Mind the gap on gender pay reporting

25 April 2018

If you work for a large UK company, it's likely your employer will be legally obliged to publish a 'gender pay gap' report. Sarah Robinson finds out what this means, how it works and what's happening in the UK shipping industry…

From 4 April 2018, all UK companies with 250 or more employees will be required by law to carry out a 'gender pay gap' review and publish the results on their own website and on the government website

It's a measure that stems from the Equality Act 2010 but has only recently come into force, and it's sparking a great deal of debate – as well as a degree of misunderstanding.

In this article, we'll be getting to grips with UK gender pay gap reporting and how it applies to the shipping industry. And to help with our investigation, we've sought the opinions of two experts: Sam Smethers, chief executive of the Fawcett Society, the UK's leading gender equality campaigning charity; and David Appleton, Nautilus professional & technical officer and former seafarer.

What is the gender pay gap?

Put succinctly by Sam Smethers, it is: 'A measure of the difference in average hourly pay between men and women.'

It's usually calculated for the staff in a particular company or organisation, but can be applied across a group of related organisations, a sector, or a whole country. Indeed, as the April 2018 gender pay gap reports come in, the UK government is committed to looking at the gender pay gap at a national level and taking steps to close the average gap. 'There's cross party support for this in parliament,' notes Sam, 'with MPs from the Conservatives, Labour, Liberal Democrats and the SNP all backing the legislation that introduced gender pay gap reporting.'

What do you have to report, and how do you calculate it? 

The following four types of figures have to be reported for each participating company:

  • gender pay gap (mean and median averages)
  • gender bonus gap (mean and median averages)
  • proportion of men and women receiving bonuses
  • proportion of men and women in each quartile of the organisation's pay structure

To calculate the gender pay gap across the organisation, each employee's hourly pay rate must first be worked out, because obviously it would not be meaningful to carry out the review using monthly or annual salaries; this could give the impression that some people were unfairly paid differently when in fact some had simply worked more hours than others.

Companies are also strongly encouraged to provide a 'narrative' in their report.

Although this is not mandatory, the ACAS guidance document Managing Gender Pay explains that it is important because 'reporting a gender pay gap does not necessarily mean a company has acted inappropriately or discriminatorily, but this will need explaining. A narrative helps anyone reading the statement to understand the organisation's view of why a gender pay gap is present and what the organisation intends to do to close it.'

Reporting a gender pay gap does not necessarily mean a company has acted inappropriately or discriminatorily, but this will need explaining... ACAS guidance document - Managing Gender Pay
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Gender pay gap data for shore-based workers in the UK shipping industry

These gender pay gap figures shown here were calculated in November 2017 by the Maritime HR Association.

The researchers collected the hourly pay rates of 2,720 shore-based workers at a range of UK maritime companies, as well as the amount each employee had received in bonuses. They then calculated the gender pay gap across the sector – i.e. the percentage difference between the average hourly pay of men and women.

The figures show that, on average, male shore-based workers in the UK shipping industry earn over 45% more than their female colleagues.

Employees of both genders have about the same likelihood of receiving a bonus, but the amount of this bonus will, on average, be over 60% higher for a man than a woman.

As shown in the chart, the gender pay gap for shore-based workers in the UK shipping industry compares unfavourably with large companies in other sectors, and it is particularly notable that Rolls Royce – known for its recruitment and training of female engineers in a male-dominated industry – has a small pay gap.

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Is the gender pay gap the same thing as 'equal pay for equal work'?

No. 'Equal pay for equal work' is about ending the practice of paying a woman less than a man for doing the same job, or when they are working in a role which is of equal value (e.g. shop floor workers vs warehouse staff). In the UK, that practice has been illegal for several decades.

Having a large gender pay gap across an organisation is generally considered undesirable, but it's not in itself illegal.

So what does the gender pay gap tell us?

The gender pay gap is essentially a comparison of men and women's progress within an organisation. 'The process of calculating the gender pay gap does sometimes throw up violations of equal pay legislation,' says Sam Smethers, 'but it's more a way of taking a fresh look at your company as a whole, and seeing whether you are making the most of all your employees' skills and talents.'

At the most basic level of analysis, the presence of a gender pay gap can tell us:

  • there are more men than women in senior positions
  • male employees are being awarded bonuses more often, and at a higher rate, than female employees
  • the lowest-paid jobs in the company have a concentration of women

And before anyone writes in: yes, gender pay gap data can sometimes show a bias in favour of women at a company, but in Sam's substantial experience, this is rare. 'Even in organisations that employ more women than men,' she notes, 'we often see that the men have higher average hourly wages because they are more strongly represented in the senior positions. Where women are earning more on average than men, a negative pay gap will be reported, but this is unusual.'

It may not come as news to management or staff that men are more successful in their company than women, but gender pay gap reporting is useful in showing quite how far apart the male and female employees are. This can be a wake-up call for companies that have 'talked the talk' about equal opportunities but have not yet succeeded in creating a well-balanced workplace.

Being held to account by gender pay gap reporting should prompt companies to investigate further, drilling down into their data and exploring the reasons for the gap.

'An example of an issue that often comes up in this deeper analysis,' says Sam, 'is a relatively poor hourly rate for part-time work – where we tend to see many more women than men. Part-time work does not have to equate to low-skilled or junior positions, and it is a waste of women's expertise when companies have them working below their skill level just because they are part-time.'


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