10,000 British Companies Revealed Their Pay Gaps. Here’s What We Learned
As of Wednesday night, more than 10,000 U.K. companies with at least 250 employees completed the humbling process of submitting to the British government their gender pay gaps.
The main takeaway—a median pay gap of 9.7% across the reporting companies—is not all that surprising, unless the phenomenon of men being paid more than women is brand new to you. The pay gap between genders in the U.K. and beyond is well-documented and persists, in large part, due to the “motherhood penalty,” women’s salary negotiating tactics, and employer bias.
In October, the U.K. statistics office pegged the nationwide pay gap at nearly the same level as the company disclosures: 9.1%. So what’s the point of the government forcing U.K. firms to reveal what we already know?
In implementing the disclosure requirement in 2016, the British government sought to close the pesky divide with a naming-and-shaming approach. It assumed that company-specific reporting would embarrass firms so much that they’d be forced to alter their hiring and pay practices. And indeed, beyond the overall 9.7% gulf, individual companies did submit some compensation figures that favor male employees to an alarming degree.
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Goldman Sachs, for instance, reported that in the U.K., women earn a median hourly rate that’s 36% lower than men’s, and that women account for just 17% of its highest-paid employees.
At Barclays, the median pay gap is 43.5%, with women making up 19% of the highest-paid.
Women at HSBC, Europe’s largest bank, earn a median hourly rate that’s 29% lower than men’s. Of the firm’s highest-paid employees, 34% are women.
Now that the numbers are in, it’s time for companies to make sweeping changes—or at least that’s what the government hopes will happen.
The core of the problem is that, with few exceptions, there’s a lack of women in management and leadership positions. And in all fairness, some companies have already announced plans to address this issue.
Goldman Sachs says it’s working to move more women into more senior roles. Airlines EasyJet and Virgin Atlantic, with median pay gaps of 45.5% and 27.2%, respectively, say they’ll aim to hire more female pilots since women are currently concentrated in lower-paying jobs, like flight attendant.
(For its part, Barclays says it’s “confident that men and women…are paid equally for doing the same job.” Likewise, HSBC has stood by its pay practices, saying it makes appropriate adjustments when it identifies pay disparities that aren’t due to performance or experience.)
Finance and airlines were among the industries with worst pay discrepancies.
Companies that have offered up solutions to their pay gaps have done so voluntarily; the government initiative that prompted the disclosures does not, in fact, require companies to explain their gaps—let alone do anything to narrow them.
It’s worth noting that female-friendly Iceland has taken a more forceful approach, enacting legislation that requires employers to prove they are paying men and women equally or else face a fine.
The U.K.’s strategy, meanwhile, is wholly reliant on public humiliation as an engine for change. One day after the disclosure deadline is too soon to evaluate the effectiveness of that approach, but skeptics should keep this in mind: The U.K. government provided no real incentive other than transparency in its push to get more women on boards. As of this year, the share of female directors in the FTSE 100 has increased from 12.5% in 2011 to 29%.