New research by the Chartered Management Institute (CMI) has found that the gender pay gap for female executives has grown this year and that on current figures it will take almost 100 years for women executives to catch up with the pay of their male peers – 50 years longer than reported a year ago.
On average, male managers are paid £10,500-plus a year more than women in the same jobs. The report compared salaries on a like-for-like basis. It found that women executives currently earn an average of £31,895, compared with £42,441 for male executives. The gap has widened since last year, increasing from £10,031 to £10,546. These figures put the pay gap for female executives at about 25 per cent this year, even higher than the full-time gender pay gap as a whole, which is currently 15.5 per cent.
So why do gender pay gaps still exist, more than 40 years after the enactment of equal pay legislation? There are a number of key factors, many of which overlap and reinforce each other.
There are often appreciable differences in starting salaries between men and women. It has been suggested that women may be less likely than men to negotiate
in response to an employer’s opening offer, whether on joining or on promotion. Inequalities in starting salary can then become entrenched or even made worse by discrimination, conscious or subconscious, in pay review processes.
Length of service is thought to be a key cause of gender pay gaps, as pay schemes based wholly or partly on length of employment are common. Women tend
to change employers more frequently than men, to accommodate childcare responsibilities. Using length of service to decide pay can mean that those men who are able to stay with an employer for long periods can ’build’ better salaries then women, often simply by virtue of staying power.
The recession is playing its part too. The CMI research found that senior women are almost twice as likely as men to have been made redundant in the past year. Female directors fared even worse, with almost five times as many women directors losing their jobs compared with men. Even where women are able to keep their jobs, financial constraints restrict pay rises, and this means pay differentials can remain unchecked. Where employers want to narrow pay gaps by giving higher pay rises to those paid less than their counterparts, they may find themselves unable to do so because of the overall economic position.
In a working culture where people shy away from discussing pay, many women may never know if they are being paid less than their male colleagues. To address this, there are legal procedures to enable the disclosure of pay information. If a woman believes she is being paid less than a male colleague doing the same or a broadly similar job, she has the right to request pay information from her employer. The Equality Act allows an individual to serve a questionnaire on their employer to enable the individual to see whether they are being paid fairly. This can include information about the pay histories of colleagues, which makes this a highly sensitive area. Partners and members of LLPs, as well as employees, are protected against gender discrimination in relation to their terms and benefits.
On a collective level, women can encourage employers to be more open generally about pay, and to adopt transparent pay schemes, as these reduce the scope for inequalities to creep in. Provision for mandatory equal pay audits was included in the Equality Act but will not now be brought into force. However, employers who really want to address pay equality issues should monitor pay regularly and publish the results.