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mind the gap

Gender Pay Gap v Equal Pay – The Difference and Why

With the forthcoming Economy, Jobs and Fair Work Committee’s current inquiry into the Gender Pay Gap in Scotland I thought it would be helpful to outline the distinctions between equal pay and the gender pay gap. Many think we don’t have a pay gap in our economy due to equal pay legislation.

Equal Pay and the Gender Pay Gap are two completely separate issues.

Equal Pay is covered by the Equality Act of 2010 which means that men and women in the same employment performing equal work must receive equal pay.

The Gender Pay Gap is the difference between men and women’s average earnings in a business or across the labour market. The Pay Gap is expressed as a percentage of men’s earnings.

The Gender Pay Gap exists for a whole host of reasons.

Women are still more likely to work in part-time and low paid roles compared to men. In Scotland, women account for 76% of all part-time workers.

The average gender pay gap across the UK is 18% however in some sectors it is much higher including financial services where it is estimated to be as high as 39%. Simplistically we can say that is because in this sector there is likely to be more men in higher paid roles than women.

The Gender Pay Gap isn’t unique to Scotland or the UK. Global estimates suggest that it could take another 140 years for the gap to close at a global level.

So in Scotland – how do we tackle the gap that remains? This is complex and there is no one correct answer but taking a detailed and evidenced based approach to understanding the facts is a start.

If we know what the gap is key industry sectors in Scotland we can start to look at how we use the tools available to us to close it. These include encouraging more girls into Science and Technology at a younger age and maintaining this interest beyond school to lead to career opportunities. For women in employment, how do we support more women to move from part-time to full-time work? How do we look at developing more women in work into senior leadership roles? How do we reward success in our companies? Are promotions solely based on presenteeism, finding someone in the boss’s own image or through closed networks?

This is a massive challenge but also a huge opportunity for Scotland’s economy. More women working and earning means more economic growth – inclusive economic growth.

We all have a part to play and the Economy, Jobs and Fair Work Committee’s inquiry is an important step in the journey.

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Women Consumer Power

Candace Bushnell, the “Sex and the City” author, famously once said “Women with money and women in power are two uncomfortable ideas in our society”. But the fact is that the economic power of women as earners, consumers, purchasers and influencers has been growing steadily for decades.

Whilst the media is dominated by issues linked to pay gaps, board membership, career progression and the many obstacles faced
by women, and it is right that we focus on the inequalities and social injustice that still exist for many women today, what is often forgotten is the scale and the extent of the economic power and influence that women have.

Women currently control $20 trillion or 27% of the world’s wealth. In the UK 46% of the 376,000 millionaires are female and 18 women are now in the exclusive billionaires’ club (2016). And this figure is expected to grow as more women enter these power indexes, no longer claiming their position due to family inheritance or divorce settlements.

More women are graduating with degrees, and more women are entering the workforce. Not only are women earning more as they scale professorial and corporate ladders, but they are also setting up businesses at a faster rate than men. One third of businesses in the world are owned by women. In Scotland, over 80,000 businesses are owned by women contributing over £5 billion to the Scottish economy each year, that’s a lot of female buying and influencing power.

Women now represent the largest market opportunity in the world and female consumer purchasing power exceeds the GDP of India and China combined (Forbes 2013). Women are fast becoming “prominent creators of wealth” and it is expected women will control 75% of all household spending by 2028.

The influence of women on the consumer economy is huge, leading many commentators to suggest that if consumer spending had a gender it would be female. Leading gender analysts Catalyst.Org, estimates that, on average, 67% of all UK Household consumption is controlled or influenced by women. And it is much greater in many key household areas.

Women make the decision or influence the purchase of 92% of holidays, 65% of cars, 93% of food, 91% of homes and 61% of PCs and with the extensive and growing use of social networks such as Facebook and sharing of social reviews by women, social media is now playing an increasingly important role in the decision-making process of many women.

In response to this “gender flip” or changing economic dynamic, most consumer businesses and advertising specialists have become much smarter in terms of how they “sell” to women.

Yet this consumer industry experience is not reflected in the response by many other companies to increasing female economic power. However, many organisations do understand that learning from the consumer industry could be vital for them as they look to sell to the growing number of senior female business decision makers, create greater gender diversity in their organisation or recruit and retain more women in their workforce.

Deloitte, a global accounting and consultancy practice, has recognised that the first step to achieving greater diversity within their business is to focus on their clients or customers who are increasingly female decision makers – where a “one size fits all” marketing or sales approach no longer works.

They have effectively transformed their internal HR diversity training into a key business tool, successfully winning more contracts and pitches and at the same time raising levels of awareness of the benefits of gender diversity within their own organisation.

Similarly, many recruitment companies are understanding the impact of language and job advertisements on success rates. #WordsthatWork, an Australian Government initiative has recognised, as in consumer messaging, business words are powerful.

