Gender pay gap reporting rules should extend to ethnicity and class – here’s why

All for one? Andrey_Popov

Ever since the BBC published the pay of its highest earning talent last July to reveal a big gap between male and female earnings, the issue of gender pay has never been far from the news. We have seen headlines on similar disparities between men and women everywhere from the houses of parliament to the Football Association.

A fuller picture will soon emerge as all UK employers with 250 or more employees have to publish their gender pay gap by April – with the vast majority still to do so. This gender transparency is welcome and the gaps that have already been revealed show major systemic inequalities among UK employers. But the disclosures won’t tell the whole story. Much of the full picture about gender pay will remain obscured, along with other worrying disparities around socioeconomic background and ethnicity.

First a quick word about what gender pay means in this context. It should not be confused with equal pay, which relates to paying men and women the same rate for the same job. Gender pay relates to the difference in total average pay. A company could pay all men and women at the same grade the same amount (so would have equal pay) but could still have a gender pay gap if women are concentrated in lower grade positions with lower pay rates.

Data drawbacks

So what’s wrong with the requirements? They will tell workers how male and female pay levels compare at their employer but they won’t tell them how their pay compares with workers at other, similar, firms. The new rules also only apply to firms employing 250 or more employees, so won’t reveal the gender pay gaps in smaller firms.

Take the case of a female chartered accountant. The “big four” international firms which dominate the profession – KPMG, PwC, Deloitte and Ernst & Young – have already revealed their gender pay gaps. At these firms, female employees earn 14%-22% less than male employees on average (this is known as the median gender pay gap).

Women are also concentrated in lower levels at these organisations, so are less likely to reach the top and earn the highest salaries. The big four acknowledge this and have all committed to implementing policies aimed at addressing these inequalities.

By all accounts … Roman Samborskyi

Outside the big four, the gender gap looks even worse – according to new data just published in The CA, the monthly magazine of ICAS (the Institute of Chartered Accountants of Scotland). A survey of over 1,200 Scottish chartered accountants working in all parts of the UK, employed across a wide range of sectors and occupations, which we analysed on behalf of The CA, showed a median gender pay gap of 31.8%.

The gaps in financial services and oil and gas are particularly worrying – 38% and 32% respectively. And for all newly qualified female chartered accountants, the data shows an 8% gap. This raises serious questions about frequent arguments that gender pay gaps are because women are more likely than men to work part-time and have career breaks once they have children.

With women comprising a third of ICAS members and just over 40% of trainees, the data reflects what is happening to a lot of people. The females who qualify as chartered accountants have done well at school and nearly all are high flying graduates, so the fact that their gender pay gap starts so early in their careers shows there are systemic challenges that need to be addressed.

More gaps

Besides gender, other factors affect pay too. At the 2017 general election, both the Conservative and Labour party manifestos included a commitment to get large employers to report on their ethnicity pay gaps. So far, the government has been preoccupied with other things and there is no prospect of ethnicity pay gap legislation appearing any time soon.

The big four accountancy firms have taken the lead and voluntarily published ethnicity pay gap data, however. This shows a gap of between 8% and 13%, which is high if not as high as the gender gap; again these firms have committed to tackling it. New figures meanwhile show that London’s public workers have an ethnicity pay gap of up to 37%.

Brown barrier. Uber Images

Then there is social background. Research last year by the London School of Economics and University College London for the Social Mobility Foundation showed that a wide range of professionals from working-class backgrounds, including lawyers, accountants, doctors and engineers, earned £6,800 less than more affluent colleagues.

The ICAS data bears this out. Chartered accountants who were privately educated earned on average £12,109 more than their comprehensive school counterparts, a 14% gap. Graduates from the Russell Group of 24 leading UK universities earned £5,500 more than other graduates (a 7% gap).

Those who had a father who had been employed in a higher professional or managerial occupation (such as a doctor, lawyer or chartered accountant) earned £5,000 more than those who came from non-professional or managerial backgrounds (a 6% gap).

In short, the government needs to look again at this area. The rules around gender pay gap reporting need widened. Not only should they include more organisations and make comparisons between them possible, there also needs to be reporting requirements around ethnicity and socioeconomic background. The effects in these areas are substantial enough that there is no justification for focusing on gender alone.

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