Gender pay gap narrows in organisations with largest disparities

The gender pay gap has narrowed the most in employers which reported the largest gender pay gaps at the introduction of transparency legislation.

Professor Melanie Jones and Dr Ezgi Kaya have analysed four years of gender pay gap data and found that the gender pay gap has narrowed the most in organisations where transparency laws exposed the greatest pay disparities.

Legislation was introduced in April 2017 as part of a strategy to end the gender pay gap. Transparency laws require UK employers with over 250 employees to publicly report their gender pay gap.

These figures are made publicly accessible by the Government Equalities Office through a central and searchable website, allowing comparisons between employers over time. The initial figures published in 2018 demonstrated evidence of a gender pay gap in favour of men in the vast majority of organisations and attracted considerably public scrutiny.

The public nature of transparency is a unique feature of the UK legislation, with gender pay gap measures often made available only within organisations in other countries. Professor Melanie Jones said: “We have been able to provide evidence that this matters. Even after accounting for their own gender pay gap, employers with larger gender pay gaps than the average of organisations in the same industry experience greater narrowing post-transparency.

“Among those with above-industry gender pay gaps, a lower average gender pay gap among comparative employers, or a high relative employer gender pay gap, is associated with further narrowing.”

Dr Ezgi Kaya explains: “Our evidence thus suggests relative, or between-employer, comparisons enabled by this transparency have provided a further channel through which the legislation operates, perhaps driven by additional pressure from employees, consumers and investors to address gender pay gaps which are viewed as large, relative to industry norms.

“Our findings complement existing evidence on the narrowing impact of the introduction of the legislation, and are important to the ongoing evaluation of gender pay gap reporting in the UK. This is also relevant to recent calls for extensions of pay gap reporting to other protected characteristics, including race and disability, as well as for countries deciding whether and how to introduce such legislation.”

The full paper is available at: Organisational Gender Pay Gaps in the UK: What Happened Post-transparency? (iza.org)

Acknowledgements: We are grateful to the Government Equalities Office (GEO) for releasing the version of the Gender Pay Gap Reporting Data (2017-2021) used for this project. Although all efforts have been made to ensure the quality of these data the GEO do not bear any responsibility for the accuracy or comprehensiveness of these materials. We are also grateful to the GEO for their advice and guidance in using these data.