Gender pay disparities set to become a controversial topic in Ireland

Gender pay disparities are about to become a hot topic in Ireland thanks to Government plans to pass the Gender Pay Gap Information Bill this year.

The original legislation fell by the wayside when the last general election was called. Now it’s back, with some strengthening provisions (for example, companies that don’t comply can expect to receive High Court orders). The reintroduction is timely, as the European Union has also recently issued a directive on pay equity and pay transparency.

After the proposed bill is enacted, any company employing more than 250 people will have to publish data on the differences between the average and median hourly pay and bonuses of men and women and the percentages of men and women receiving bonuses and benefits in kind.

In the coming years, that requirement will gradually be extended down to any company employing more than 50 people.

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The gender pay gap should not be confused with equal pay. Equal pay is a legal requirement giving women and men the right to receive equal remuneration for doing the same job in the same organisation. The gender pay gap is a broader measure of the difference in the average earnings of men and women across an organisation and can be seen as an indicator of women’s representation at more senior levels.

The reasons behind the gender pay gap are many and complex. Whilst it’s apparent that lack of career progression for women is central to this issue, unconscious bias based on cultural attitudes about the roles of men and women in society can also impact corporate pay programmes.

Another major contributing issue is that statutory policies around maternity, paternity and parental leave are still aimed predominately at females. This is improving and changes have been brought in in recent years but we have a long way to go to catch up with more progressive countries such as the Nordic nations.

According to the latest data from the Central Statistics Office the average gender pay gap in Ireland is 14.4 per cent. That’s roughly in line with the European average. Averages however always conceal disparities. Some companies will have a much larger gender pay gap, and thanks to the legislation they will now have to reveal the figures.

When mandatory reporting was first introduced in the UK in 2018, several media outlets cheerfully named and shamed organisations with particularly eye-catching gender pay disparities. Those organisations were free to point to reasons, and many did so while publishing their plan to address the gap.

Whether the reasons given are regarded as a legitimate excuse or indicative of a bigger issue is of course entirely up to interested employees, customers and investors to decide. What is clear from the UK experience is that gender pay gap reporting has the potential to produce discomfort for employers.

Reputational effect

On the positive side, most companies in Ireland welcome the planned legislation – showing a willingness to tackle gender imbalances.

According to Mercer research, 74 per cent of companies believe mandatory gender pay gap reporting is a good thing, as it increases transparency. A willingness to engage exists, albeit mixed with trepidation: 55 per cent say they are not fully ready for mandatory reporting and 67 per cent are worried about the reputational effect.

To get ahead of the issue (and because this is a sensible thing to do anyway), companies should start both identifying their gender pay gap and framing policies to address both pay and career equity.

This is about not only legal compliance but also achieving a fairer and more inclusive working environment, with all the benefits that should bring to companies themselves.

Ultimately, mandatory gender pay gap reporting has potential to reveal inequity. That inequity is likely to be no less painful and damaging for being, in many cases, wholly unintentional.

Gender pay gap reporting does not in itself tackle the causes or provide easy solutions. This is where the requirement, contained in the legislation, for companies to disclose their plans to address the issue becomes interesting.

Gender pay disparity is not a cause, but a symptom, of an underlying problem: the unequal career progression of men and women. Consequently, a plan that merely states intent to reduce the gender pay gap is not going to provide a meaningful solution.

Organisations looking to tackle the issue properly should look at the employee journey, from the hiring process, through performance assessment to the selection of candidates for promotion. A good plan of action might include targets in diversity and inclusion as well as pay, along with the adoption of family friendly working practices and gender career equity policies.

Mandatory gender pay gap reporting forces recognition of the reality of gender pay gaps. It’s a positive start. But the reporting itself should only be the start of a more holistic approach to tackling gender imbalance.

Danny Mansergh is the head of Mercer Ireland’s Career practice