UK
21/03/2018 00:01 GMT

What Is The Gender Pay Gap And How Is It Calculated? Everything You Need To Know

In two weeks, the deadline for companies reporting on the gender pay gap closes.

Big names such as the BBC and Channel 4 have already reported their figures, but there are still far more to come, with around 9,000 companies and public bodies obligated to comply with the Government’s request.

Employers will have to publish their mean and median gender pay gap figures, as well as information on bonuses.

Here’s everything you need to know about the statistics.

What is the gender pay gap?

It is the difference between the average salaries of men and women in a given company or public body. It isn’t the same as equal pay, where firms are required to pay men and women doing the same job the same salary.

A company may pay men and women in the same role the same wage but still have a gender pay gap, for example if most of their senior positions are filled by men who earn more.

What is the difference between mean and median?

To work out the mean, the hourly wage of each male employee is added together, and then divided by the number of male workers. The same is done for each female employee, and the numbers compared.

For the median, the hourly wage of each male employee is put in order, lowest to highest, and the middle value is taken. The same is done for each female worker, and the numbers compared.

Which is better?

The median is helpful because it discounts outliers – if the male chief executive of a company earns a lot more than the average worker, it will distort the mean figure and drag it up, but not affect the median so much.

A mean gender pay gap that is higher than the median may mean there are more senior male figures in a company.

What does the gender pay gap percentage actually mean?

The percentage difference shows how much lower the average female pay is than the male pay.

For example, if the average male earned £50 compared with £40 for a female, there would be a gender pay gap of 20%, because 40 is 20% lower than 50.

What else do employers have to publish?

Companies have also been told to submit how many men and women are in each quartile of their payroll, so the gender split among senior and junior roles can be seen.

They have also been asked to publish the mean and median gender gap between bonuses, and the proportion of men and women who received bonuses.