In recent years, conversations around diversity, equity, and inclusion have been thrown into the limelight. At the heart of the discussion is equal pay – the wage imbalance between workers from specific demographic groups and their counterparts.
High-profile activism and widespread media coverage have put pressure on employers and the UK government to address and alleviate wage inequality. Then why does pay disparity still exist in the modern workplace?
We explore how asking a candidate’s salary history can perpetuate systemic inequality, which groups of people feel less confident negotiating their salary, and how it can have an impact on what they take home.
But first, let’s explore the issue of pay gaps…
What are pay gaps and why do they exist?
Simply put, pay gaps are the difference in earnings between two groups of people. It is common practice to find wage disparities by comparing the median earnings, although elements like bonuses can also be taken into consideration.
On a societal level, inequity in workplace pay reinforces existing power imbalances. It entrenches disparities between different groups of people and makes it harder for those who are already disadvantaged to get ahead.
The most cited pay gap in the UK is the gender pay gap, which is the difference in wages between men and women. Women make up almost half of the UK workforce yet they still earn significantly less than men. In the UK, the average gender pay gap is 9.8%. That means for every pound a man earns, a woman earns just 90p.
Efforts are predominantly focused on gender equality
Although the gender pay gap is widely documented, it is unclear what other pay gaps exist and how widespread they are. While gender pay gap reporting is mandatory for employers with over 250 employees, no other pay gap reporting is currently mandated in the UK. This makes it hard to understand which pay gaps exist, and the extent of them. However, research shows that some of the pay gaps that the public believes exist include gender, age, ethnicity, and disability pay gaps.
Gender pay gap reporting has helped to increase awareness of wage disparities, but much more needs to be done to understand the scale and root causes of other potential pay gaps.
What pay gaps do people think exist?
In a recent Reed.co.uk survey*, just over two-fifths (41%) of jobseekers said that they think the gender pay gap is currently the largest wage imbalance that exists in the UK.
While the majority of people are in consensus that the gender pay gap exists (59%), the same cannot be said for how other pay disparities are perceived. When exploring the perception of pay gaps in our survey, an interesting pattern emerged.
We found a correlation between the background of a respondent and the pay gaps that they believe exist, and perceive to be the largest gap in the UK. Of our total respondents, 26% of people think that the UK suffers from an ethnicity pay gap. However, 39% of those who identify as BAME (Black, Asian and Mixed Ethnicity) believe an ethnicity pay gap exists, compared to their White counterparts (23%).
These are pretty startling statistics considering the amount of attention that this issue has been getting in recent years. In 2020, the Black Lives Matter movement triggered an influx of companies voluntarily reporting their ethnicity pay gap. This movement also led to a government proposal for mandatory ethnicity pay gap reporting which was later rejected because of their reluctance to ‘overburden British businesses’.
Additionally, one-third (33%) of people who identify as LGBTQ+ believe that a sexual-orientation gap exists, compared to 13% of respondents who identify as straight.
The reason perception changes depending on who you ask may be due to a lack of research on different pay gaps in the UK and reporting, which can cause the existence or extent of pay gaps to be unclear. It is also worth considering that people who have first-hand experience of discrimination in the workplace or are more aware of the issue in their community, have a heightened perception of the gaps that exist. Nonetheless, the lack of reporting in the UK means that there isn’t a clear way to tell which gaps currently exist.
Negotiations and the cycle of unequal pay
Over the last decade, the UK government has introduced many initiatives to help close the gender pay gap, including the salary transparency pilot scheme and the STEM returner’s programme for women. The salary transparency scheme invites employers to list a salary on all job adverts and stop asking candidates for their previous salary history.
When it comes to addressing systemic inequality, banning the use of salary history is a major step in the right direction. In fact, 43% of employers we surveyed said that they ask candidates what their previous salary was. Of them, 73% of employers confessed that a candidate’s salary history affects how much they are ultimately offered**.
For groups negatively affected by income disparities, using this practice to determine salary – rather than merit and skill set – will only continue the cycle and replicate gaps throughout their career.
Another factor that can have a significant impact on how much someone is paid is confidence – and having the confidence to negotiate and ask for more. We found that women feel 20% less comfortable discussing salary in the negotiation process compared to men. Interestingly, men were also 20% more likely to negotiate their salary in an interview, and one-fifth (20%) of women have never negotiated their salary at all.
Although there is limited data to know where the age gap stands, 44% of respondents believe that there is an age pay gap in the UK. People aged between 45 – 64 years old were always found to be the least comfortable negotiating their salary. Their lack of confidence not only means they are the most likely to avoid negotiating but even when they do, 45 – 54-year-olds struggle the most to increase their salary – with only 8% revealing they were able to negotiate a salary boost above £5,000.
However, it’s not just about confidence. All groups of people need to be prepared with the right information and strategies to make sure they get the best possible outcome in salary negotiations.
Teaching salary negotiations during a person’s education should hopefully make these conversations fairer by giving people the confidence they need to negotiate. However, this isn’t a part of the curriculum. While more than two-thirds (70%) of jobseekers think that salary negotiation should be taught, candidates who belong to a minority felt this view more (20% more than those who are non-minorities).
According to research, both women and minority groups ask for and are therefore offered a lower salary. This phenomenon is known as the ‘ask gap’, which suggests that salary expectations differ amongst different types of people. If women and minority groups are attending interviews with a lower starting salary, they have a lower starting base compared to men. Their expectations of a salary increase may be significantly lower than men, who tend to ask for more. Again, this indicates that people most affected by pay gaps in society require more training and support to make negotiations fairer.
A staggering 87% of those who identify as BAME believe that salary negotiation should be taught – 15% more than those that identify as White. This is interesting because the majority of BAME workers do feel comfortable discussing pay in the interview process (58%), and they are negotiating 15% more than their White counterparts. However, education may be key to the success of negotiation.
How can we make salary negotiations fairer for all?
A salary history ban has been implemented in several states and cities across the United States, and the concept is gaining momentum worldwide. The Fawcett Society – a UK-based gender equality charity, recently joined forces with the REC to launch the #EndSalaryHistory campaign. This is following research that the US bans resulted in women receiving an ‘8% pay increase and Black employees a 13% pay increase’. This is good news, as it means that groups of people that have historically been underpaid have a better chance of getting jobs that pay them what they deserve and reflect their true worth.
Not only is this good for employees, but it’s also good for business. A study by the Harvard Business Review found that companies with more diverse and inclusive workplaces are more likely to outperform their competitors. So if you’re looking to create a level playing field in your workplace, start by taking salary history out of the equation when determining pay.
If everyone starts from the same point in salary negotiations, then we will all be on equal footing. This would help to close the gender pay gap, as well as other wage disparities in the workplace.
More work needs to be done
The salary history ban is a great first step in the right direction, but it’s not enough. We need to do more to encourage and train women and minority groups on negotiation skills so they can get paid what they deserve and we can achieve pay equality in the workplace.
The UK government will also need to widen pay gap reporting policies if we want to identify and rectify any other existing gaps. We can all agree that the fight for equality will continue until everyone is paid fairly.
* This online survey was conducted by Atomik Research and consisted of 2,008 adults in the UK. (69% identified as female and 31% identified as male). This survey took place between the 4th – 11th February 2022. Atomik Research is an independent creative market research agency that employs MRS-certified researchers and abides by the MRS code.
**This online survey was conducted by Atomik Research and consisted of 251 hiring decision-makers in the UK. The survey took place between the 7th – 18th February 2022. Atomik Research is an independent creative market research agency that employs MRS-certified researchers and abides by the MRS code.