For many employers, pay gap reporting remains a key priority, according to Mercer’s 2021 UK Gender and Ethnicity Pay Gap Trends Survey. Three-quarters (75%) of respondents to the survey disagreed with the Government’s decision to suspend gender pay gap reporting in 2020. Meanwhile, nearly two-thirds (65%) supported the idea of legislation enabling ethnicity pay gaps to be reported and addressed.

There is, however, little progress in closing the gender pay gap (GPG, defined as the difference between the average earnings of men and women, expressed relative to men’s earnings) within organisations. Recently reported Government figures on the UK gender pay gap numbers suggest a median gap of 10.4% for 2020, compared to 9.7% from 2019. Said Michelle Sequeira, Diversity, Equity and Inclusion Consulting Leader at Mercer UK:

“We see a similar theme in our 2021 UK Gender and Ethnicity Pay Gap Trends Survey, where half of the participants reported little or no progress year on year. Only 30% of respondents say they were able to close their gap by more than 2% between 2019 and 2020, while just 1% have closed their gap by more than 10%. Looking ahead, it is likely that little progress will be made in closing gaps, and the organisational perspective of the legislative reporting will not highlight further impacts on individual populations, such as predominantly lower-paid women who have been impacted by job loss or a reduced wage due to furlough stemming from the COVID-19 pandemic.

“Female-dominated industries, such as hospitality and retail, could even show misleading improvements; front-of-house female staff might not be included in gender pay gap calculations as the nature of their contracts, whether part time or zero hours, could exclude them, thereby skewing the reported figures. The bottom line is that employers are still struggling to narrow their pay gaps. Drivers of pay gaps range from issues with attracting and retaining women to failing to eliminate the barriers to career progression that prevent female employees from entering more senior roles.”

Sequeira is of the opinion that employers need to better understand what’s driving their own pay gaps. With additional deeper analysis now seen as the biggest challenge by 40% of employers within the Mercer survey, explaining gaps has become an annual challenge. However, without an effort to understand these disparities, organisations are unlikely to see long-lasting changes to the experiences of females in their organisations or, more broadly, to the pay gaps.

Says Sequeira:

"Employers also need to make progress beyond gender pay. Supporting the experiences of racially and ethnically diverse (R&ED) colleagues, including analysing and closing ethnicity pay gaps, is a much greater priority for organisations following the Black Lives Matter movement. Nearly three in five employers (57%) have already calculated their ethnicity pay gaps or are planning to do so, while more than one in five (21%) have taken steps to address the pay gaps they have uncovered.

“Employers need to be more transparent. Despite a readiness to calculate ethnicity pay gaps, seven out of ten employers (70%) are not yet ready to publish their findings. Concerns over data credibility and being able to explain the gaps — not to mention public scrutiny — are just some of the factors resulting in this reluctance to be transparent. It is crucial to explore underlying causes in order to create an action plan and supporting narrative that will explain the steps being taken to address this issue.”

The report sets out Mercer’s findings in detail, accompanied by recommendations on key actions every organisation can start taking today to help reduce and eliminate gender and ethnicity pay disparities.