When it comes to recruitment, words can encourage or discourage women from applying for jobs, they can help reduce unconscious bias and provide a broader candidate field. Research suggests that women are less likely to apply for male sounding roles, described as “assertive” or “determined” and similarly for software companies, substituting the word “developer” for “hacker” increases the number of female applicants.

With 71% of social media users’ women and 78% of women using the internet for product information, social marketing is also becoming an increasingly important tool and channel to influence decisions and to engage women on a range of business and work related issues. Studies show that messages on users’ Facebook feeds can significantly influence voter patterns and social media played a key role in influencing decisions in the recent US Presidential elections.

The convergence of the consumer and business world is driving change in our homes, workplaces, communities and society.

More women with more money and more power is something we all need to get used to, uncomfortable or not.

Dr Lesley Sawers

Executive Chair

GenAnalytics Ltd

This article first appeared in Business Women Scotland Magazine February 2017

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The ‘Unfinished Business’ of Caring

In recent months, we have seen a renewed focus on the issue of pregnancy and maternity in the workplace and the growing acceptance of the business case for supporting pregnancy and maternity rights at work. Despite this progress, a review by the Equality and Human Rights Commission into pregnancy and maternity in Britain, revealed that high levels of discrimination still exist in both the private and public sector. This report identified that not only can pregnancy and maternity impact the earnings of many women it can also potentially damage their future career progression.

The TUC estimate that around 25% of women do not return to work after maternity leave, and one in six of mums who do go back change jobs because their employer will not allow them to work reduced or flexible hours. And when women do return to work, the Institute for Fiscal Studies estimates that, on average, for a woman a pay gap of 10% exists even before the arrival of a first child. There is then a gradual increase in this gap, until the first child is twelve years old, when it is likely a women’s hourly wage will be a third below a man’s.

Whilst it is important to focus on areas of discrimination that still exist linked to pregnancy and maternity rights and to ensure that we collectively work to reduce inequality in the workplace and within roles, this work also highlights a wider issue operating in our society that we need to address. And that is in terms of how we treat and view not just expectant mothers but others who undertake caring roles in our society.

The majority of paid and unpaid childcare is undertaken by women, and is viewed and valued as low status work. Historically, occupations that are undertaken mainly by women or have been “feminised” are characterised by low pay and are perceived as having low economic value in comparison to work undertaken predominately by men. Anne Marie Slaughter, Hilary Clinton’s former policy chief, in her book “Unfinished Business” argues that to drive change across society we need to stop viewing caring as a “women’s issue”. She talks about building an infrastructure of care, around the notion that “If family comes first, work does not come second. Life comes together”, where caregiving rather than seen as a business cost, is viewed as an asset by businesses and organisations allowing many women to be their most productive in the workplace.

To achieve this, we need to broaden the national conversation to consider changing current childcare attitudes, the level of financial support for shared parental leave and the role that men can and should play in care provision. In Norway over 70% of fathers currently take more than 5 weeks’ paternity leave, whilst in the UK we still have a stigma that prevents many fathers or partners from playing a more active role in early parenting and which has led to a woeful uptake by men of shared parental leave.

We also need to consider the support and encouragement we give to home based work, allowing more parents to set up businesses, work from home, or to study or learn new skills whilst undertaking childcare. And we also need to address the growing “hidden” caring burden, increasingly being carried by many women in support of elderly relatives or parents, and ensure that we are not creating a new “covering” syndrome, linked to ageing.

The introduction of pay gap reporting in 2017, will shine a spotlight on earnings inequity across sectors and within organisations. However, we won’t get near to closing the gender pay gap until we also take action to address the low economic value we attach to caring roles, recognise the contribution of caregiving to the formal and informal economy and invest in it accordingly. Anne Marie Slaughter sets out a vision for the caring economy in the United States, but her focus on the “unfinished” business of how we value and integrate caregiving into our workplaces and society is universal.

Dr Lesley Sawers

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Why We Need to Change the Equality Conversation across UK Plc

Earlier this month a group of business leaders gathered in Edinburgh to hear from Thorhild Widney, one of Norway’s foremost and experienced politicians. The leadership event was hosted by FWB Park Brown and supported by Ernst & Young LLP.

In a lengthy international career, Thorhild’s portfolio has included Minister for Petroleum and Energy, State Secretary in the Ministry of Foreign Affairs, Minister for Culture and Minister for Fisheries. Experience now applied within the international renewable and energy sectors at Board and NXD level.

The discussion was wide ranging, covering the breadth of Thornhild’s ministerial and non-executive portfolio and the interests of those attending. We discussed Norwegian politics, the economic impact of social and progressive labour programmes, international energy politics and the governance and leadership issues within large and complex listed companies.

