What does the gender pay gap actually mean?

Sarah Kaiser
By , - Responsible Business

The upcoming gender pay gap reporting regulations require UK employers with 250+ employees to disclose their gender pay gap.

How is this different from the requirement for equal pay? And why should the tech industry be concerned?

The disparity of pay

The gender pay gap is often confused with equal pay. However, whilst both deal with the disparity of pay that women receive in the workplace compared to men, they tackle two different issues:

  1. Equal pay means that men and women must be paid the same for carrying out work of equal value for the same employer, as set out in the Equality Act 2010.
  2. The gender pay gap gives a snapshot of the gender balance within a hierarchy. It measures the difference between the average earnings of all men and women across an organisation or the labour market, irrespective of their role. It is expressed as a percentage of men’s average earnings.

Any practitioner embarking on completing the gender pay gap analysis for an organisation, must understand this basic premise.

In Britain today, there is an overall gender pay gap of 18.1%. 

The World Economic Forum has predicted that it could take 118 years to close the gap.

Our Prime Minister, Theresa May, said she wanted to see this close within a generation, by 2040.

Why is there a need for further pay reporting?

We have come a long way since the Ford Dagenham strike in 1968, which resulted in the Equal Pay Act 1970.

Today, equal pay is widely understood as a basic requirement for all employers. But a simple equal pay audit that compares the pay of people doing the same work doesn’t tell the full story of gender equality in employment.

For a responsible business that takes diversity and inclusion seriously, the gender pay gap reveals something far more interesting about our progress on female economic empowerment. There is a pernicious problem of gender imbalance in work in UK society.

In the tech industry, this gender gap is even more pronounced. While men and women may end up earning roughly the same amount in the same jobs, men are more likely to end up in higher-paying roles.

In fact, it is possible to have an organisation with no equal pay issues and a huge gender pay gap… or an organisation with no gender pay gap and big equal pay issues.

Compare the two examples below.

Company A pays men and women equally for the same work and has a gender pay gap of 16.7%.

COMPANY A No. of men Average male salary No. of women Average female salary
Senior level 10 £75,000 5 £75,000
Middle level 20 £50,000 15 £50,000
Junior level 20 £25,000 30 £25,000
Total figure 50 £45,000 50 £37,500

Company B has no gender pay gap at all, even though it pays women less than men for doing the same work at every level of the organisation.

COMPANY B No. of men Average male salary No. of women Average female salary
Senior level 10 £75,000 20 £70,000
Middle level 20 £50,000 10 £45,000
Junior level 20 £25,000 20 £20,000
Total figure 50 £45,000 50 £45,000

That is because the gender pay gap is more influenced by women’s position within the hierarchy than by pay issues.

Why are we seeing a gender pay gap?

The two main factors contributing to the gender pay gap are:

  • Occupational segregation: men are more likely than women to pursue careers in highly paid occupations
  • Career progression: women still don’t progress to leadership levels as quickly or as often as men. Only five of the FTSE 100 are led by women.

These twin challenges are pervasive throughout our society, so they are far harder for companies to tackle than simply ensuring equal pay for like work. They require long-term cultural change and strong leadership.

Why Fujitsu cares about the gender pay gap

The IT market is changing faster than ever, shifting to fast IT and digital. In this new landscape, our future growth is predicated on recruiting and retaining the best diverse talent.

It has been conclusively proven that more gender diverse companies outperform their competition as they are more innovative, more productive and have stronger relationships with customers.

In Fujitsu, we believe in diverse, creative and high-performing teams. We have focused on diversity and inclusion, strongly advocating our inclusion networks focusing on cultural diversity, disability, gender and LGBT+. We have scrutinised all of our people processes, including recruitment to ensure they are barrier and bias free.

However when you look at the tech industry we see:

  • The gender pay gap in the tech sector is 25%
  • In 2016 only 16% of IT students were women.
  • Women are likely to earn 20% less in terms of bonuses in the tech sector
  • Men are twice as likely to reach senior management level in the sector

The problem starts early. Girls are still gravely under-represented in STEM subjects and that naturally has a massive impact on the talent pipeline for the tech industry.

This is a global issue, not just a UK problem. By 2020, in the US there will be 1.4 million jobs available in computing-related fields. US graduates are on track to fill 29% of those jobs. Women are on track to fill just 3%.

Fujitsu’s contribution

In my time as Fujitsu UK&I’s Diversity & Inclusion Lead, I have been putting in place a whole raft of positive actions to make Fujitsu the tech company where women come to succeed, and to move the tech industry into a more gender-balanced state.

Here are a few examples:

  • Influencing young people at school is a critical part of our approach. We work with charities including Princes Trust, BITC Business Class and Code.org and have recently launched a new schools engagement strategy to inspire more girls to develop careers in the IT sector.
  • We are focusing on future leaders. Ensuring apprenticeship and graduate opportunities achieve a gender balance is mission critical to develop a strong female talent pipeline. Back in 2014, women only made up 36% of our graduate intake. Now, women will make up 49% of the graduates joining our company in September 2017.
  • Flexible working patterns that support caring responsibilities are part of a host of good employee policies that support people on their career path. We offer generous parental leave packages and ensure that taking parental leave does not slow down career progression.
  • We run Ada Lovelace networking events to promote women in technology across the business, help them widen their network and give them access to other opportunities. These events have led to an increase in women securing career sponsors, being promoted, and being nominated for the prestigious Fujitsu Distinguished Engineers programme.
  • Our Women’s Business Network is about creating enablers that support women in the workplace, while actively shaping the culture of our business. Through our partnership with everywoman, members can access a wealth of personal and professional development resources. The Women’s Business Network promotes a diverse range of female role models from all levels of our company.

What’s next?

I welcome gender pay gap reporting as another useful tool that will help to progress our gender diversity ambitions. It will help me as a practitioner to identify areas where I should focus my attention to address unconscious bias, change behaviours, and support women in work.

I intend to use our report to engage all our key stakeholders on what they can do to help ensure that the tech sector is narrowing its gender gap year on year, and that Fujitsu is leading the way.

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The Gender Pay Gap report is another useful tool to help companies focus minds on gender diversity. Read Sarah’s blog post ‘How to carry out a gender pay audit‘.

Sarah Kaiser

Sarah Kaiser

Diversity & Inclusion Lead at at Fujitsu UK&I
Sarah Kaiser

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