Mind the (pay) gap
In an organisation, where both a man and a woman receive the same pay for performing the same job, would you say that there is a gender pay gap?
It’s a complex question, and the answer lies in the need for… more data.
It’s a common tendency when reading this scenario to immediately jump to the conclusion that there is no gender pay gap.
However, as organisations in Asia intensify their efforts to advance Diversity, Equity, and Inclusion (DEI), it becomes crucial for HR and DEI professionals to grasp DEI concepts and definitions, particularly the distinction between the ‘gender pay gap’ and ‘equal pay’.
Though these two terms are often used interchangeably, they carry different meanings, implications, and measurement criteria.
This article aims to demystify these differences, emphasise the importance of accurate measurement, and offer insights to organisations on effectively driving their DEI initiatives forward.
Equal pay
Equal pay refers to paying equally individuals doing the same or a very similar role. This means that employees performing similar roles with similar qualifications and responsibilities should receive the same remuneration, regardless of their gender. Equal pay can be assessed through regular pay audits, which help identify and rectify any salary disparities.
Equal pay remains a prevalent issue today. According to the World Bank’s Women Business and the Law 2022 report, 95 countries do not guarantee equal pay for equal work. This presents a significant opportunity for organisations to take action to ensure equal pay.
Gender pay gap
A ‘gender pay gap’ refers to the difference between men’s and women’s average pay across all jobs in a workplace or a country, according to the International Labour Organization.
There are various approaches to measuring the gender pay gap. Our team has reviewed multiple sources and methodologies and found that the method employed by the Office of National Statistics in the United Kingdom stands out as the most robust, accessible, and transparent.
The gender pay gap in the UK is calculated as the difference between the average hourly earnings of men and women as a proportion of men’s average hourly earnings, across all jobs, full-time and part-time and excluding overtime, in a workplace or a country.
In summary, the Gender Pay Gap is a measure of the difference in average earnings across all roles and all women and men in a workplace or country, whereas equal pay compares pay for individuals who work in the same role in the same workplace.
Measuring the gender pay gap
There are two unique ways to calculate the gender pay gap in a workplace: one using the median and the other using the mean.
By employing both the mean and the median gender pay gap calculations in tandem, organisations can gain valuable insights to enhance their understanding of the gender pay gap within the workplace.
The mean gender pay gap is the difference between the mean hourly pay of men and the mean hourly pay of women.
The median gender pay gap is the difference between the hourly pay of the median man and the hourly pay of the median woman.
Interpreting the gender pay gap figures
A gender pay gap of zero percent indicates no disparity in average between the hourly pay of men, and that of women.
Also, when a workplace reports a gender pay gap of 25%, it means that, on average, women earn less than men in that workplace. In other words, for every dollar a man earns, a woman earns 75 cents.
Conversely, when a workplace reports a gender pay gap of -15%, it indicates that, on average, women earn more than men in that workplace. In this scenario, for every dollar a man earns, a woman earns $1.15.
Why do these figures matter to organisations in Asia?
Understanding the gender pay gap and equal pay figures is an essential step in the journey toward achieving gender equality. These figures point clearly to the unequal distribution of income based on gender, encompassing various factors such as occupational segregation, discrimination, and variations in career progression.
So, what does the state of the gender pay gap look like in Asia?
- The Korn Ferry Global Gender Pay Index reveals a regional gender pay gap of 15% in Asia (Source: The Korn Ferry Global Gender Pay Index 2020)
- Only three companies have reported closing their gender pay gap – Oil Search (AUS), Rio Tinto (AUS), and China Gas (HK), out of 1,181 companies researched in Asia (Source: Equileap Gender equality in Asia Pacific Report 2022)
- 91% of companies in Asia do not disclose any information on their gender pay gap
- Just 4% of 46 Asia-Pacific companies give details on strategies to close the gender pay gap (Source: Equileap Gender equality in Asia Pacific Report 2022)
These statistics serve a compelling call to action, underscoring the need for effective measures and transparency.
Closing the gap isn’t just the right thing for organisations to do. It’s also a smart thing to do; a strategic imperative
So what steps can HR professionals take to close the gap and advocate for equal pay?
Even if you are starting from scratch, you have the power to drive positive change within your organisation.
Here’s a step-by-step guide to kickstart your journey towards closing the pay gap:
- Lay the foundation by collecting data: start by setting the baseline and identifying the specific pay data you need to collect. This includes salaries, bonuses, benefits, and any additional forms of compensation across all staff.
- Analyse the data: Calculate the gender pay gap and delve into specific factors contributing to the disparity, such as job roles, promotions, and performance reviews.
- Secure leadership buy-in and alignment: Ensure that organisational leadership is committed to closing the pay gap and encourage them to actively support and promote pay equity initiatives.
- Advocate for transparency: Share the gender pay gap data with your staff and establish channels for open and confidential communication. This encourages employees to provide feedback and report any concerns about pay disparities.
- Continuous monitoring and improvement: Schedule regular pay audits to continuously monitor progress and identify areas that require attention.
Reporting on the pay gap might be seen as “airing one’s dirty laundry”. However, it’s a crucial step towards a more equitable future. By openly acknowledging and addressing pay disparities, organisations demonstrate a commitment to progress, fostering a culture of transparency, inclusivity, and accountability.
Reporting the pay gap is not a sign of weakness; it demonstrates dedication to a more equitable future. For on-demand training, easy-to-download and customise DEI policies and guides, consult the DEI Academy:
