There is a pay gap in the UK, with the Financial Times reporting that women are still being short changed compared to their male counterparts. The gender pay gap worsened from an average of 11.8% in 2017 to 11.9% in 2018. Pay gaps though aren’t entirely gender-based; black and ethnic minorities are also getting short changed.
An audit focusing on organisations in Greater London shows that minorities at the Transport of London and Mayor’s Office for Policing and Crime earn less compared to their white counterparts. Sian Berry, co-leader of the Green Party and London Assembly member, claims that there shouldn’t be a pay gap, as it is a sign that “systems are discriminating.” In response, London mayor Sadiq Khan has called for pay disclosure rules, saying, “The colour of your skin should have no bearing on what you can achieve. This data clearly shows there is more work to be done.”
The mayor’s suggestion is a step in the right direction, especially since there is little talk about the ethnicity pay gap when compared to that involving gender. The Telegraph’s feature on ethnicity pay gaps point out that black and ethnic-minority employees lose out, on average, some £3.2bn a year due to this difference in salary. The question is, what else can be done to address this problem?
The Conversation suggests changing job descriptions as a possible solution to address the gender pay gap. Full-time work in the UK is structured in a way that working long hours is expected. This perpetuates the idea that those capable are entitled to higher pay. Men, in this case, are at a distinct advantage, as women generally have to transition to part-time work, if they are considering motherhood. As many as 38% of women work part-time, as opposed to only 33% who work full-time. In contrast, only 7% of men do part-time work. This difference “diminishes” part-time work, and this seeming belittlement is reflected in negligible wage increases and has a detrimental effect on the chances of getting a promotion. It doesn’t help that many employers view part-time workers as having less commitment, thus confining them — women, in effect — to low-paying jobs.
A solution is to alter job descriptions so that pay and promotions are not directly tied to working hours but on actual performance. This effectively eliminates concepts of part-time and full-time work. Pay differences based on working hours will be reduced, if not totally eliminated, i.e., just because someone works longer hours doesn’t mean they deserve higher pay. While this is innovative, making it work is the challenge. It could require legislation and the full support from the majority of UK companies. Even in the off-chance it is implemented, it will — and this is the best-case scenario — only address the gender pay gap.
Transparency is key
The minority pay gap, on the other hand, requires a different solution – pay disclosure. Mandating companies to disclose salaries results in pay transparency, as explained in a Forbes article about addressing pay gaps. UK-based tech firm Verve implemented measures towards full transparency, and surprisingly, no employees left as a result. Discussions about salary differences occurred, but Verve top brass justified everyone’s wages by using objective data.
In some ways, the UK government is in a Catch-22 because it has limited control over how private firms run their business. It did, however, institutionalise pay ratio regulations, and through the National Statistics Office releases data regarding levels of pay. The economic calendar on FXCM includes an Average Earnings Including Bonus report that indicates “how levels of pay are changing within the UK economy.” It’s not a solution, but it gives companies an idea as to where they stand in terms of compensating their employees.
Consequently, companies behind the standard might just be compelled to adjust accordingly. The government has also ordered companies with 250 or more employees to report their gender pay gap. Hundreds of firms did, while 15 organisations — led by the Bank of England, Deloitte, and Sodexo — voluntarily reported minority pay gaps. These are positive developments. The hope now is that they can reduce those gaps.