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New report: ‘Still a way to go to close the gender pay gap in the retail sector’

Diversity in Retail (DiR) has released its Gender Pay Gap Report 2023 for the retail sector in partnership with PwC UK. The report indicates a positive… View Article


New report: ‘Still a way to go to close the gender pay gap in the retail sector’

Diversity in Retail (DiR) has released its Gender Pay Gap Report 2023 for the retail sector in partnership with PwC UK.

The report indicates a positive trend, with the gender pay gap in the retail industry decreasing from 13.9% to 12.7% over the past year. However, this progress is juxtaposed against the backdrop of slow overall change in the broader market, signaling that closing the gap both in retail and across the UK industry will require more time.

The report highlights the influence of the cost-of-living crisis, revealing that inflation-driven costs and demand uncertainty have impacted the sector. Some organisations responded with pay changes, potentially affecting the gender pay gap reporting numbers. Such changes, particularly one-off bonuses, could contribute to higher hourly pay and bonus figures, potentially exacerbating the gender bonus gap.

The report indicates that retailers are expanding their focus to include other pay gap metrics, such as ethnicity. While ethnic pay gap reporting is not mandatory, guidelines have been published for companies interested in addressing pay imbalances.

Tea Colaianni, Founder and Chair of Diversity in Retail, said: “The reporting of gender pay gap numbers is very helpful but it is not enough in itself to significantly move the dial. The focus needs to move beyond reporting numbers to understanding the underlying inequalities and devising action plans to address these issues. Given the timeframe it is fair to say that the combination of the pandemic and the cost-of-living crisis has probably also had a disruptive impact. Whilst the industry is moving in the right direction there needs to be a drive to introduce policies and practices that remove barriers to women returning to work after having children along with a visible commitment to developing the pool of talented women for leadership roles.”

Katy Bennett, Diversity, Equity and Inclusion Consulting Director at PwC, said: “Whilst we have seen some progress, there is still a way to go to close the gender pay gap in the retail sector. In an environment of increasing stakeholder expectations it’s no longer enough for organisations to rely solely on the gender pay gap, which can fail to capture the true story of fairness within an organisation. Diversity, Equity and Inclusion reporting and broader pay transparency requirements are becoming increasingly high-profile and complex, and organisations need to consider aligning multiple metrics to create a holistic picture. Companies then need to demonstrate that they understand, and will address, the key drivers of their pay gaps through creating a credible action plan which moves the dial from reportable numbers to improving fairness through their diversity pay gap reporting and wider sustainability reporting narratives.”

To accelerate change, the DiR Report underscores the need for retail companies to deeply analyze the drivers of their pay gaps and broader societal inequalities. Such analysis should form the basis of forward-looking action plans with targeted interventions. Anticipating potential regulatory changes, the report mentions the EU Pay Transparency Directive, which could indirectly influence the sector’s gender pay gap through global consistency.

The report suggests that a focus on inclusion and diversity as part of Environmental, Social, and Governance (ESG) requirements will increase. Incorporating diversity metrics, gender pay gap data, and pay equity statements within sustainability reporting frameworks will maintain this focus.

Companies need to address broader “Social” aspect requirements within ESG to effectively communicate their narrative on workplace fairness.The situation described in the text regarding the gender pay gap in the retail sector is a mix of both positive and challenging aspects.

In summary, the positive news is as follows:

  • Progress: There is evidence of progress, as indicated by the reduction in the gender pay gap from 13.9% to 12.7% over a year.
  • Momentum: The rise in ethnicity pay gap reporting and the achievement of the 40% Women on Boards target in the FTSE Women Leaders Review show positive momentum toward diversity and inclusion.
  • Commitment: Member organizations are dedicated to Equity, Diversity, and Inclusion (EDI) activities, exemplified by efforts such as employee network groups, career progression initiatives, and understanding broader workforce demographics.

The challenges are as follows:

  • Slow Pace: Despite progress, the rate of change remains slow. The reduction from 13.9% to 12.7% is modest, indicating that closing the gender pay gap in the sector will take time.
  • Meaningful Change Difficulty: Organisations are finding it challenging to achieve significant reductions in pay gaps. This could imply that while some progress is being made, there are underlying complexities in addressing the gender pay gap effectively.
  • Economic Impact: Economic challenges, such as the cost of living crisis and inflation, have led to uncertainty in demand and impacted pay structures. One-off bonuses have influenced reporting figures, creating volatility and potentially complicating the analysis of pay gaps.

Retail is moving in the right direction, but there is still work to be done to achieve substantial and equitable change in addressing the gender pay gap. DiR provides a range of guidance, toolkits and development/leadership programmes that are worth taking a look at. Find out more here

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