Gender pay gap – Key issues explained

The gender pay gap is the aggregate difference between what women are paid compared to men. It is a broad measure of the difference in the average gross hourly earnings of male and female employees as a percentage of the average gross hourly earnings of male paid employees. It is usually measured across the economy as a whole or an entire industry or occupation and is expressed as a percentage of men’s earnings. It’s currently 13.9 per cent in Ireland, meaning that an Irish female earns just under 86 cents for every euro earned by an Irish male.

Origins and causes

The origins and causes of the gender pay gap are complex, multi-faceted and require a multi-dimensional response. Several complex factors typically lead to a gender pay gap, and often these factors are interrelated and may include: caring responsibilities, part-time working, differences in human capital, occupational segregation, pay discrimination and the undervaluing of women’s work.

Legislation

The Gender Pay Gap Information Act, 2021 was signed into Irish law on July 13th, 2021. The Act introduces regulations requiring Irish employers to publish their gender pay gap (“GPG”) information for their employees, the reasons for any GPG in the employer's case, and the measures (if any) being taken to eliminate or reduce GPG.

The reporting requirements will initially apply to all public and private sector organisations with 250 or more employees and is expected to begin in 2022 following the publication of specific reporting regulations later this year.

These requirements will expand on, or after, the second anniversary of reporting regulations, where employers with less than 250 employees will be required to publish their GPG data. On, or after, the third anniversary of regulations, employers with less than 150 employees will be required to publish their GPG data.

Industrial sectors and organisational levels

Understanding the broader context within which your pay system operates makes it easier to close the gender pay gap or to put right any unjustifiable differences in the pay of men and women doing equal work. It can be helpful not only to know something generally about why men’s average earnings tend to be higher than those of women but also about how this manifests within industrial sectors.

The gender pay gap is wider, for example, in the private than in the public sector, and much wider in the financial services sector than in the healthcare sector. The extent of occupational segregation also varies markedly from one industry to another.

While there have been significant strides in gender equality, this has yet to translate through to senior levels in many organisations. To address this issue, organisations must regularly review and assess their gender pay gap statistics. Gender equality is something that many organisations speak of and create policies for, and gender pay gap reporting is the first real test of the effectiveness of those policies. The enactment of the Irish Human Rights and Equality Commission (Gender Pay Gap Information) Bill 2017 in Ireland will help this progress, but significant steps can only be made by organisations buying into this process.

This article first appeared in Business & Finance and was written by Sonya Boyce, Director, People Consulting.