Gender Pay Is Having Its Day in the UK
February 01, 2018
Few things can get the British public’s attention away from Brexit these days. There's the upcoming wedding of Prince Harry. The possible ouster of Prime Minister Theresa May. And now a topic that appears to be boiling up: the gender pay gap.
While efforts continue across the globe to address discrepancies between male and female worker pay, the Brits were greeted with mixed news this week. In one development, the broadcasting giant BBC, under fire for paying women less than men, persuaded some highly-paid men to take pay cuts, and then instituted a pay cap of £320,000 (around $450,000) for all on-air news readers.
But with one step forward came a couple back. A new study by the Centre for the Study of Financial Innovation shows that the country's gradual move to voluntary retirement plans over traditional pensions may have unintended—but severe—consequences for women workers, creating an 80% gap in benefit funds for men verses women.
The gap would be the fallout from decades of past discrepancies, an issue that won't be exclusive to England. "When you have a difference in salary, it gets compounded into a difference in pension, but that goes very much under the radar,” says Ben Frost, general manager for reward products at Korn Ferry in London. In other words, whatever difference there is in straight cash salary gets translated into an even larger gap in the value of a pension because the money set aside for retirement grows over many decades.
Women also fall behind in running up benefits when they take off time for child-rearing. “If you miss out on pension contributions early in your career than that has a disproportionate effect on the final value of the pension,” Frost says. The compounding then makes the differences even bigger.
While retirement gaps have few short solutions, the BBC, as the world's largest news broadcaster, took swift steps to address gap issues that were recently disclosed among its top anchor talent. In taking corrective steps, the company's leaders may be trying to set a more global example. "The BBC is in a tough spot," says Frost. "They are very high profile so everything they do is highly scrutinized."
Scrutiny, of course, follows the CEOs of the county's other big companies who—in another pay gap development—came under fire in a news story this week disclosing that less than a third of CEOs for the Financial Times Stock Exchange 100 firms were committed to a movement to increase women board representation. That included three female CEOs.
The movement has been spearheaded by the 30% Club, a private outfit that has helped more than double representation to nearly 28 percent in eight years. Experts say some CEOs may feel the slightly higher commitment of the full 30% by 2020 may too ambitious. "The career break (for child rearing) may hold some women back because they don’t get promoted because they aren’t in the office or the workplace as long as the men," says Mark Thompson, head of rewards and benefits consulting for Korn Ferry in U.K. and Ireland. The issue, though, can get resolved over time, he says, as more women enter the workplace.