The audience, a mix of corporate lawyers, financier, academics, CEOs, FDs and senior industry leaders gained insights into the relationship between government, the Norwegian economy and business practice, learning lessons for Scotland and their own organisations in the international context and from the extensive experience of the speaker.

Overriding themes that emerged crossed business, politics and society and included the need for transparency in decision making and in action, the key role for business in changing working practices and the need for a framework of legislation that can act as triggers to change business and society behaviours. The homogeneity of many Boards and the issues this creates in terms of “group think” and corporate governance was also highlighted.

The audience experienced a masterclass in both big “P” and small “p” politics at a national and business level, they learned how to succeed in business through strategic and personal career planning and how to balance successful international assignments with family commitments.

It was an inspirational event, and one that demonstrated the nature of the national business and equality conversation that many women want to have at a Board and senior level across the UK. If it can be done in Norway, then why not here?

Dr Lesley Sawers
Executive Chair

GenAnalytics Ltd

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When First Becomes Meaningless

Last week I was asked to join a panel discussion on BBC Scotland Radio to answer the question have we finally achieved gender equality in the UK?

With a soon to be second female Prime Minister, a female First Minister in Scotland and Northern Ireland, we were asked to share our views on the second wave of Girl Power in the UK.

Of course it is excellent that women play such a prominent role in UK politics and such high profile individuals can only continue to champion the cause to encourage more women to enter the political field. However, in my view we will only be able to say we have achieved equality at all levels in business and society when first becomes meaningless.

How often do we refer to the First Female?

The biggest of all is the potential this year of the First Female President of the United States. We have the first female head of the IMF, the first female Chancellor of Germany, the first female First Minister of Scotland, the first female Chair of the US Federal Reserve Bank.

And we also have a constant stream of first female CEOs in companies and organisations throughout the world.

That’s a lot of First Females.

Such high profile appointments can only be good to show girls and women what can be achieved but when we scratch beneath the surface and the headlines we still have a significant journey ahead of us before we can truly say we have achieved equality.

The latest Women on Boards performance in the UK announced last week demonstrated a snail pace effort to improving the balance. Only 25% of recent FTSE 100 Board appointments have gone to women – the lowest rate since 2011. If we look at the FTSE 350 total only 7% of board directors are women.

In Scotland we continue to have a pay gap between men and women currently standing at 17.5% – this rises to 40% in some sectors.

Women across the UK are more likely to be in low-paid, part time roles as opposed to men.

Women are more likely to face challenges with lower pension provisions than men as they reach older age.

We all know that equality matters and that it is the right thing to do.

What can often be understated though is the significant economic benefits that gender equality would deliver.

McKinsey has estimated that $12 trillion could be added to global GDP by 2025 by advancing gender equality.

If we do not harness the potential of over half of the world’s population the global economy will suffer.

Unleashing the potential of women to set up their own businesses in Scotland could lead to a 5% increase in Scottish GDP if women were to create their own businesses at the same rate as men. When Scotland’s current growth rate is hovering around 1.7% this makes for a tantalising opportunity to stimulate a significant boost to our economy.

With companies continuing to face a war on attracting, keeping the best talent and maintaining competitive advantage we know that diverse teams can demonstrate higher performance levels and importantly increase bottom line profitability.

So we have the attention grabbing headlines on women running the world and a message to the boys in the UK that the political norm has changed. The reality, once the headlines and the articles that follow have disappeared into yesterday’s news, is that we still have a long way to go.

Unless we change our approach now we will have to wait another 117 years before we achieve pay equality globally according to EY. I really don’t want to wait that long and what kind of message does this signal to the next generation of young women leaving school into work or going into further education.

So we need to shift the conversation from nice to do to have to do. That means mainstreaming gender equality as a business issue and creating frameworks and measurements to set baseline performance and track progress.

What gets measured gets done.

It is through a structured, analytical approach that we will see progress and this begins in the companies employing women across the UK.

At GenAnalytics we are confident that this approach will work and that we can track the talent pipeline, support organisations to close any gender pay gaps and importantly support women to achieve their ambitions – whatever their background.

This will require a massive effort across industry and with individuals stepping up to the plate to take responsibility.

Only then will we begin to reach a point in time when we no longer talk about firsts.

Jane Gotts
Director
GenAnalytics

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Women and Ageism: Economic Illusion or Fact

You may have never heard of the term “Frequency Illusion” but now that I’ve mentioned it chances are that you will hear it again some time very soon. “Frequency Illusion” is the phenomenon where you hear a piece of news or information or see something and very soon afterwards encounter the same object or information again, often repeatedly.

