obligations on employers to draw up action plans, or in some cases equal pay audits.

Austria’s pay gap sits currently at 23%. This has reduced by 2% since 2008. The National Action Plan for Gender Equality in the Labour Market places a compulsory requirement on companies to publish equal pay reports every two years. All companies with more than 150 employees must take part. The report must include pay levels of men and women per occupation group and average or median income of men and women by occupation group and pay level. Failure to indicate salary in job advertisements may be penalised.

In Belgium, a law on reducing gender pay gap was adopted in April 2012. Its modest figure of 9.8% puts Belgium at the lower range of member states. Companies are required to state the labour costs of men and women (separately) in their annual social balance sheets. This document is sent to the National Bank of Belgium and is publicly viewable. For companies with more than 50 employees, there is a requirement to conduct a comparative analysis of the wage structure of male and female employees every two years. If, as a result of this analysis, it is apparent that women earn less than men for the same positions, the company must produce an action plan.

A multi-industry agreement on gender balance and gender occupational equality was signed by all social partners in France in 2004. Sitting at just under the EU average figure, France has a gender pay gap of 15.2% A new law was then adopted in 2006 requiring companies with more than 50 employees to carry out collective bargaining on occupational equality. A requirement for the gender pay gap to be abolished by 2010 was also set.

The German Federal Ministry for Family Affairs, Senior Citizens, Women and Youth submitted a draft bill in December 2015 with the aim of eliminating the current differences in pay between men and women. Germany has a higher than average pay gap figure of 21.8% and a high level of part time working. Due to come into force in 2016, the legislation will require companies to provide employees (upon request) with information disclosing how much colleagues in similar position earn, and for companies of more than 500 employees, a requirement to introduce mandatory procedures for reviewing and establishing equal pay conditions within organisations.

In Spain, various pieces of legislation, including the Constitutional Act, the 2007 Gender Equality Act and the Law on the Workers Statute, place requirements on companies. For companies with more than 250 employees, there is a requirement to formulate and implement gender equality plans. Spain’s pay gap has increased in recent years to 19.3%. An annual business equality label is granted by the Secretariat of State for Social Services and Equality, highlighting any employer who has performed particularly well at implementing equal treatment policies between men and women.

The Discrimination Act 2009 brought in several requirements for employers in Sweden, which has a pay gap of 15.2%. Employers, as well as employees, must undertake to equalise and prevent pay differences between men and women doing equal work or work of equal value, and employers should promote equal pay growth opportunities for both men and women. There is also a requirement on employers to carry out a pay survey every three years, and to detect, remedy and prevent unjustified differences between men and women’s pay (and draw up an equal plan if they employ 25+ employees).

Conclusion

Whilst initiatives to define and publicise the gender pay gap across UK business are a starting point, it is too soon to say whether a duty to publish will result in employers taking action which will lead to a reduction in the gender pay gap.

Even then, their sphere of influence in closing the pay gap remains limited. Since employers are not responsible for all the problems associated with the gender pay gap, neither can they be held accountable for all the solutions.

There is a significant role in the state promoting a cultural shift towards shared parenting, encouraging young women into a broad range of industries at higher education level, and challenging low paid feminised sectors of the workforce. All of this takes time. While the World Economic Forum, in their Global Gender Gap report, rather depressingly said that it will take 118 years to close the gender pay gap, David Cameron has said that he wants the UK to have done so ‘within a generation’. Let’s hope that it is the latter aim that prevails.