The gender pay gap can be defined as the percentage difference between men's and women's pay. Globally, women are paid 23% less than men. In Europe, women earn on average 14.9% less per hour than men. In Ireland, this figure is slightly lower than the European average - 14.4% in 2021, a decrease of 2.9 percentage points in 14 years! Given the context and societal changes, progress should be made on gender equality as women continue to earn less than men.
In this article, we discuss the importance and specifics of the gender pay gap and offer 5 great ways a company can work to close the gender pay gap and strengthen its culture.
Gender Pay Gap vs Equal Pay
Equal pay means that any work given to men and women must be substantially equal for the "same work" or "work of equal value." Inequalities based solely on gender are not permitted under Irish law. The Equality Act of 2010 states that employers are required to pay men and women the same if the work is the same and/or substantially similar. The gender pay gap is the percentage difference between the average hourly wages of all men and women in a company. This percentage can also be measured by sector and country.
According to the European Institute for Gender Equality, Ireland scores 72.2 out of 100 on overall gender equality. On the 13th of July 2021, Irish Minister O'Gorman introduced gender pay gap reporting as a legal requirement in Ireland. "When it comes to labour market participation, women face far greater barriers than men," the Irish government said.
The Gender Pay Gap Act requires employers to provide details of the gender pay gap in their business and identify measures to reduce it.
"According to the Gender Pay Gap Act, all companies with more than 250 employees will have to report on their gender pay gap from 2022."
This measure will actually provide more transparency on pay. It would help expose unjustified gender pay gaps for equal work or work of equal value and help victims of pay discrimination enforce their rights to equal pay and claim compensation.
Why it’s important to close the Gender Pay Gap?
Measures of the gender pay gap encompass a wide range of inequalities that women face in access to work, career advancement, and pay, such as sectoral segregation, unequal distribution of paid and unpaid work, the glass ceiling, and wage discrimination. Let us remember that women's salaries are as important to household financial health and freedom as men's. Bridging the gender gap fosters a sense of social justice and equal opportunity in society. It reduces the risk of women's impoverishment and improves the quality of child care and health care, as well as overall economic success. Companies that do not address this issue seriously may face consequences in terms of job performance, employee retention and employer branding.
At Great Place to Work® Ireland, we’ve been studying what makes for fair, great workplaces for women, and our team is lucky to work with companies that are openly acknowledging the issue and doing what they can to address it. Among the survey responses of the Best Workplaces in Ireland to the statement "People are paid fairly for the work they do", the responses from women are still 2 points of a percentage less positive than men.
Here are 5 simple ways to close the gender pay gap and strengthen your organisational culture:
1. Invite the elephant into the room
First and far most, understand the extent of the issue and what it is made of. Whether it is confidence in the workplace, sectoral and racial discrimination, motherhood and work balance, the glass ceiling theory, the Gender pay gap amplifies through a series of situations and events. You might even have pay discrimination in your workplace that you might not be aware of!
Being aware that small adjustments drive big changes will help decrease the gap.
Start by analysing your compensation reports of all people and all departments. You can compare women and men, but also take into account, gender, sexual orientation, nationalities, etc. This will provide you with a clearer point of view on the situation.
2. Provide transparency in your salary scheme
Refer to the market wage for the position in question to indicate an appropriate salary for the job you are seeking to fill. Include a clear description of your compensation in your job description and be open to talking with your candidate. This will increase the likelihood that the candidate will be hired fairly. If you find discrepancies in the salary report you analysed, you can address them by focusing on pay equity and closing that pay gap when hiring each employee.
3. Hire for an inclusive and diverse culture
Hire for a diverse and inclusive leadership team where they can work smarter, bringing new perspectives, and points of view to challenge the gender pay gap status quo. A homogenous leadership team will be less likely to push for change and create solutions. For example, a millennial or Gen Z person, a single mother, a 50+ person, a disabled person or a foreigner might not have the same ideas and opinions on salary and compensation.
More information to have a fair process of promotions here.
4. Build career paths and training
One of the problems of the gender pay gap occurs when women negotiate their salaries. Women are less likely to negotiate their salaries than men. When they do, they feel punished or judged for simply asking, which leads them to settle for lower compensation agreements and entry-level salaries. Offering negotiation training helps them build their confidence, learn valuable business skills, and function better in their roles.
In general, managers can help their employees shape their careers and grow within the organisation. In fact, career planning is a great way to reduce the pay gap and address the lack of gender diversity in certain departments.
More information about retaining your top talents is here.
5. Own your promotion scheme
Approach the problem in a different way. Instead of always having the same people ask for raises and promotions where the least confident get left behind, develop an annual strategy where monthly/yearly promotions go to those who earn them the most. This way, you ensure that you acknowledge your employees' concerns about salaries and promotions in a fair, clear, and structured way. Define what is best not only for your company but more importantly, for your employees. They need to feel that the goal is achievable, that it is fair and accessible to everyone, that they will be rewarded, and that they will be continually motivated to work and stay with the company. Among the survey responses to the survey of the Best Workplaces in Ireland to the statement "Promotions go to those who best deserve them", men and women scored the same percentage.
You're going to tell us "Ok, I get the picture, but where do I start?"
Showing that you care and give back has a very positive impact on the trust, performance and retention of your female employees and employees in general, and strengthens the company culture as a whole. How can you show that you care and support them? Start by listening to them! We can help you create a customised survey for your company's needs. Talk to your employees, gather their feedback and act on it.