With the first annual reporting window having closed on 4 April 2018, we look at how the luxury goods sector has fared in the first year of mandatory gender pay gap reporting.
Since 6 April 2017 employers in the UK with 250 or more employees have been required to begin publishing figures on their own website and a dedicated government website showing the pay gap between their male and female employees. Employers must publish averages in terms of both hourly pay and bonuses for men and women in their organisation. They must also show what proportion of male and female employees receive a bonus, and how many men and women are in each quartile of the organisation’s pay structure.
Around a dozen businesses in the luxury goods sector have reported their gender pay statistics so far, including leading names such as Burberry and Rolls-Royce.
In many ways, the sector provides a beacon of hope. It offers the opportunity for a potential good news story in an otherwise fairly depressing series of results for industries dominated by men at the senior level and women at the most junior levels. Historically within the luxury goods sector, women have been far better represented at board level than in other sectors such as property and financial services. Conversely, at the lower end of the pay scale, on the shop floor, the gender divide has been more balanced than in other retail sectors. However, is this reflected in the results?
The statistics reveal a fairly mixed picture. On a positive note, companies within this sector appear to have more balanced workforces. Gaps in hourly pay are generally lower than the national average. There remain, however, marked differences in terms of average bonus pay, and in mean (as opposed to median rates) hourly rates of pay. Mean hourly rates are more susceptible to being skewed by a handful of highly paid, male employees.
In terms of good news stories, Rolls Royce Motor Cars has a male-dominated workforce, but its female employees are equally spread throughout all levels of its organisation. It has published a gender pay gap of 4.8%. This compares to a nationwide average of 18%. Luxury fashion and jewellery brands, who tend to have female heavy workforces, such as Louis Vuitton (which has reported a gender pay gap of 2%) and Burberry (which has reported a gender pay gap of 7.8%) again both perform better than the national average.
In another good news story, luxury retailer Fortnum & Mason appeared to have a balanced workforce, with women equally represented at all levels of seniority, and it has reported a gender pay gap of 0.8%.
In terms of the cause of the pay gaps that remain, as noted by Burberry, these gaps appear driven in part by the fact that men continue to occupy certain senior roles immediately below Board level, including, notably, in manufacturing and distribution.
The mean gender pay gap better highlights this underrepresentation of women in these senior, higher-paying roles. For example, De Beers has a median gender pay gap of 12.7%, compared to a mean gender pay gap of 32.8%.
It is important to note that a pay gap is not synonymous with pay discrimination. However, businesses should review the context behind any pay discrepancies to enable them to explain their data to their own staff and in the media. Much of gender pay reporting is about the direction of travel. Businesses which can show they have addressed areas of weaknesses in their own data and closed the gap year on year will fare better than those with static data or which show a deterioration in their overall numbers.
Gender pay is often confused with equal pay. Whilst the legal right to equal pay and the concept of the gender pay gap both deal with the disparity of pay between sexes in the workplace, they are two separate issues. The gender pay gap is a measure of the difference between the average earnings of men and women across an organisation. Equal pay is the legal right for men and women in the same employment, performing equal work, to receive the same pay. Unequal pay, unless justified, is unlawful. We consider the difference in more detail here.
There are no specific legal consequences of not reporting gender pay figures, although reporting can be enforced by the Equality and Human Rights Commission. The main fall-out of failing to report is likely to be reputational. The requirement for employers to publish their gender pay gap relates to transparency as well as equality. It encourages organisations to be aware of their own gender pay gap by considering and, if necessary, addressing recruitment, pay, promotion, family-friendly and flexible working policies, so that the gap can be reduced in future.