Gender pay gap reporting is coming to Ireland. Although it is not yet clear when reporting will officially begin, draft legislation (the General Scheme of the Gender Pay Gap Information Bill) was published by the Irish government in June 2018. At its simplest, the gender pay gap is the difference between the average wages of men and women.
The drivers of a gap are typically diversity/demographic factors such as the distribution of men and women across the levels of seniority but they may also include pay factors which could represent equal pay risk areas i.e. differences in pay between men and women performing equal work (this is prohibited under legislation; men and women must be paid equally for “like work”, “work of equal value” or “work rated as equivalent”).
These are clearly very different drivers and will need to be addressed through very different means. The aim of gender pay gap reporting is to create greater transparency and awareness of the factors contributing to the gap, so that it can be closed. High level details of the metrics to be reported (Figure 1) were included in the draft legislation and greater detail will emerge over time.
By implementing gender pay gap reporting, Ireland will follow in the footsteps of many other OECD countries including France, Germany, Sweden, Iceland and Australia. The UK recently introduced gender pay gap reporting and the first submission of reports occurred in April 2018. In this report, we will consider the experience and insights of our nearest neighbour so that Irish employers can navigate the journey effectively and avoid potential pitfalls. The PwC UK report Mandatory UK gender pay reporting- the story so far provides a deep dive into the UK experience, including full details of the results.
In Ireland, the gender pay gap is 14%, according to the most recently available data from the OECD/Eurostat. Women make up 46% of the Irish labour force and in an increasingly tight labour market, the ability to secure female talent is vital for employers. When reporting becomes a reality, organisations that can demonstrate they are taking sizeable steps to address their gender pay gap could emerge ahead in their ability to attract pivotal talent. This will be particularly important for skills in short supply that are also highly mobile, such as IT.
Closing the gender pay gap will undoubtedly have a positive effect on Irish women and the Irish economy: PwC’s 2018 Women in Work Index reports that closing the pay gap globally could increase OECD female earnings by as much as $2 trillion in the long-run.
Although the gender pay gap in Ireland has been reported for some time, a formalised approach to reporting will provide much greater insight, specifically about the gaps that exist in individual organisations and across sectors. Whilst details are not yet available, we expect that employers will be required to report their gender pay gap information to a designated public body, as well as publishing details on their websites. This level of transparency is likely to bring a high degree of scrutiny for companies from a range of stakeholders including Boards, shareholders, employees, the media and regulators; this has certainly been the case in the UK.
One of the big impacts of gender pay gap reporting will likely be on employer branding. An organisation’s employer brand affects their ability to attract (and retain) female and male talent, so negative results may adversely affect their talent pipeline, in turn, impacting efforts to improve organisational diversity and compounding the gap in the longer term. When deciding whether or not to work for an organisation, for example, 82% of female millennials identify an employer’s policy on diversity, equality and workforce inclusion as important. Gender pay gaps are likely to feed into a candidate’s assessment of an organisation’s commitment to diversity and inclusion.
For those employers who are embracing diversity and inclusion, gender pay gap reporting presents a positive opportunity to strengthen their employer brand by promoting their efforts publicly. For those who are yet to embrace the topic, it will provide a chance to understand the reality in their company, why a gender pay gap exists and what the key contributors are. They can then begin to make data-informed decisions.
Regardless of an organisation’s track record on diversity and inclusion to date, the impetus for Irish employers to be proactive now is clear. Reflecting on experiences in the UK, we believe that the key lessons for Irish employers are:
Getting a head start makes sense for a range of reasons.
Gender pay gap reporting is a complex and emotive subject; organisations can avoid the potential misinterpretation of their data and negative PR by taking time to develop a narrative report to explain their results and to educate stakeholders about gender pay gap reporting. Although it was not mandatory in the UK, many organisations took the opportunity to include a narrative with their submissions. Including details of a tangible action plan as part of the narrative provides valuable reassurance to stakeholders that action will be taken.
Communicating to all stakeholders is vital, particularly employees, and timing is key. For example, some organisations in the UK did not communicate to their employees before their results were made public which is likely to have had a negative effect on employee engagement, morale and productivity. Tailoring your narrative to your specific stakeholders will also be important. Although key messages should be consistent, it is likely that the message to your Board, for example, will have a different focus to that intended for employees. Take the time to develop the right messages for each stakeholder group.
Gender pay gap reporting on an annual basis will mean that there is regularly available information to track progress (or lack thereof). In the UK most organisations embraced the opportunity to take action. Once figures are reported (or before if possible), put in place a realistic plan that can be actioned in time for the following year’s reporting and report regularly on progress to internal stakeholders. Your plan may include a broader review of pay structures, the introduction of a job evaluation scheme, etc. You may also come under pressure, as many UK employers did, to analyse other (non-mandatory) pay gaps e.g. race. Many of these activities will take time so it will be important to manage stakeholders’ expectations around timelines. Regular communications will provide an opportunity to engage stakeholders on an ongoing basis and should support more positive responses to subsequent results.
Certain sectors in the UK (e.g. construction, insurance) had particularly large gender pay gaps as a result of occupational segregation i.e. men and women undertaking different types of role. Organisations may wish to collaborate on D&I initiatives to improve their attractiveness as a sector, for example, partnering with third level institutions to encourage women to undertake STEM qualifications.
The timeline for introducing gender pay gap reporting in Ireland is not yet clear as the Bill is at the beginning of the legislative process. However, this is an opportune moment for employers to prepare as the topic is clearly on the government’s agenda.
For those wishing to make the most of the opportunity, now is the time to act. By reflecting on the lessons learned and taking concrete steps, organisations can position themselves well for whatever gender pay gap reporting will entail.
Director, PwC Ireland (Republic of)
Tel: +353 1 792 6428
Director, PwC Ireland (Republic of)
Tel: +353 1 792 6171
Director, PwC Ireland (Republic of)
Tel: +353 1 792 5374