Equal pay analysis: a great start but only the beginning

To mark Equal Pay Day 2023, we’d like to present a brief snapshot of what’s been achieved so far on the equal pay analysis front and give an idea of what’s next on the fair pay agenda.

High pass rate at current threshold

The good news is that most companies that run an equal pay analysis pass the 5% threshold. While 5% makes sense from a statistical point of view, as it builds in a level of tolerance, it is currently under debate in both the EU and Switzerland and could be lowered sometime in the near future.

Not to be taken at face value

The more analyses are done, the clearer it becomes that it’s important to take a nuanced view of the findings.

On the one hand, “passing” the analysis doesn’t mean that inequality has been eradicated in an organisation. The analysis yields an average figure, and the possibility that individual cases with higher gaps exist can’t be ruled out. (It is interesting to note that whenever there are gaps, they’re generally in favour of men).

On the other hand, an analysis pointing to unequal pay doesn’t necessarily mean there’s discrimination. The results might have been negatively influenced by mergers, legacies and factors not taken account of in the analysis. As is the case for any statistical analysis, drawing the right conclusions on the basis of the results can be a challenge, particularly in complex, heterogeneous organisations. Companies need to pay attention to how the findings of the analysis are interpreted.

Going deeper

To yield accurate and really useful insight, equal pay analysis has to go further. In our experience, it pays to do deep dives, for example to get a clearer picture of the situation in specific functions or salary bands.

It’s important to remember that the equal pay analysis in its current form doesn’t consider equal opportunities and inequalities in career paths or more structural considerations. Hence the need for deep dives to paint a more nuanced and accurate picture.

Going wider

Another point to remember is that so far, the analysis has focused only on gender and hasn’t gone into intersectionality – the way different aspects of people’s identities, such as gender and cultural background, nationality or family status, combine to create privilege or discrimination. This has prompted the Equal-Salary Foundation to launch gender and ethnicity pay gap certification – a good step towards looking in more detail at intersectionality.

Going further

In our work we’re seeing a growing realisation that commitments to equal pay have to go even further to encompass global pay fairness. In response to a growing sensitivity among consumers, employees and investors to the need for fair wages – plus the need to attract and retain people with the right skills – a growing number of companies are considering the implications not just within the narrow organisation, but along the supply chain. This includes committing to and reporting on efforts to pay a global living wage.

Clients of ours are already seeing the benefits of such commitments and are coming to us for ways of gaining greater insight into pay fairness, among other things using modern data analytics to assess the status quo (on a more granular basis than the current equal pay analysis), design responses, assure compliance and report.

Reach out to us if these topics resonate and you’d like to discuss them in more detail.

EQUAL-SALARY certification

The bottom line is pay. Prove that you’re paying men and women equally. Equal pay isn’t just a human right. It’s a business imperative. There’s now so much evidence on the benefits of gender equality and a diverse workforce that CEOs are expected to deliver. Are you ready to commit to diversity and equality?

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