Gender Pay Gap? What Contractor Gender Pay Gap?

The start of a bright, new tax year has been blighted by the results of the UK’s first ever probe into the gender pay gap. Unfortunately, they don’t make pretty reading.

And although the figures aren’t that surprising, it is a painfully stark reminder of the economic disparity that persists between men and women in today’s workplace.

But does this disparity apply to men and women if they are contractors?, asks Maggie Lawson, head of finance at contractor accountants ICS Accounting.

Before I look at this question, let’s step back to gauge why the gender pay gap is suddenly being talked about so widely. It’s without doubt a dialogue that contractors’ workplaces are having.

It’s all because UK companies that employ more than 250 employees had until April 4th 2018 – last week -- to publish details of the gap between the median hourly rate paid to male and female staff. The required information extends to differences in mean hourly rate, median hourly rate, details of the proportions of men and women in four pay quartiles, and information relating to bonuses.

How did the wage-rich banks fare?

As contractors in rate-rich financial services have probably heard the most, a notable imbalance which was uncovered is how there is a significant difference in male-female hourly pay. The financial sector also stuck out for having a much lower percentage of women occupying senior roles.

While the ‘ever-humble’ banking execs made noises in their gender pay reports about how they’ve got new initiatives working on “improving the gender imbalance,” only time will tell if these are genuine commitments able to make a real difference. Because for now, the figures from the big banks -- below -- are a bit uninspiring.

  % Women's median hourly rate is lower than men's % Top Quartile (highest paid) Women Men
Lloyds Bank Plc 43% 32% 69%
The Royal Bank of Scotland Public Limited Company 37% 30% 70%
Santander UK Plc 29% 36% 64%
HSBC Bank Plc 29% 34% 66%
Barclays Bank UK Plc 14% 45% 55%

Source: https://gender-pay-gap.service.gov.uk

The Contractor Pay Gap (we can’t find)

Even though it isn’t required of companies with less than 250 employees to publish their pay gap data, we have profiled a sample of our limited company clientele to understand if the pay bias in favour of men is repeated in independent contracting. This is the question I posed at the outset.

At a glance of our database, we can see that the male-female percentage ratio of our client base of PSCs is 80 : 20. This isn’t necessarily reflective of the contracting industry however, as contractor trade body IPSE’s Gender Split Report found a more even split; 59% male, 41% female.

The sample data from our database also showed that there is a clear divide among male/females operating within the top three contracting sectors. Of the three, the Construction & Engineering sector has the biggest gender imbalance, at odds with the IT sector which is the most neutral.

Industry F M
Automobile 19% 81%
Construction & Engineering 6% 94%
IT 21% 79%

However, we then made an interesting discovery. Buried within our contractors’ average daily rates, and across all industries (not just the three above), is an average that defies the trend that’s making too many of us miserable! In fact, the mean daily rate of a male contractor is £404 -- whereas the mean daily rate of a female contractor is £408.

This goes against the reported 8 in 10 UK firms that typically pay their men more. So we can assert that, based on a sample of our client database, female contractors operating through their own limited company look to already be closing the UK gender pay gap on their male counterparts

Overview

Female 20% Average daily rate £408.50
Male 80% Average daily rate £404.77

Where we were / are

We know that women historically have been paid less than men for doing the same job. For instance, state policy in the early decades of the 20th century actually endorsed the widespread practice of lower wages for women!

It wasn’t until 1968 that the issue of equal pay made major headlines. Women machinists who sewed covers for car seats at the Ford Car Plant in Dagenham, Essex, went on strike because they were being paid less than the men.

Their strike action contributed to the campaign for equal pay and the passing of the Equal Pay Act (1970). According to this act, men and women are entitled to equal pay and terms of employment -- in theory that is, but whether this is always the case remains open to question.

Which brings me back to today’s trending topic of #genderpaygap. If we look beyond both the newspaper headlines and the large corporate promises of programmes to assist family flexibility, there is still so much more to be done if the UK is to benefit. The global management consultant firm McKinsey Global Institute has found that improving gender parity in the workplace could realistically add £150billion in GDP by 2025.

Here’s hoping our next generation of fierce and feisty millennials make their way to the top. Failing that, we could all move to Iceland which has become the first country to make companies prove they are not paying women less than men for the same work. A step too far or the ultimate solution?

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