90% of firms face a standing start on gender pay gap reporting

EEF, the manufacturers’ organisation

A new survey by EEF, the manufacturers’ organisation, reveals that 90% of manufacturing and engineering firms face a standing start when it comes to forthcoming gender pay reporting requirements. Less than one in ten (9%) currently report any gender pay information, while many others do not have the right systems in place to provide accurate and robust pay data. Despite the significant challenges, firms see the forthcoming reporting requirements as an opportunity to improve their systems and to benchmark themselves.

The Government is currently consulting on the new gender pay gap reporting requirements. The survey findings reveal high awareness of the forthcoming requirements (83%), but low understanding (7%) and little preparedness (29%). Three in ten firms (30%) are concerned about the amount of work that will be required to provide gender pay gap data.

However, firms will need to contend with significant gaps in their current pay systems and processes and are in danger of underestimating the challenges to be overcome in order to provide meaningful and robust data. Only a third (33%) have undertaken a pay audit in the last 5 years – over a quarter of companies (27%) have never undertaken one. Similarly, 34% haven’t undertaken any work to define pay and job roles, while 35% don’t have any measurement systems in place for various pay grades (35%). Four in ten firms (39%) don’t undertake regular job evaluations.

Many firms (45%) don’t have an official pay scale – pay is determined individually and case-by-case. Other challenges include having a complex pay structure (29%) and TUPE arrangements (22%). Some firms (15%) don’t even have a central pay system.

In fact, just two in ten firms (18%) have open and transparent pay scales determined by job evaluation, putting them in a good place to meet any gender pay gap reporting requirements. Despite this, 67% of firms are confident of being able to provide robust and accurate gender pay data and 65% expect that providing the data will be easy. This suggests that firms may be underestimating what may be required of them, or overestimating their ability to extract and provide data.

This danger aside, it is also clear that firms already recognise a real opportunity in gender pay gap reporting. Just under half (47%) say it is a great opportunity to benchmark themselves against peers and other industries, while 38% say that the work they will need to undertake to provide the data will help them to get to grips with their pay structure and auditing. Over a quarter (26%) say that gender pay gap reporting will provide the impetus they need to overhaul their pay structure and to establish better processes.

At the same time, however, 68% of the companies surveyed say that women make up 30% or less of their workforce and there is recognition that this could cause a problem when reporting. A third (32%) agree that industries struggling to attract women into skilled roles are likely to have a wider gender pay gap. This means that context must be provided when the data is published and that every effort is made to ensure that gender pay gap reporting doesn’t make it even harder to attract skilled women into industries where they are currently under-represented.

Tim Thomas, Head of Employment Policy and Skills at EEF, says: “The good news is that many firms recognise gender pay gap reporting requirements as an opportunity to improve their systems and to benchmark themselves against peers and other industries. The bad news is that, if asked for the data today, it’s clear that the majority of manufacturing and engineering firms would struggle to provide it.

“Not only are there significant gaps in many firms’ pay processes and systems that will make providing accurate and robust information a real challenge, but there is also a real concern that gender pay gap reporting could reflect poorly on industries with low numbers of skilled female workers.

“It’s critical that the data requirements aren’t allowed to undermine the huge efforts being made to attract women into skilled roles in industries where they are currently under-represented. If we are to avoid the pitfalls then providing context to published gender pay gap data, support for businesses being asked to provide the data and a phased roll-out will be key.”