Profession under fire over gender pay gap

“The finance sector is a breeding ground for discrimination and unfairness.” So says Harriet Harman, minister for women and equality.
She was commenting on figures released by the Equality and Human Rights Commission’s (EHRC), which highlighted pay gaps within the financial sector. But she could easily have been speaking specifically about the accountancy sector, judging from the recent ICAEW Career Benchmarking Survey 2010 report, which was produced with staffing company Robert Half. It highlighted some stark trends.

* The average female accountant’s salary (£53,000) is two-thirds of mens (£86,100).

* The average basic salary for a male accountant over 45 is £98,400, more than 60% greater than their colleagues’ average of £60,500.

* For those aged 46–55, females’ average salaries are down by 10%, compared with a drop of only 1% for males.

The survey says: “The differential reflects, in part, at least, that male accountants are typically older (46 compared to 41 for females), longer qualified (18 and 14 years respectively), more likely to be in a permanent full-time role (89% as opposed to 74%) and work longer hours (45 hours per week for men– 6 hours more than for women). Female accountants are also particularly well represented in the low paying government, charity and not-for-profit sector.”

However, these factors themselves need to be analysed if the pay gap is to be exempted from charges of sexual discrimination.

For example, why do males work longer hours? Why are they typically older and qualified for longer? Do these differences stem entirely from personal choice or are they sometimes symptoms of inequality? If so, what can be done to remove them?

“Equality measures haven’t been working,” says Nicola Walker, senior policy adviser at CBI. “However, it’s too simplistic to explain these gaps in terms of straight discrimination, because surveys often don’t compare like-for-like. What the results show is a misrepresentation in terms of senior positions held.”

Sarah Veale, head of the equality and employment rights department at TUC, agrees: “The problem is not with the profession but outside it. For example, gateways in terms of education are always a big factor.”

However, some contend that there is an aspect of direct sex discrimination across the board. “It’s often argued that there aren’t enough women with the suitable qualifications and skills to occupy the top positions. But research from the Female FTSE doesn’t support this,” says Julia Whitfield, manager for the finance inquiry at the EHRC.

Claire Reynolds, membership services manager at Opportunity Now, concedes that unconscious bias might be a problem. “Sometimes male line-managers appreciate male work-place characteristics more than women’s. A lot of them don’t receive training in how to understand their own biases.”

According to the ICAEW survey, the average bonus of males (£15,600) is nearly two and a half times that of their female colleagues (£6,300).

“Bonuses are a potential problem because there’s typically a gagging clause that stops employees discussing them, which creates a level of secrecy. It also creates a discretionary element where pay is concerned, which facilitates discrimination,” says Whitfield.

Psychological matters can also play a part. “Women are generally less forceful in negotiating their salaries, which often results in them getting lower pay and missing out on promotion,” says Reynolds.

The second main reason for inequality is provisions (or lack of) for child-care responsibilities. 30,000 women a year lose their jobs as a result of becoming pregnant, according to research by the Equal Opportunities Commission.

“The key question for accountancy firms is ‘how family-friendly are we?’” says Whitfield.

Walker says: “Firms need to invest in retraining and re-acclimatising women when they return to work after maternity leave. At the moment, a lot of women return to find things have changed and that they’re out of sync.”

However, some industries have avoided such apparent inequalities. The prime example is the public sector, which has less occupational segregation and more regulation. “In the public sector, pay scales and job descriptions are far better defined,” says Whitfield. “There are also more options on child care and flexible working hours.”

Veale adds: “The public sector’s challenge to achieve equality is much greater because their range of roles is much larger, so it’s harder to ensure apparent equality across different positions. Yet they’ve managed it, so there’s no good reason for other sectors not to succeed.”

Overall, outright discrimination doesn’t seem to be the chief reason for the industry’s pay gap, or why women occupy fewer senior positions.

Instead, the gap is primarily the manifestation of cultural and social factors.

Arguably, a great deal more can be done to remove them and pave the way for greater equality. Whitfield says: “A cornerstone of equality needs to be transparency of pay, bonuses and job responsibilities. This requires greater documentation and a more systemised format of employment. The fewer discretionary decisions made and the greater the documentation, the greater the chances of equality.”

The public sector can serve as a useful model for implementing some of these features, though methods of ensuring a fair bonus system will need to be found elsewhere.

Provisions for child-care responsibilities and all their consequences also need to be better considered.

Walker says: “Legislation, such as the soon-to-be amended Equality Bill, will play a part but, ultimately, the real drive will need to come from the firms themselves, particularly senior management.”

Veale adds: “Equal-pay measures will never be cost-free.”

However, the short-term cost may pale into insignificance compared to any long-term neglect of the issue.