Jessica Fino 16 May 2018 10:25am

Work flexibility and bonus pay impact gender pay gap

Promoting flexibility in UK workplaces to increase diversity and addressing large bonus pay gaps could help close the gender pay gap, says Big Four firm PwC

Promoting work flexibility

Sarah Churchman, head of diversity at PwC, said that “everyone wants flexibility”, from women to millennials. “It’s what everybody wants. It isn’t just a women’s issue.”

PwC published a report today saying that the sector a company operates in is a far better indicator of their pay gap than the number of people it employs.

The average gender pay gap in the UK currently stands at 18.4%, but the financial services sector has one of the highest gaps at 30%.

PwC explained this is particularly due to a higher number of men in senior positions, as well as lack of women in the profession and poor reputation on opportunities for women.

Speaking to reporters, Churchman said the lack of women in senior positions is not related to the fact that they usually take more time off work after their children are born than men do, but because they are usually more loyal to their organisation and harder to poach.

“Most women seem to be very loyal to their organisation so when we go out to recruit we find it more difficult to identify women. The challenge is to bring them in into more senior roles,” she explained.

Churchman also said women have been let down in the past, due to social pressures to be the primary carer of their children.

PwC is one of the companies trying to change this, offering “generous” shared parental leave packages. Over 200 dads or same-sex parents at PwC have taken shared parental leave of between 3 and 6 months in the last few years.

“The more people do it, the more it becomes normal,” Churchman added.


Tackling bonus pay gaps

After analysing data from the 100,000 companies that disclosed their gender pay gap figures in the government website, PwC found that, while the gender pay gap in the financial services sector is 30%, the bonus pay gap is 60%.

The report revealed that bonus gaps are generally twice as high as pay gaps, with more than 10% of companies saying their bonus pay gap was larger than 70%.

It also found that 10% of companies disclosed having a pay gap larger than 30%, while 55% have a bonus gap higher than 30%.

PwC’s gender pay gap excluding partners is 13.7% and its bonus gap is 37.5%.

Lloyd’s of London’s CEO Inga Beale criticised accountancy and law firms for skewing their gender pay gaps by excluding their partners’ income in the calculations.

According to Acas’ gender pay reporting guidance, partners should not be used as part of the calculations because they are not “paid” but instead take a share of the profits, which is not directly comparable with employees’ pay.

However, following criticism, the Big Four firms updated their figures to include partners’ pay. PwC had the highest updated gap of the four, at 43.8%.

Laura Hinton, head of people at PwC, said the firm should have included partners in its calculations from the beginning.

She added that 81% of PwC partners are men. As a result, the firm has introduced “literally hundreds of initiatives” to change this.

Ed Stacey, PwC’s head of legal services, said that looking forward, companies with 50 or more employees could be required to report on their gender pay gap. At the moment, only companies with 250 or more staff are required to do so.

He expected that the Equality and Human Rights Commission will struggle to deal with organisations that have not complied with the regulations. Around 500 companies have failed to disclosure their figures.

Reporting by grade was first included in the regulations but it was taken out after lobbying from companies that do not have pay structures. However, Stacey believes it would be “quite difficult and costly” to do so. Regulators are expected to look at it in the next few years, he added.

He said that it might take the commission at least six months to fine somebody as fines could take time to come in and are expected to be based on the turnover of the company.