Business Irish

Wednesday 20 September 2017

We can't lay all the pay-gap blame on our firms: society needs a culture change too

'The gender pay gap is the difference between what is earned on average by women and men, based on average gross hourly earnings of all employees.' (stock image)
'The gender pay gap is the difference between what is earned on average by women and men, based on average gross hourly earnings of all employees.' (stock image)

Catherine O'Flynn and Louise Harrison

Gender pay disparity has again been in focus in recent weeks, following the publication by the state broadcasters in the UK and Ireland respectively of data about their employees' pay.

Employers in the UK are now required to disclose gender pay data under legislation in place since April of this year. Companies with over 250 employees are obliged to publish gender pay gap data by no later than April 2018.

In Ireland, a private members bill was initiated by Ivana Bacik of the Labour Party in May which, if enacted, will require employers having 50 or more employees to publish data on gender pay disparity.

The gender pay gap in Ireland is 13.9pc according to most recently published Eurostat figures, which show that the average gap EU-wide is 16.7pc.

Reporting this gap without a deeper analysis is misleading as it can create a perception that women are paid less simply by virtue of being women. The reality is less straightforward.

The gender pay gap is the difference between what is earned on average by women and men, based on average gross hourly earnings of all employees. Gender pay gap disclosure involves highlighting the difference between the average pay received by all working women and men, as distinct from the pay of women and men in comparable roles working equivalent hours per week.

The existence of the gap of itself does not therefore prove discrimination by employers or that women are not receiving equal pay for equal work. The gap is, however, stark evidence that there are real obstacles to women doing as well as men at work.

It would be wrong to lay the blame for these barriers at the door of employers or to classify them as a HR issue.

The reality is more complex, the disparity being underpinned by a number of existing cultural, societal and socio-economic factors, as well as the legacy impact of historical issues.

As Ibec and other commentators in Ireland have observed, disclosure is not a magic bullet. Indeed this is explicitly recognised in the explanatory memorandum relating to the Irish private members bill, which describes the proposed regime as a 'diagnostic rather than a curative measure'. Meaningful reform will only come about when cultural and social change happens, for which there is no quick fix. The systemic reform needed for women to fully realise their potential in the workplace will come about only when deep seated, often subconscious beliefs and assumptions about gender roles and occupational stereotypes about leadership and success are challenged and eradicated.

Education will be key to this end. Separately, significant government investment in childcare and early education is badly needed.

The inevitable introduction of gender pay gap disclosure will undoubtedly represent an administrative burden for business.

A key concern for employers (borne out by the recent controversy about pay at the BBC) is the scope for reputational damage. Mandatory disclosure also has the potential to create internal HR issues and grievances which in turn can have a bearing on workforce morale and productivity.

Industry resistance to the concept is understandable but there is now an opportunity for employers to prepare for the likely introduction of disclosure in a way that will both mitigate risk of adverse business impact and boost employee morale and in turn loyalty and output.

Practical steps employers should now consider taking would include review of pay and bonus practices and assessment of the annual review process. The imposition of objective criteria or parameters for the exercise of discretion in the award of pay increments or bonuses might be considered, since opacity in relation to pay reviews can support an inference of bias.

Some employers have found that the introduction of fixed salary and bonus bands made known to employees (with a consequential limitation of scope for individually-negotiated pay increases) has been beneficial in terms of avoidance of the HR disruption that can follow pay reviews.

Prudent employers will examine whether advanced technology might accommodate more flexible, family-friendly working policies (for both genders). An employer who embraces pro-active measures to support career resumption and progression for mothers returning from maternity leave and who communicates openly in this respect will have little to fear about a mandatory disclosure regime.

When the legislation was introduced in the UK, the view was expressed by some legal commentators that gender pay gap reporting obligations would likely do more to resolve pay disparity in the short term than decades of equal pay legislation.

Only time will tell whether the disclosure model will achieve meaningful progress.

The introduction of a publication regime in Ireland will certainly not by itself resolve gender pay disparity. However, in terms of encouraging reflection at societal level and incentivising employers to examine and revise their practices for unconscious gender bias, it can contribute towards reform.

Catherine O'Flynn is a partner in William Fry's Employment & Benefits Department. Louise Harrison is an associate in William Fry's Employment & Benefits Department.

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