This informal CPD article, ‘Debunking Myths About the Gender Pay Gap’, was provided by 3R Strategy, an independent pay & reward consultancy based in the UK.
Let's talk about the gender pay gap—a term that's frequently mentioned but often misunderstood. Despite being a regular topic in workplace discussions and news headlines, several persistent misconceptions can make it difficult for organisations to address effectively.
In this article, we'll debunk some of the common myths and explain why gender pay gap reporting is more nuanced than many people realise.
Whether you're a business leader, HR professional, or simply interested in workplace equality, understanding these distinctions will help you contribute more meaningfully to the conversation.
"Gender Pay Gap & Equal Pay Are the Same Thing"
Perhaps the most common misconception is that the gender pay gap and equal pay are interchangeable terms. They're not, and the distinction is important.
Equal pay is about men and women receiving the same salary for doing the same or equivalent work. This has been a legal requirement in the UK since the Equal Pay Act of 1970 (now part of the Equality Act 2010). If a woman is paid less than a man for the same job, that's potentially unlawful discrimination.
The gender pay gap, on the other hand, shows the difference in average earnings between men and women. This does not take into account differences in roles and is usually represented at an organisational or even national level. It's perfectly possible for an organisation to provide equal pay, but still have a significant gender pay gap.
Why? Because if more men occupy senior, higher-paying positions while women are concentrated in lower-paying roles, the average pay for women will be lower than for men across the organisation as a whole.
"Gender Pay Gap Reporting Only Looks at Base Salary"
Actually, gender pay gap reporting usually extends beyond base salary comparisons. It encompasses the likes of:
- Base salary
- Bonuses and commission
- Overtime pay
- Allowances
- Pay in lieu of leave
- Shift premiums
This broader view provides a more accurate picture of earnings disparities. For example, in some sectors, bonuses make up a significant portion of total pay. If an organisation has equal base salaries but men receive substantially higher bonuses, there's still a meaningful earnings gap that wouldn't be captured by looking at base salary alone.
It's also worth noting that the gender pay gap is influenced by numerous factors beyond direct pay, including:
- Occupational segregation (certain roles and industries being dominated by one gender)
- Working patterns (full-time vs part-time work)
- Career breaks (often taken by women for caring responsibilities)
- Access to progression opportunities
Understanding these contributing factors is crucial for developing effective strategies to address pay disparities.
Aim for 0% gender pay gap
"The Goal Should Be a 0% Gender Pay Gap"
While it might seem logical to aim for a 0% gender pay gap, we shouldn’t be aiming for a target. The overall number doesn’t necessarily tell us there is pay inequity, so we need to investigate further.
A 0% gender pay gap may suggest equal average earnings, but it doesn’t necessarily reflect full gender equality unless men and women are equally represented across all levels and departments of an organisation. In many cases, differences in representation can be influenced by a range of factors such as personal choices, societal norms, and organisational structures.
Consider this scenario: an engineering firm might have mostly male engineers (higher-paid) and mostly female administrative staff (lower-paid), resulting in a gender pay gap. This doesn't necessarily mean there's pay discrimination–it reflects occupational segregation.
The solution isn't to artificially manipulate salaries to achieve a 0% gap, but to address the underlying reasons why women are underrepresented in engineering roles.
What we should focus on instead is:
- Ensuring equal pay for equal work
- Creating equal access to opportunities for career development
- Addressing barriers that prevent certain groups from entering or progressing in particular fields
- Implementing flexible working practices that support work-life balance for all employees
- Investigating unexplained pay gaps and taking corrective action
"Gender Pay Gap Reporting Only Matters for Large Organisations"
In the UK, only organisations with 250 or more employees are legally required to report their gender pay gap. However, this doesn't mean smaller organisations should ignore the issue.
Small and medium-sized enterprises (SMEs) make up 99% of UK businesses1, employing millions of people. If these organisations collectively addressed gender pay disparities, the impact on workplace equality would be substantial.
There are compelling reasons for smaller organisations to voluntarily analyse and report their gender pay gap:
- Competitive advantage: In a tight labour market, demonstrating a commitment to fairness can help attract and retain talent
- Employee engagement: Transparency around pay practices can boost trust and satisfaction
- Preparation for growth: Establishing fair pay systems early is easier than correcting inequalities later
- Future-proofing: As pay transparency becomes increasingly expected (and potentially required by law for smaller organisations in future), being ahead of the curve is advantageous
Many smaller organisations have chosen to voluntarily publish their gender pay gap data, often aiming to promote transparency and contribute to evolving practices around fairness in the workplace.
"Publishing the Numbers is Enough"
Simply calculating and publishing gender pay gap figures isn't enough to create meaningful change. The real value comes from:
- Analysing the data: Digging deeper to understand the specific factors driving your organisation's gender pay gap
- Developing an action plan: Creating targeted strategies to address the root causes identified
- Communicating transparently: Explaining your figures, the contributing factors, and your action plan to employees and stakeholders
Organisations that take these additional steps often see better outcomes in terms of both narrowing their pay gap where needed and improving overall workplace culture.
Moving Forward: Beyond the Myths
Understanding these misconceptions is the first step toward more effective gender pay gap reporting and action. Here's what we recommend:
- Look beyond compliance: Whether you're legally required to report or not, use gender pay gap analysis as a tool for creating a fairer workplace
- Take a holistic view: Address the structural and cultural factors that contribute to pay disparities, not just the numbers themselves
- Communicate clearly: Help your employees and stakeholders understand what your gender pay gap means and what you're doing about it
- Consider the gender pay gap by job level or department: This will help you better understand the pay differences.
We hope this article was helpful. For more information from 3R Strategy, please visit their CPD Member Directory page. Alternatively, you can go to the CPD Industry Hubs for more articles, courses and events relevant to your Continuing Professional Development requirements.
References:
1 https://www.airwallex.com/uk/blog/small-business-statistics-uk
