Gender pay gap: manufacturers are ahead of the curve

Out-Law Analysis | 07 Sep 2018 | 4:06 pm | 5 min. read

ANALYSIS: The gender pay gap (GPG) in UK manufacturing is smaller than in many other sectors of the economy, but industry must step up its efforts to attract and retain female talent to eradicate the gap in the long term.

At Pinsent Masons, the law firm behind Out-Law.com, we have analysed the data reported by manufacturers and businesses in other sectors under the UK's GPG reporting regulations. The information disclosed by companies across the diversified industrial sector reveals a mixed picture, but provides examples of good practices that should be replicated and built upon.

The GPG reporting requirements

The gender pay gap reporting regulations apply to private and voluntary sector employers with 250 or more employees. Public sector employers are subject to a similar duty under separate legislation.

The regulations require employers to publish their overall mean and median pay gaps based on gross hourly pay for men and women, expressed as a percentage; as well as their mean and median gender bonus gaps. They are also required to publish the proportion of male and female employees within each quartile of your pay distribution, ordered from lowest to highest pay, as well as the proportion of both men and women that have been paid a bonus in the preceding 12-month period.

GPG information must be reported annually. The first reports had to cover GPG information as at 5 April 2017, and had to be reported by 4 April 2018. The next reporting period applies to employers' GPG position as at 5 April 2018 and must be reported by 4 April 2019.

Employers are required to publish the information on their own website and also submit it to a portal set up for centralising the data by the government. The submitted data displayed on the government portal is standardised. However, employers can provide a link to more detailed information on their own website. Employers therefore have an opportunity to contextualise the data, place it in its historical context and set out action plans to tackle any problem areas.

The GPG in manufacturing

Approximately 1,392 manufacturing employers have reported their data so far.

While the manufacturing sector has the eighth biggest GPG of all sectors in the UK economy, the results within the sector are particularly diverse. Median pay gaps range from more than 60% in some cases to under 5% in others, with some manufacturers even reporting pay gaps in favour of women.

Overall, however, the median pay gap across the sector is approximately 10% between male and female employees. This median gap is significantly lower than sectors such as construction (24%), finance and insurance (22.5%) and education (21%).

When comparing median hourly rates, female employees within this sector earn on average 90p for every £1 earned by their male counterparts. According to some commentators, that gap has decreased significantly over the last five years. There are also examples of progressive hiring rates for women. The trends could represent the beginning of a brighter future for women within the sector.

What manufacturers said in their GPG reports

As in other sectors, a common theme has been for companies to provide a set of combined statistics which summarises the GPG across the entire corporate group despite the reporting requirements not applying to all of the legal entities in their group. Companies have included such statistics in their reports to show a fuller picture of the GPG within the group and have also chosen to include additional explanations.

Some companies also included extra data and explanatory information on their bonus pay gap, while others went beyond the reporting requirements set out in the GPG reporting regulations to include information about their annual equal pay audits and regular pay and benefits benchmarking exercises as well as details of the equal pay training they provide to all managers and other employees involved in pay reviews.

Causes of the pay gaps in manufacturing

It is no secret that the diversified industrial sector has traditionally tended to attract more men than women.

Gender imbalance within the industry has been highlighted in many reports as a major cause of the pay gap. Men occupy the vast majority of senior, highly paid roles within this sector.

One report submitted by a manufacturer highlighted having long-serving male staff and low staff turnover as factors behind their GPG, and further referenced the challenge of recruiting female staff to engineering or maintenance roles when vacancies arise.

A central factor is the significant shortage of females with skills in science, technology, engineering and mathematics (STEM). Only 24% of STEM graduates in 2017 were female, and of that 24%, only 14% were in technology and engineering. Many reports suggest that this hinders the recruitment process.

The challenge of retaining talented women was also flagged in the GPG reports within the sector. Companies suggested that even if they are able to successfully recruit more graduate female engineers it is proving difficult to retain talented female employees particularly following maternity leave. A possible reason for this is that shift patterns in the manufacturing industry mean that employees often have to work unsocial hours. These types of work patterns are inevitably less attractive to those with childcare responsibilities.

Examples of good practice by businesses

At a sector wide level, the industry wide campaign 'Taste Success – A Future in Food' has been launched to promote exciting job opportunities in the engineering industry.

Companies are supporting the active promotion of STEM subjects in schools. This is particularly important in primary education as by the age of 16 only 35% of girls elect to study mathematics, physics, computing or a vocational qualification. Siemens' investment in The Curiosity Project, a UK wide engagement programme with the aim of inspiring young people to study STEM subjects, is an example of the positive work being done to address this challenge.

Employers are also encouraging gender responsive teaching strategies to encourage girls to develop an interest in STEM subjects and continue this into higher education.

Diageo has introduced an internal job share portal. Employees are able to indicate that they are interested in job share and look for job share partners. This comes alongside plans to identify roles that are suitable for flexible working.

Coca Cola and Tunnock's are among other companies that actively seek gender balanced shortlists to ensure diversity within the recruitment process. Many companies, including Cargill and BAE Systems, have also introduced unconscious bias training. Some companies are also rolling out an e-learning module to help colleagues understand the impact of their own unconscious bias.

Muller's report revealed that female career progression is a priority for the organisation. To bridge the gap it said it will focus on developing and promoting female colleagues within the business. This is in step with many companies that are providing training and mentoring for women at all stages of their careers to drive progression and increase the number of female employees at all levels within the business.

Other manufacturers have introduced leadership workshops for their HR teams and set up internal groups aimed at changing attitudes to help encourage women into more senior roles.

In its 'paradigm for parity' action plan, Cargill specifically addressed the culture of presenteeism that is sometimes seen as a barrier to career progression by women with child care commitments. The action plan states that the company will base career progress on business results and performance, not on physical presence in the workplace. It also said that it recognises the need to take into account the view of 'millennials' and consider where and how they would like to work.

Companies such as Unilever that already have family friendly policies in place have reported a desire to improve their inclusive culture by increasing communication and ensuring that employees are fully informed in relation to all of the policies that they are able to benefit from.

More and more companies are recognising the importance of encouraging women to return to work within the sector following career breaks. Babcock, for example, has been working in partnership with the Women's Engineering Society and the Institute of Marine Engineering, Science and Technology to develop initiatives to support such returners.

Manufacturers serious about tackling gender imbalance and pay inequality should consider whether they can adopt similar measures in their own organisations.

Susannah Donaldson is an employment law expert at Pinsent Masons, the law firm behind Out-Law.com.