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The Gender Pay Gap Reporting Fails to Get to the Heart of the Imbalance

03/08/2015 11:28 BST | Updated 31/07/2016 10:59 BST

What a pleasant surprise to read that David Cameron is looking to force companies into revealing the pay gap between men and women.

It's an eye-catching proposal which is attractive in its simplicity: by having to make pay gaps visible, companies will feel compelled to address the issue of gender pay inequality.

The problem with the proposal is that the reasons why women lag behind men in the pay stakes are a bit more complicated than comparing one full-time salary with another.

Two very powerful drivers of pay disparity are the 'Part-Time Penalty' and the 'Motherhood Penalty', both of which apply to women.

Let's look at the issue of part-time first. About half of the professional women we maternity coach in the City come back to work on a flexible basis. This is usually a four-day week for which they lose 20% of their pay.

This leads to pay disparity being 'baked into' the system, something which gets worse when big bonuses are an important part of the compensation package.

In many City careers, bonuses are the most important element of the pay package. They are also frequently awarded at a manager's discretion and this means, in practice, women frequently lose out because discretion effectively leads to discrimination against part-timers.

A common example of this is where a manager is faced with sharing a small bonus pool: here, the temptation for a manager to use the woman on matleave's share, to bolster other team members' bonuses is substantial.

The motherhood penalty comes into play when women make the full to part-time shift with the same manager. Here, research shows she can expect to drop a grade in performance rating.

Frequently the reason for this is that the criteria for achieving an 'Excellent' grade, often contains a 'going the extra mile' phrase. Managers find it hard to tick that box for people working shorter hours.

Add that to an unspoken or insinuated feeling that people who have managed to get a flexible working contract are 'lucky' and should be grateful, makes matters worse when it comes to weighing up performance and reward.

And so, as performance ratings and pay are linked, women fall behind as more of them work part-time, usually after maternity leave.

The maternity and part-time penalties come into play in other ways. Some women I know avoid putting themselves forward for promotions in case they lose their flexible arrangements. Similarly, others spurn opportunities to get involved in high-profile projects because of the impossible conflict with part-time hours and other responsibilities. And so, again, women fall back in the pay stakes compared to their peers.

What all of this does is create a 'sticky floor' for women's pay levels, something which is less talked about and much more pernicious than the 'glass ceiling' as a cause of the gender pay gap: this is the real issue to address.

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