Progress might be slow but the gender pay gap is shrinking

Large employers in Ireland recently completed their second year of gender pay gap reporting. Leaders and employees at businesses where the gap reduced are likely to feel pleased while those at businesses where the gap widened may be worried about their direction of travel. Two years of data, however, does not make a trend.

At country level, it is possible to take a longer view. In 2007, the overall workforce had a gender pay gap in favour of men running at 17.3 per cent. This had come down to 9.6 per cent by 2022, according to the Central Statistics Office.

Progress since that year has been neither linear nor steady. Nevertheless, there has been clear progress. The Irish gender pay gap is now as low as it has been since the metric started to be measured at country level in the early 2000s, and in all likelihood is as low as it has been in our history.

Clearly, there is still a lot more to do. A point that can’t be repeated often enough is that the gender pay gap is not a measure of equal pay. It is a legal requirement that men and women receive the same pay for the same work, allowing for legitimate differences based on factors such as experience or performance. The existence of a gender pay gap does not prove that pay is unequal – nor, for that matter, does the absence of a gender pay gap prove that pay is equal.

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The underlying context is complicated, but in most cases the gender pay gap, whether at country or at organisation level, is the result of differences in seniority. Quite simply, while men and women may be paid the same for equivalent work at equivalent positions, there are still more men in senior, highly paid positions than there are women.

The adjusted pay gap, which takes into account legitimate reasons for differentials in pay such as experience, role and level, is below 3 per cent

Using internal Mercer data, we have compared the unadjusted and adjusted pay gap for the companies that have taken part in our reward surveys.

The unadjusted pay gap for these firms stands at 8.2 per cent on average and is similar to the nationwide gender pay gap. The adjusted pay gap, which takes into account legitimate reasons for differentials in pay such as experience, role and level, is below 3 per cent.

The adjusted pay gap can be calculated for individual organisations. It can be useful in analysing where a gender pay gap is coming from, what the reasons for it may be and whether an employer has an equal pay issue.

[ Transport sees biggest fall in gender pay gap among Government departments ]

It may be useful in developing targeted remediation plans and in preparing for EU-wide pay transparency, which is due in 2026. In the course of our work at Mercer across several countries, we have observed that employers who focus year over year on equity in career progression, rather than just reporting their pay gaps in compliance with the law, are more likely to see increased representation in leadership levels over time for women. This, in turn, helps to lower a gender pay gap.

Progress that feels glacial – a 1.5 per cent improvement in the gender pay gap over a year for example – could in fact represent a path to reducing an organisation’s overall gap to statistical irrelevance. Such improvement, however, will probably not come in a straight line.

In any organisation, it is highly likely that there will be years where the gap widens. This should not be a cause for too much concern if the organisation in question, and its people, are confident that real efforts are being made to ensure equity in career progression between men and women.

Shift work, and the higher pay that comes with shift work, continues to be chosen by men far more often than women

None of this is to ignore the point that there are structural and societal factors, at country, organisation and even household level, that mean we will probably continue to see significant gender pay gaps for some time.

[ The gender pay gap: if we're to accelerate change we need a gear shift ]

In all too many households it may still happen that a husband prioritises his career while a wife prioritises her family. Claudia Goldin won the 2023 Nobel Prize for Economics in part for her description of how this household level dynamic can contribute to a gender pay gap at societal level.

Shift work, and the higher pay that comes with shift work, continues to be chosen by men far more often than women. Meanwhile, in organisations where clerical roles are better paid than operational roles, it can be the case that an entrenched gender pay gap will favour women over men.

These factors may, in truth, be more difficult to alter than the more eye-catching and more frequently emphasised, but to some extent symptomatic, issue of the gender split at executive level.

It is abundantly clear, however, that significant change has occurred at country level when we look at the broad sweep of the past two decades.

Organisations reporting double-digit gender pay gaps now, may be worried and disheartened. Yet if they and their employees consider the gaps that their organisations might have calculated 20 years ago, those focused on driving real change may feel somewhat better about the path they are on.

Danny Mansergh is the head of Mercer Ireland’s Career Practice