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Out-Law Analysis 6 min. read

Bonus pay gap in energy sector significant, gender pay reporting shows

The UK energy sector has a 46% difference in mean bonus payments to men and women, a gap which is more significant than in other sectors.

This does not include the oil and gas industry, which has a 29% difference in mean bonus payments between men and women, from the companies who have reported so far.

Analysis by Pinsent Masons, the law firm behind Out-Law, of the gender pay gap (GPG) reports made by energy companies for the year 2020-21 shows that the sector’s pay gap is on a par with other industries. However, energy companies are making a concerted effort to reduce the difference through recruitment, D&I data gathering and setting GPG targets.

The energy gender pay gap

Around 55 energy companies have so far reported their 2020-21 GPG through the UK government portal, a lower number than in other sectors, although those to have reported include most of the industry giants. Of those 55, 20 are oil and gas companies.

The small number reporting could be attributed to the effective six-month grace period for reporting, with the Equality and Human Rights Commission having announced that it is delaying enforcement action until 5 October 2021. GPG reports should have been made by 5 April 2021, using the ‘snapshot’ date of 5 April 2020.

The figures show that women working for large energy companies are paid approximately 19% less per hour than men, which is a similar GPG to other sectors, albeit slightly lower than the 2020 average of 22.8% reported by the Office for National Statistics. Similarly, women working in the oil and gas industry are paid, on average, 22% less than their male counterparts.

Lisa Byars

Senior Associate, Pinsent Masons

There are recognised ongoing challenges from an oil and gas perspective around accommodating flexible working within certain job profiles, most notably when it comes to offshore and rotational working.

On the whole, several companies within the sector have improved their gender pay gap by 1-2%. In the oil and gas industry specifically, most operators have been showing a year on year improvement since the GPG reporting obligation was first introduced in 2017, with several oil and gas companies reporting improvements of up to 5% in their gender pay gap. However, the figures also show that many companies have remained static and have failed to make any improvement to their gender pay gaps, or have regressed in their progress and have in fact widened the gender pay gap.

Some companies have shown rapid improvement, with one power company continuing to improve its hourly median pay gap from 10% in 2017-18 to just 1.3% in 2020-21.

An oil and gas operator reported a significant improvement to its hourly median pay gap of approximately 23% since 2017. This was an improvement of 6% from 2019/20, after the company took steps to strengthen its equal pay evaluation as part of the annual salary review process last year.

Underlying causes of the energy GPG

It is widely recognised that there is a shortage of females working in the STEM sectors. This is even more widely recognised within the oil and gas industry where approximately only one third of entry level employees are female, less than that across other STEM sectors. Whilst efforts are being made at recruitment stage to balance this – particularly in oil and gas, taking into account the focus on energy transition and the need for a more diverse workforce – this is yet to have a significant impact on the sector, particularly in respect of employees in more senior positions (and those working off-shore), which still remain predominantly male.

In addition to the shortage of women working across the energy sector generally, it is also reported that the majority of higher paid technical roles across the sector are held by men, whereas a greater proportion of women work in customer service and administrative roles, which are typically lower paid. This is also reflected in oil and gas, where the majority of both technical and managerial roles (i.e. the higher paying roles) are held by men.

Of course, there are job-specific factors which are also relevant to the cause of the pay gap, particularly where more men are typically earning additional call out and unsocial hour allowances compared to women. This is particularly the case within oil and gas, where offshore workers (where it is reported only 3% of which are woman) earn offshore allowances, travel allowances and other additional payments to reflect the rotational working pattern. The Covid-19 pandemic has, however, influenced the energy GPG for some companies, with the reduction in such activities (due to various government imposed restrictions, including but not limited to those on travel) helping improve the GPG. Company redundancies as a result of the pandemic, combined with the drop in oil price during 2020 for those companies operating in the oil and gas industry, have contributed to improving the gender pay gap for some companies. However,  as we return to normality, and employees return to their normal working patterns and duties, unless more woman are recruited into the industry there is a risk of the GPG continuing when the industry recovers from the significant struggles of the last year.

Steps addressing the GPG

One of the biggest drives by energy companies in terms of improving their gender pay gap and balance appears to be at the recruitment stage, with recruitment channels and social media being regularly reviewed to ensure gender neutral language is used in order to attract female applicants. Some companies are also trialling ‘blind screening’ of CVs for senior leadership roles or introducing diversity score cards for graduates and apprentices. Even at school age, companies are working to encourage STEM subjects and are working with schools to promote these, particularly amongst girls. Oil and gas companies recognise that a higher awareness of the types of jobs that are available within the sector is required to attract, entice and encourage woman to the industry, particularly in light of the focus on energy transition. There is a real focus on making those outside the historically “male dominated” industry aware of the opportunities it holds for women, not just for men.

An example is EDF Energy, which works with campaign groups such as the Women's Utilities Network, Women in Science and Engineering, Women in Nuclear; and POWERful Women, as well as being a signatory to the ‘Tech She Can’ charter, in order to demonstrate its commitment to encouraging women to enter the energy sector.

Candidate experience surveys are also being used by some companies in order to collect data on the recruitment experience and monitor ongoing changes.

National Grid has undertaken a number of initiatives to actively recruit and promote women and launched a campaign titled “Jobs That Can’t Wait” to attract new talent, which in turn resulted in a sevenfold increase in applications to its Advanced Apprenticeship scheme and increased awareness of STEM careers. The company has also appointed a chief diversity officer who will be responsible for driving its inclusion and diversity agenda across the business.

Like other sectors, flexibility in working patterns, as well as family friendly policies, are seen as a way of supporting female employees, especially those progressing to more senior roles. This has been furthered by the greater autonomy presented by the impact of the Covid-19 pandemic and the rapid development of working from home culture. Of course, there remains the recognised ongoing challenges from an oil and gas perspective around accommodating flexible working within certain job profiles, most notably when it comes to offshore and rotational working.

Companies also seem to be giving a real focus to the diversity and inclusion training of employees, and in particular managers involved in the recruitment process, to overcome unconscious bias. Networks and committees are also another initiative by companies to act as a support forum for discussing gender issues and spreading support and awareness in the workplace. Diversity and inclusion (D&I) is clearly high on the agenda, particularly in the oil and gas industry, with the publication of the results from the OGUK D&I survey in April 2021, which it is hoped will act as a catalyst for even further advancement on this front.

Target setting is also common amongst energy companies – for example, having a set amount of women in a particular business, or recruiting a set amount of females to apprenticeship roles – and this enables companies to measure their ongoing success in comparison to these targets. Commonly, these targets are being set as part of companies' diversity and inclusion strategies.

This year’s GPG data does not yet show a marked impact from these efforts to improve diversity, however there is clearly increased engagement across the energy sector from a D&I perspective so hopefully continued analysis will demonstrate further change.

Written by Lisa Byars of Pinsent Masons

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