Since turning 50 some years ago and heading all too fast towards the next significant birthday, I seem to be confronted on an almost daily basis with facts and stories about ageing women. It’s everywhere – on the news, in magazines, on the web at home and at work. I don’t think it’s an illusion, I do believe there has been an increase in the frequency and volume of information on the issues facing women in the third age that reflects the increasing focus of society, the media, politicians and from women ourselves on ageing and its impact on our careers, family life and future work and earning prospects.

Since 2000, the proportion of people aged 50-64 in work has grown from 61% to 66% in 2014.The employment rate for people over 65 has similarly risen from 8% to over 14%. This older working group however contains a lot of disparity linked to age, occupation and education and there are significant challenges experienced by many women in this age group. Within the UK, three in five female employees (aged 50+) work in three sectors characterised by low paid jobs; education, health and retail. All sectors that are predicted to shrink in employment numbers. In a recent Radio 5 survey into ageism, one in five adults said they had experience ageism, 32% of them in the workplace. Worryingly in this survey, Scotland had the second highest incidence of ageism in the workplace, just behind Wales.

And whilst employment rates amongst the 50+ age group are rising, across the UK there are over 3 million unemployed people aged 50-64 who are actively seeking work. Approximately 1 million of these people have been made “involuntary workless” or as Business in the Community describes it “pushed out of their jobs” for reasons of redundancy, ill health or early retirement. What this essentially means, is that there are millions of people over 50 who would like to work but can’t find a job. Within my own circle of 50+ friends and colleagues, this seems a particularly serious issue for many women, who may also have experienced divorce or single parenthood and now find themselves the sole household earner and faced with very real challenges in re-entering or remaining in work.

A number of experts are also highlighting the potential challenge facing many women in this older age group in seeking work, as their jobs and skills do not match those sectors predicted to grow. Older women on average have lower levels of formal qualifications and are less likely to engage in training, either through not working in sectors that have invested heavily in workforce development or having missed earlier career development opportunities due to a whole host of reasons linked to caring responsibilities or extended periods not in paid employment. A recent study across the OECD highlighted the fact that women do more unpaid work than men, many choosing to combine work with family responsibilities, something we all know, but interestingly what this study also demonstrated was this comes with a cost to many women’s long term career and earning prospects. The effect of the boomerang generation is also adversely impacting many women, with over three million older women within the UK having adult children still living at home.

In Scotland, the proportion of older women (50+) has been rising steadily since 2004, from 24% to 28% in 2011. Many of these older women are likely to earn less than older men, on average 20% less, and to have more responsibility for caring for elderly relatives or grandchildren. This trend is likely to continue as more and more of us baby-boomers and Generation Jones’s (that’s anyone born up to the mid 1960’s) become a larger proportion of the ageing workforce.

The recent increase in retirement age has also impacted many working women, the STUC have identified that many women in the 50-64 age group are less likely to be eligible for full state pensions or to have access to an occupational pension, often having either restricted access to schemes or breaks in contributions due to childcare. Figures show that women have on average £32k in defined pension schemes as opposed to £62k+ for men. Analysis of single women households suggests that this age group may also be negatively impacted by a changing welfare system that has a focus on family units as opposed to individuals.

So for many women in Scotland ageing is not an economic illusion.

It would be hard reading this data and statistics, not to feel a little depressed at the potentially very bleak future for many women. But there is a positive side. With this increase in focus on ageing in society and in the workplace, there has also been a growing recognition of the need to specifically look at third age work requirements, particularly for women.

A report last year by the UK Government into older people, recognised the need for a national focus on retaining, retraining and recruiting workers over 50 and it identified a whole package of policy measures to support flexible working, training needs and to protect earnings.

There are also a growing number of women like myself, now choosing self-employment as a career option, 10% of women in Scotland aged 50-64 are now self-employed. Many cite greater flexibility and overcoming challenges of age discrimination as their reasons for entrepreneurship. The majority of new businesses in the UK are created by people in their 40s and 50s, the evidence shows that these “olderpreneurs” have a 70% chance of survival compared to 28% for younger people. Little research exists into the female “olderpreneur” and the contribution this group could make to the economy, but we know that in Scotland if woman started businesses at the same rate as men, this would add an additional 5% to GDP or the equivalent of an extra £7.6 billion to the national economy. So the opportunity for policy makers and government to develop a package of targeted support measures and incentives to support female “oldpreneurs” is there.

Similarly, both the Scottish Commission into Older Women and Business in the Community have also identified a range of practical measures that would support more women to remain in meaningful and rewarding work or to develop new third age careers, these include a greater emphasis on training, agile or flexible working, carer support and pay gap transparency.

I hope in the future we will see greater and faster progress on a range of government and business measures specifically focused at addressing gender ageism at work and in society. As someone very wise once said, “all problems are an illusion of the mind”, ageing and gender is definitely one “frequency illusion” that we can solve.

Dr Lesley Sawers

Executive Chair

GenAnalytics