Equal Pay Day: Why are we still facing gender pay bias and what can we do about it?

Today is Equal Pay Day; it marks how far into a year women must work to earn what men earnt in the previous year.

As this day comes back around for another year, it shines a light on the fact that we seem not to have moved much closer towards tackling gender pay biases, despite it being an issue that faces half of the workforce.

According to WTW’s 2023 Workforce Analytics report, men generally earn higher average salaries than women in most positions.

As there are more men than women in certain functions (like Business management strategy, Data Science, Information Technology, and Transportation) you might think the pay gap sounds logical.

However, in sectors such as HR, Legal, Marketing and Communication, there are more women than men. And even in these industries men’s average salaries are still higher – the figure is 12.3% higher for the Legal sector. Is that logical?

Unfortunately, we’re seeing that the pay gap is widening, especially in sectors like Finance and Controlling, Information Technology, Legal, Marketing and Communications.

In fact, last year the pay gap in these sectors reached 22.5%, 9.6%, 12.3%, and 11.4% respectively.

The causes of the gender pay gap

So, what are the key factors potentially contributing to this gap?

Occupational Segregation: Male-dominated functions often offer higher salaries, while female-dominated fields may have lower pay scales.

Vertical Segregation: Women are often concentrated in lower-ranking or support roles within organizations, while men are more likely to hold higher-paying managerial and leadership positions.

Negotiation and Self-Advocacy: Research shows that men are more likely to negotiate for higher salaries and better benefits, while women may hesitate to negotiate or accept initial offers.

Unconscious Bias: Hiring managers and decision-makers may have unconscious biases that impact their salary decisions. These biases can result in men being offered higher initial salaries.

Lack of Transparency: According to the 2023 EU Pay Transparency Directive, equal work deserves equal pay. And for equal pay we need transparency. If employees are not aware of their colleagues’ salaries, it becomes easier for pay gaps to persist.

Career Interruptions: Women often face career interruptions due to maternity leave and family responsibilities, which can impact their overall earning potential.

Historical Trends: Past inequalities affect women’s access to education and opportunities.

Family-Friendly Policies: Organizations that provide family-friendly policies, such as flexible work arrangements, may inadvertently contribute to the gender wage gap by offering lower pay for jobs with more flexible hours.

Tackling pay transparency head on

Many of the key factors contributing to the gender pay gap are centered around biases or historical trends.

It is clear that change needs to happen from the top, so that biases are challenged and unable to filter through to pay decisions and so that historical trends remain just that: history.

How can we address these issues to implement fairer pay going forward?

Promote Pay Transparency

The EU Pay Transparency Directive, coming into effect in 2026 gives employees in the EU extensive new rights to information about their own pay and the pay of male and female peers.

As part of the requirements, employers will need to make information easily accessible on the criteria used to determine pay, pay levels and pay progression.

Additionally, workers will have the right to request information from their employer on their individual pay level and on the average pay levels, broken down by gender, for categories of workers doing the same work or work of equal value.

Employers with at least 100 workers must submit information on the pay gap between female and male workers in their organization to the relevant authority and may make it publicly available.

In addition, employers must also submit information on the pay gap between female and male workers in the same category of workers and provide this information to all employees.

All these measures will put employees in a far better position to assess if they are being paid fairly and employers will need to be confident that they deliver pay equity.

Implement the right structures and processes

Getting the right structures in place is a core foundation of pay equity at any company.

Organizations should have a clearly designed job architecture and levelling framework that identifies employees doing comparable work using objective and gender-neutral criteria; are these aligned with pay ranges?

While it is acceptable to have pay differences based on objective factors, such as location and performance, these parameters should be clearly defined as part of the rewards approach. The key issue to avoid is any unexplainable difference in pay.

Employers should design consistent and fair pay processes that they follow in all pay decisions and for all employees, both current and new and whether on recruitment, on promotion or as part of pay review.

Educate decision makers to get rid of bias

Education is another key lever in the process of becoming more transparent and ensuring the delivery of fair pay.

Making all stakeholders such as leaders and managers fully aware of the company’s pay management philosophy and approach, as well as how to use the companies’ structures and processes to make pay decisions that are fair and consistent will be critically important.

Offer mentorship for women

Organizations also need to strive to build inclusive cultures that offer flexibility to support employees as they continue to progress their career.

They also need to ensure career opportunities are based on competence and ability at all levels including leadership.

To help, it is key that employers offer more learning and development opportunities internally – particularly related to those returning from career breaks – rather than relying on external qualifications.

This will help bridge the gap that has often led to under representation of women, and the pay gap.