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Why COVID-19 business recovery must also be a recovery for equal pay

Has the pandemic had the same impact on both men and women? An increasing body of research indicates that the answer is most likely no: COVID-19 has disproportionately affected women. Just last week, yet another study was released, this time by Ibec (the group that represents Irish business), revealing that the pandemic has the potential […]

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Has the pandemic had the same impact on both men and women? An increasing body of research indicates that the answer is most likely no: COVID-19 has disproportionately affected women. Just last week, yet another study was released, this time by Ibec (the group that represents Irish business), revealing that the pandemic has the potential to undermine the progress of gender equality in the workplace.

One significant facet of this topic is gender pay gap reporting, which is an important tool for monitoring gender inequality in the workplace and encouraging organisations to combat it. However, in the UK, there is concern that the latest reporting, due by 5 October 2021, will fail to provide any meaningful analysis of the current gender pay gap.

As restrictions in the UK ease and many businesses reopen their doors, employers have a responsibility to combat the negative impact of the pandemic on gender equality.  One way of doing this is to incorporate gender pay gap reporting into their COVID-19 recovery plan.  UK business leaders should, however, ensure that their recovery strategy addresses how gender pay gap reporting is potentially distorted in the current COVID-19 landscape.

What is gender pay gap reporting?

UK employers with 250 or more employees are required to publish annual information relating to gender pay disparities, including any differences in average hourly pay between relevant male and female employees. For private sector employers, the required data relates to the “snapshot date” of 5 April and must normally be reported within 12 months. In recognition of the impact of the pandemic, the reporting deadline for the 2019/2020 reporting year has been extended by six months. The UK government suspended entirely the enforcement of the gender pay gap deadlines for the previous reporting year. 

Why is this year’s data distorted?

Significant time has passed since comprehensive gender pay data was made available in the UK. However, those hoping that the 2020/2021 gender pay gap statistics will provide accurate information on gender inequality in the workplace will be disappointed. The data is likely to be heavily distorted by the impact of COVID-19 on the UK’s workforce, given that, at the snapshot date of 5 April 2020, the UK was in the midst of the first national lockdown. 

It is significant that UK employers are not required to include in their calculations the pay of any employee who, on the snapshot date, is being paid at a reduced rate, or not at all, as a result of the employee being on certain types of leave. The upshot is that a substantially larger proportion of the working population will be excluded from 2020/2021 gender pay gap reporting than in previous years. On 5 April 2020, many UK employees were receiving statutory sick pay, having contracted COVID-19 or because they were self-isolating and unable to work.  Likewise, large numbers of working parents were taking unpaid parental leave in order to care for their children, following the closure of schools and childcare providers for most children. The pay of all of these employees, together with the millions who were furloughed on 5 April 2020, will, therefore, be excluded from the 2021 pay gap reporting statistics.    

There is currently no reliable data on the gender division of employees who were absent on reduced pay on 5 April 2020, although it is estimated that a far greater proportion of women than men took parental or furlough leave to care for their children when schools and other childcare providers were closed. The government did not start releasing data on the numbers furloughed according to gender until July 2020, so the female proportion of those furloughed on 5 April 2020 is unknown (although, since this data has been reported, more women than men have been furloughed). It is, therefore, likely that many more women, typically lower paid, will be excluded from this year’s gender pay gap reporting, distorting the differential between male and female pay.

However, it is too simplistic to conclude that the impact of COVID-19 will inevitably lead to an apparent reduction in the gender pay gap. For example, it is estimated that significantly more women than men reduced their working hours in response to the closure of schools and childcare providers. As these women were not on leave, albeit working reduced hours, their reduced pay will be included in gender pay gap reporting and will reduce the average female’s pay in their organisations. 

How can we narrow the gap?

Due to the limitations in the reporting process, most notably the narrow window for analysis being a single day, and the exceptional circumstances that existed at that time as a result of the pandemic, 2020/2021 gender pay gap reporting will, without further analysis and explanation, be unreliable and potentially misleading. There is a danger that it may give the false impression that the gender pay gap is reducing more rapidly than is actually the case, hindering progress towards genuine gender pay equality. 

To combat this, UK business leaders should not delay in sharing any data on gender pay disparity in their workplaces. To date, only approximately one quarter of the total number of employers required to report for 2020/2021 have done so.  It is vital that those remaining employers complete their reporting processes as soon as possible and in good time of the 5 October deadline. Additionally, UK employers may also want to address any exceptional circumstances that frame their data and set these out in a voluntary narrative accompanying their report.

Ultimately, gender pay gap reporting needs to be timely, complete and accurate. If it ticks all of these boxes, it could be a highly effective tool in reducing gender inequality in the workplace.  For any organisation seeking to reverse the negative impacts of the COVID-19 pandemic, meaningful gender pay gap reporting should form a central part of the organisation’s COVID-19 recovery strategy.

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