Gender pay gap – how do ombuds services fare?

Gender pay equality isn’t about who gets the bigger ice cream (important though that is)

By Margaret Doyle

Here in Britain, it’s hard to ignore the recent hubbub about gender pay equality. The other day, 4 April, was the big reveal. All private-sector and most public-sector employers with 250 or more employees are now required, under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, to publish data on the differences in average hourly pay for men and women in their organisation – the gender pay gap. The new regulations require organisations to report annually (and initially by 4 April 2018), on:

• the difference between the average hourly rate of pay paid to male and female employees
• the difference between the average bonus paid to male and female employees;
• the proportions of male and of female employees who receive bonuses; and
• the relative proportions of male and female employees in each quartile pay band of the workforce

The differences in hourly rate must be reported as both mean average (the result of adding all the rates and dividing between the number of rates) and median average (the mid-range number of all the rates). Mean averages give a useful overall average but can be skewed by bonuses applied to only some employees. Median averages give a ‘typical’ rate, what a middle-earning employee earns; they don’t tell you as much about the overall picture but are also less likely to be distorted by outliers.

The resulting data (available on https://gender-pay-gap.service.gov.uk/public/assets/pdf/gender-pay-gap-explained.pdf) have been pored over, analysed, celebrated and dismissed in the news over the past few days. Some organisations have had shamefully poor report cards; others surprisingly good ones. The reasons for gender pay disparity are many and complex, and the gender pay gap reporting requirement is a fairly crude measure of equality, but it is one that can be measured, and in this sense the initial reports serve as a valuable benchmark against which to gauge progress. How organisations respond to the results is the true test of their integrity in relation to gender pay equality.

Is this about equal pay?

The gender pay gap is not the same as equal pay, which is paying men and women the same for the same or similar work. Failing to comply with the equal pay legislation is illegal (and has been since the Equal Pay Act of 1970, although it is now covered by the Equality Act 2010). However, having a gender pay gap is not illegal (although failing to comply with the 2017 Regulations is – see below).

The gender pay gap is the difference in average hourly wage of all men and women across the organisation. The pay gap generally reflects men being paid more than women, on average. In some organisations, the pay gap is in favour of women; ie the average hourly wage is higher for women than for men. This is true for 13% of organisations reporting. A further 7% reported no pay gap at all. The vast majority reported a pay gap in favour of men.

Failure to comply with an obligation imposed by these Regulations constitutes an ‘unlawful act’ within the meaning of section 34 of the Equality Act 2006 (c. 3), which empowers the Equality and Human Rights Commission (EHRC) to take enforcement action. The EHRC has been in the news making it clear that it will be rigorous in investigating non-compliance with the Regulations and, where necessary, taking enforcement action.

What does it tell us?

The median gender pay gap in Britain in 18.4%, according to the Office for National Statistics. However, that figure covers all organisations, not only those with 250 or more enployees. The median gender pay gap reported to the government ‘gender pay gap portal’ is 9.7%, according to the BBC (see http://www.bbc.co.uk/news/business-43651780). Almost eight out of ten of the more than 10,000 organisations reporting on the portal pay men more than women.

The gender pay gap identifies potential structural inequality, not inequality or discrimination at an individual level. Although there is some criticism of the crude nature of the data being reported, it is generally accepted that reporting on the gender pay gap reveals patterns and trends about the proportion of women in senior positions, which in turn gives insights into potential barriers for women in the workplace, including the effects of prejudice and unconscious gender bias and of caring responsibilities (for children, elderly parents, etc) still primarily being taken on by women. Identifying a gap in pay can help organisations see that there’s a problem that needs addressing.

A female employee earns 33p for every £1 paid to a male employee of Ryanair.

A female employee of the Financial Ombudsman Service earns 93p to every £1 paid to a male employee.

These problems will be specific to the employer or sector. For example, many airlines are reporting a high gender pay gap because pilots, who are paid much more than cabin crew, are predominantly male. In education, one factor is that women with family responsibilities are drawn to a sector that offers part-time and term-time work, which for administrative staff and teaching assistants usually means lower hourly pay. These are not excuses for tolerating a pay gap, however. Rather than tolerating a pay gap, organisations need to consider their recruitment and promotion strategies.

What causes a gender pay gap?

Having a gender pay gap is not evidence of intentional discrimination but does reflect entrenched patterns and as such it invites honest reflection on the part of organisations. A number of complex factors influence an organisation’s gender pay gap (as noted by the EHRC), including but not limited to:

• Men at the top: The highest paid sectors are male-dominated; women often end up in employment sectors that offer narrower scope for financial reward.
• Undervaluing some work over others: Some sectors or jobs that are primarily female dominated are not valued and thus not as well paid as male-dominated sectors and jobs.
• Not sharing caring: In the UK caring for family and children is still predominantly seen as ‘women’s work’ and mostly carried out by women. The gender pay gap is affected by more women being in part-time work and taking time out in order to accommodate caring responsibilities.
• Stereotyping and unconscious bias: Recruitment and promotion are key to addressing the imbalance if women in senior positions, where pay is highest. Efforts need to be made to combat bias, prejudices and assumptions. Assumptions may also be made about women not asking for or accepting promotions because of their caring responsibilities or not negotiating higher pay on appointment. Many employees assume pay parity and are not aware of gender discrepancies and hence do not push for change.

More details on the factors that contribute to a gender pay gap are given in the EHRC’s research report, The Gender Pay Gap, published in August 2017.

How do ombuds fare?

Four ombuds schemes have reported: Legal Ombudsman (LeO), Parliamentary and Health Service Ombudsman (PHSO), Financial Ombudsman Service (FOS) and Ombudsman Services (OS).

Staff are divided into four groups (quartiles) according to level of pay: top quartile (highest pay), upper middle, lower middle and lower quartile (lowest paid). In all four ombud services, women are in the majority in the top two quartiles. In PHSO, LeO, and Ombudsman Services women are in the majority in all four quartiles.

Three of the services award bonuses: In FOS, roughly equal percentages, 96% of both men and women, received bonuses, although women’s mean average bonus was 6.5% below men’s. In PHSO, 25% of women and 26% of men received bonuses, and women’s mean average bonus was 6.1% higher than men’s. In Ombudsman Services, 18% of women and 14% of men received a bonus, and women’s mean average bonus was 0.9% higher than men’s. LeO did not award bonuses.

Conclusion

Although it’s difficult to reach any robust conclusions from the data, it appears that ombuds’ report cards generally look better than average in terms of pay discrepancy. All except the PHSO had a median pay gap lower than the average reported figure of 9.7%, and the Legal Ombudsman has no median pay gap. Representation of women at the higher-paid levels in all these ombud services is promising. Nevertheless, it is disappointing that all have a gender pay gap, at least in terms of mean average, suggesting work to do to achieve gender equality. It will be interesting to see how they respond.

The problem – and it should be recognised as a problem, even if the averages among ombuds are at or below the national average – needs to be addressed organisationally and individually and requires leadership. At an individual level, training in unconscious bias can help address the pernicious prejudices that we all have and that can manifest themselves in recruitment and promotion decisions. Organisationally, it is important to identify the factors leading to the gap and to review approaches to recruitment, retention, promotion, job grading, and coaching opportunities.

A shared commitment among ombuds to eliminating the gender pay gap would be a great start.

About the author:

Margaret Doyle is a mediator and researcher and manages the ombudsresearch.org.uk website, which was set up as part of a mapping project on the use of informal resolution by ombuds in the UK and Ireland. She is also Senior Research Fellow with the UK Administrative Justice Institute at the University of Essex and an independent member of the Validation Committee of the Ombudsman Association.