Is the gender pay gap improving in charities?

The UK Government introduced regulations in April 2017 requiring big employers, including charities, to publish data on their gender pay gaps, in the hope that this would encourage organisations to work on making pay more equal. Several recent reports from the third sector suggest that the gap is indeed narrowing.

How is the pay gap measured?

There are two main ways of measuring gaps in gender pay:

The mean, or ‘average’, pay gap is the difference between the total pay for women and the total pay for men. It is calculated by taking the total wage bill for each and dividing it by the number of men and women employed by the organisation.

The median, or ‘middle’, pay gap is the difference in pay between a middle-ranking female employee and a middle-ranking male employee. It is calculated by finding the figure that falls in the middle of a range when everyone’s wages are lined up from smallest to largest.

Both of these figures are required in gender pay gap reporting, as each has shortcomings. The mean figure can be skewed by a disproportionate number of employees of one gender at senior levels, so the median is typically a more representative figure of the organisation as a whole. However, inequalities are usually more marketed at the top end of the pay scale.

What are the latest third sector pay gap figures?

The 2019 haysmacintyre / Charity Finance 100 Index has shown that the mean gender pay gap for the 50 largest UK charities has fallen from 18% to 11%, while the median pay gap has decreased from 15% to 7%.

Research from 568 charities by the freelance data scientist David Kane, a former senior research officer at the National Council for Voluntary Organisations, found that the mean gender pay gap fell slightly from 8% to 7.9%.

These drops are supported by TPP Recruitment’s own figures. We have been tracking the third sector pay gap since 2014 and our latest report showed a significant decrease in the mean pay gap from 12.4% to 7.5%. TPP have previously written about how the third sector can achieve greater pay equality.

The charity sector appears to be doing better than the UK as a whole, where the mean gender pay gap is 13.7% and the median at 8.6%, according to figures from the Office of National Statistics.

So is it all good news?

Unfortunately not. Some of the larger charities have reported shockingly high pay gaps. Marie Stopes International has the largest pay gap, with a mean gap of 44.7%, while Guide Dogs has reported an increase in its gender pay gap 12.8% to 14.6%.

These charities have both published “supporting narratives” that outline the reasons why a pay gap exists and what actions the organisations intend to take. Marie Stopes said that differences in the pay gap were due to there being disproportionately more men in certain, presumably senior, divisions of the workforce. Guide Dogs stated that they commissioned an external independent adviser to examine their gender pay gap in 2018. While they have a higher proportion of women in junior roles, there does not appear to be a lack of female representation at senior levels.

Should all charities publish data on gender pay?

For charities with fewer than 250 employees, there is no legal requirement to publish data on their gender pay gap, but all organisations are encouraged to do so and there could be some advantages to being up front about pay. Increased transparency on pay is a good thing for the sector as a whole. Employees ought to know if they are being paid fairly and donors should be educated about the need to pay reasonable wages.

Publishing your gender pay gap shows that equality is something your organisation takes seriously and is genuinely working towards, rather than simply a box-ticking exercise. This could help you attract new employees, volunteers and even donors, as it shows you respect all of your members of staff.

It’s extremely rare for gender pay rations to be completely equal and data should always be accompanied by a supporting narrative, explaining the reasons for any gap and outlining how your organisation is tackling the issue.

Areas covered could include:

• Proportion of roles by gender
• Discrepancies in gender ratios at the most junior and senior levels
• Levels of part time or sessional workers
• Gender split by type of role, eg front line or back office
• Equal opportunities policies
• Initiatives to promote equality and diversity
• Opportunities for flexible working

So how can charities tackle a gender pay gap?

The first step in tackling a gender pay gap is to conduct an annual analysis of pay across the organisation, regardless of its size. If you don’t know how large your pay gap is, and whether it is widening or narrowing, it will be impossible to measure the effectiveness of any activity you conduct to improve equality.

Action points your organisation could implement include:

• Be open about taking responsibility for equal pay and the steps you are taking to ensure it, both within the organisation and externally, to reassure both your employees and the public that it is an issue you take seriously.
• Make sure all compensation is clear and transparent and consistent across levels of seniority, for example by using salary banding.
• Create clear criteria for bonuses, pay increases and promotions across the organisation and make sure they are fair and available to all employees.
• Work towards eliminating biases in recruitment, particularly those which are unconscious. But be wary of relying solely on ATS systems or AI to reduce bias, as these can sometimes make things worse.
• Salaries for new hires should be based on the pay levels of existing employees, taking into account their level of qualifications and experience. Leaving salaries completely open to negotiation, or based on the employee’s previous salary, tends to favour men.
• Look for ways to creatively minimise career breaks. For example, being more open to different forms of flexible working may allow employees to return to work more easily after parental leave.

If your organisation needs some advice on addressing gender imbalances in recruitment, TPP Recruitment can help. We are sector specialists with over 20 years of experience.