Gender equality: Why pay equity isn’t enough

Fixing pay inequality is not the silver bullet solution to creating more inclusive fair organisations and economies (famous last words of the CEO of a company developing innovative pay equity and fair pay software). But an innovative rewiring of jobs, complete with a new innovative look at reward and compensation is.

For decades now, the need to create pay equity has been embedded in conversations about achieving fairness and inclusivity at work. While the World Economic Forum still puts us centuries behind achieving wage parity between men and women, current developments in the future of work (largely due to the growth of digital economies and COVID) risk pushing that even further out of reach.

In the UK, the average gender pay gap between men and women was 15.5% in 2020, down from 17.4% in 2019. This is largely in line with OECD trends. When we talk about this kind of wage gaps — we refer to differences overall, comparing the average male within an organization with the average female.

But people aren’t averages, they are individuals with different educational backgrounds and varying levels of experience and skills, performing different roles. When we account for these differences in education, length of service, and other pay determining factors and apply these across specific job functions, the differences drop further still.

Running such analysis across jobs functions can help employers identify and understand equity across roles. From this point of view, in high income countries we are getting as close as ever to achieving pay equity. Large businesses like Citi have reported a 1% gap this year, while Uber reported a 0.01% gap.

So does this mean that because we are so close to achieving wage parity by function, we are also a stone’s throw away from a more equal inclusive economy? Not quite, and one of the big reasons is occupational segregation and the way roles are structured and performed. From this point of view, gaps are still wide as women continue to perform roles that pay less per hour than men: care work, education, bank tellers, bookkeeping and payroll.

Time and time again, organisations using Gapsquare find that although large parts of their gaps can be explained by pay determining characteristics, on average, across the organisation men take more money home than women.

And these discrepancies are about to get even larger. According to a World Economic Forum Report on the Future of Jobs, the top 20 job roles in increasing and decreasing demand across industries are very gendered.

The report does not have anything unexpected in terms of growing occupations: cyber, data science, robotics engineering. The job roles in decreasing demand include clerks, accounting, customer service and human resources specialists. Largely due to digital advancements and COVID, these jobs are likely to change significantly by 2025.

I did a little experiment with the WEF jobs data, average pay for each job from Glassdoor, as well as data from the ONS Gender Pay Gap Explorer, to get a better understanding of the changing landscape in the UK employment market. I’ve even colour coded this picture to show the dramatic impact on genders. The key takeaways are that low paid populations, largely women are more likely to see disruption to their jobs over the coming years, risking complete removal from the economy if we do not take action now.

As you can see from the table above, jobs with increasing demand are male dominated, with some roles such as data science or big data specialists being 91% men. Jobs in increasing demand are also highly paid, averaging £44,500 per year. If we factor in average inflation rates, increased demand for these roles because of digitisation, and other factors such as living costs, these are likely to grow even further.

Jobs in increasing demand that are female dominated only average £28,053 per year, while those that are male dominated average over £46,000. So even in roles of growing demand, women are more likely to earn just over 60% of what men earn by 2025.

On the other end of the spectrum, jobs with decreasing demand are both low paid and female dominated. They average £26,989 per year, with only 7 of the jobs dominated by men, but at a very small margin (exception being the construction sector). In the other 13 decreasing jobs, women account for over 60% of the workforce.

Looking at this data is important from several points of view. For policy makers at national and international level, this is about creating inclusive policies that prevent large unemployment rates and foster inclusive economies. For companies, this is about ensuring diverse talent can thrive, reskill and adapt to change. For dreamers like myself who want to foster innovation in creating a better future of work, this becomes about rewiring jobs all together.

Many would argue the solution is reskilling. After all, even though Fatima is a ballerina, she could be in cyber — she just does not know it. Some would say we need more awareness about unconscious bias. But these solutions are slow and largely ineffective. Billions of pounds spent on unconscious bias training, gender decoding of job adverts, mentoring and sponsoring women in STEM roles and careers has generated steady but very slow progress that is unable to keep pace with demand and speed of change. As an example, the number of women in STEM (women graduating in core STEM subjects) has grown from 21% of the workforce in 2016 to 24% in 2019.

It is clear that business as usual is not an option. What these solutions do is trying to be more creative about fitting a square peg in a round hole. What we need to do in turn is bold and innovative change applied to the jobs and economies of the future.