pay gap reporting

Since 2017, large employers in the U.K. have been required to calculate and submit statistics on gender pay gaps among their employees. This requirement covers all classes of employers – private, public, and charitable – and must incorporate data on all employees present on a “snapshot date”: March 31 for public employers, and April 5 for private employers. These data are then reported both on the individual employers’ websites and to the Government Equalities Office.

While the required calculation of the pay gap statistics is highly proscribed, employers are free to compute and publish the data any time in the year following the “snapshot” date (in late March or early April) up until the following year’s snapshot date. It can be interesting to observe individual firms’ decisions of when to submit their findings to the government; what we have found is that most firms wait until the “last minute” to report on their gender pay gaps.

Days before deadlineIn the reporting year that spanned April 2018 through March 2019, we found that only 1,425 firms – representing 13 percent of all relevant employers – had reported their pay-gap findings by February 28, 2019. The other 87 percent of the reports were filed within a month of the April 2019 deadline. Even more surprisingly, 56 percent were filed within one week of the deadline, and 32 percent of reports were submitted within a mere two days of the deadline.

In view of the high percentage of firms that opted to delay their reporting, Welch Consulting has become interested in several questions: How do pay gaps among firms reporting early this year look compared to those reporting early last year? How did last year’s early reporting firms’ pay-gap data compare to the final average pay gaps, once the latest reporting firms had submitted their data? And, lastly, what do we expect for this year’s final results?

Studying data trends and differences between the early and late reporters has made Welch Consulting well-equipped to assist your firm in collecting pay-gap data, eliminating errors, and ultimately reporting these figures. Moreover, Welch Consulting can also help provide additional facts and analyses to strengthen a “supporting narrative” that the employer may choose to publish alongside the required numbers. A supporting narrative may help put a reported pay gap into context, and clarify that these data do not provide conclusive evidence that the employer engages in discriminatory behavior.

Findings in the 2018-2019 Reporting Year

For the 2018-2019 reporting year, the overall average pay gap was 14.2 percent. That means British men at the reporting firms earned an average of 14.2 percent more than women at the same firms. Employers reporting early tended to look a bit better: Those submitting numbers by February 28, 2019, had an average gender pay gap of 13.0 percent–1.2 percent lower than the final average.

Findings in the 2019-2020 Reporting Year

Almost 1400 firms have reported numbers for this year as of the end of February. This is similar to the prior year’s 1425; it is likely that the percentage of employers reporting early will be similar to that of the prior year as well. Among this year’s early-reporting employers, we find an average pay gap of 12.4 percent.

If the 1.2 percent difference between the early-stage and final-stage reporting that we found last year holds steady for this year, then we can expect to see a final average pay gap of 13.6 percent this year. If that figure actually comes to pass, we would see the pay gap decrease 0.6 percentage points from the 2018-2019 reporting year to the present, a small change.

Further analysis of these numbers from the last few years reveals a similar finding. When we put 2018-2019 and 2019-2020 figures for the same employers side-by-side (for those that have reported to date for the 2019-2020 period), we see that 54 percent of those firms report a smaller pay gap than last year’s, 41 percent report a larger pay gap than last year’s, and 4 percent report the same pay gap. The finding that a majority of firms reporting so far this year have reduced their pay gap relative to the prior year’s gap is consistent with the above-forecasted decrease in the final pay gap.

Our Labor Economists Can Help

The 2019-2020 pay-gap reporting season is almost at a close. But, in one month’s time, the next year’s season will open up, allowing employers throughout the United Kingdom to begin collecting their data and submitting it to the government well ahead of schedule. Welch Consulting can help. We will work with your firm to gather the required data efficiently and without error, ensure all calculations are accurate and report your findings to the British government. Additionally, we can help shape the “supporting narrative” that employers are allowed to publish with their numbers. We can support the development of this narrative through additional studies that more fully describe gender pay differences when measured among more appropriate comparison groups, or by taking into account factors heretofore ignored by the required reporting statistics. Our labor economists have worked on U.K. pay gap reporting since the 2017 mandate went into effect; they have the necessary skills to get this task done accurately and professionally.

Contact us to learn more about our labor economists and all the services we provide.