What Is Gender Pay Gap Reporting and Why Does It Matter?

What Is Gender Pay Gap Reporting? 

A gender pay gap report uses gross salaries to compare the average hourly earnings of men and women across a workforce. Because the analysis compares the pay of all working men and women in an organisation and not just those in similar roles, it is an assessment of a gender representation gap within an organisation and not an indication of discrimination or unequal pay, which are illegal practices.

Unequal pay occurs when an organisation pays female less remuneration than their male counterparts for undertaking the same work. The factors driving the gender pay gap are more varied and complicated, which means that an organisation can have a gender gap without having an equal pay issue.

The principle of ‘equal pay for equal work’ has been enshrined in the European Treaties since 1957, yet the gender pay gap has persisted throughout the European Union. Working women in the EU earned on average 12.7% less per hour than men in 2021. The pay gap varies by country: In 2021, Luxembourg had no pay gap while Slovenia and Belgium had relatively low pay gaps at 3.8% and 5.0%, respectively. Meanwhile, Estonia, Austria and Germany had the highest pay gaps at 20.5%, 18.8% and 17.6%. Ireland’s gender pay gap was at 9.9%.

The Gender Pay Gap Information Act

On 13 July 2021, the Irish Government enacted The Gender Pay Information Act (“The Act”). The Act imposes new reporting requirements on both private and public sector employers.

As of 2022, any employer with more than 250 employees must report on its gender pay gap.  In 2024, these regulations extend to employers with 150 or more employees and, in 2025, to those with 50 or more. Employers with fewer than 50 employees will be exempt from the reporting requirements.

Employers choose a ‘snapshot’ date in June and report on employees’ remuneration for the 12-month period that precedes the chosen snapshot date. They have six months from the chosen snapshot date to prepare calculations.

What Drives the Gender Pay Gap?

At a national level, interpreting gender pay gap data and determining the causes of the gender pay gap is complicated.

The gender pay gap is often much lower for younger employees, and research has shown that the gap widens with age. This change is likely connected with women taking career breaks or making career decisions based on childcare needs.

In 2018, a third of female employees (33%) in the EU had an interruption into work for childcare reasons compared to only 1.8% of men. Sociologists have suggested that women suffer a ‘motherhood penalty’ in which employers view working mothers—because of their childcare responsibilities— as less  component or capable of handling the same work as their male or non-mother peers. Access to affordable childcare could also contribute to this widening gap. Ireland has one of the lowest female employment rates of major European countries; however, the rate is nearly equal until employees enter their late 20s. The permanent drop off in female rates coincides with the typical child bearing years (29 to 39), and additional research has shown that cost of early childcare in Ireland is nearly double the average of OECD countries and that the country has a shortage of available childcare, both of which can create barriers for mothers seeking to return to work.

Workplace-specific factors also influence the gender pay gap. In the EU, women are overrepresented in low-paying sectors, such as health and education, and less than 8% of Europe’s top companies have female CEOs. For those women who do move into more senior-level positions, female managers face the greatest pay gap by occupation, earning 23% less per hour than their male counterparts.

Why Does Closing the Gender Pay Gap Matter?

The gender pay gap is an economic issue that affects us all. Reducing the gender gap has many benefits for society including reducing the number of women living in poverty, improving women’s quality of life, increasing the tax base, increasing spending, stimulating the economy and increasing GDP, to name a few.

The gender pay gap also has a knock-on effect. Once it occurs, it continues to impact women’s lifetime earning capacity, reducing their ability to save, accumulate bonuses and contribute to pensions. In 2020, the gender pension gap in EU was more than 28%.

Closing the gender pay gap also makes financial sense for organisations. Organisations that have more women in senior positions are more profitable and more socially responsible. Furthermore, organisations that focus on closing this gap by collecting data and using their findings to implement inclusive and family friendly policies are more likely to attract and retain top talent.

How Can Reporting This Information Help Close the Gender Pay Gap?

Gender pay gap reporting is a component of a larger strategic approach to addressing gaps in employment and workforce participation rates. The data collected can shed light on previously unknown patterns, spur innovative thinking and prompt new dialogues about the problems that leaders and policymakers are trying to solve as well as inform their solutions.

The information gained in gender pay gap reporting assists organisations in better understanding their own strengths and weakness in terms of diversity, equity and inclusion strategies. It can help leaders make decisions and implement strategic changes that are good for business and people while simultaneously providing valuable data and insights to research and educational institutions, policymakers and more. 

All organisations have a crucial role to play in closing the gender pay gap, and they can begin this journey by identifying and analysing gender representation across their workforces.

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Grant Thornton’s team of organisational psychologists and digital experts will work with you to help your organisation to assess and improve your gender pay gap. With our innovative technology solution, we will provide an unparalleled market leading approach to deliver actionable insights into your workforce needs. If you need help with your gender pay gap reporting, reach out to our team today.

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