On a journey towards more inclusion and diversity in the workplace, understanding and reducing the gender pay gap is a key impactful action that can make a difference for your company and your people.

Today more than ever, diversity, equity and inclusion (DE&I) are key topics for many organisations facing a competitive talent landscape. There’s a need to present a unique and authentic DE&I value proposition to reinforce attractiveness and retention. One that can both engage leaders and employees on a daily basis by being a comprehensible and distinctive voice to the external stakeholders while fitting the social agenda of the Environmental, Social and Governance (ESG).

The ESG factors create an opportunity for companies and institutions to report on their societal initiatives and could help your business's reputation as it indicates you have a transparent plan that focuses on helping the environment, supporting diversity and equal opportunities, and ensuring ethical business decisions. Gender pay gap analysis is one of the most recognised measures, not to mention that its reporting could become a European mandate in the near future.

At the current rate, it will take 151 years to close the global gender pay gap. While the gender pay gap is not something new, it’s measuring and reporting it’s just becoming more “popular” and certainly an expected indicator for the future.

By providing insights on their gender pay gap, companies and institutions won’t only be active in the DE&I dimension, but will have quantitative metrics that will allow them to establish concrete goals, visualise their accomplishments and engage into a more transparent conversation with their current and future workforce.

To reduce the gender pay gap we first need to understand it..

Firstly, we need to understand the difference between a pay gap and a gender pay gap.

A pay gap always reflects the demographic structure of your pyramid of talents and as such is expected. It is accepted to have a pay gap between two individuals that have different profiles. People have their own skills & knowledge, their number of years of experience in the labour market, their seniority in the organisation and their own progress in their career paths.

The pay gap takes into consideration factors that can objectively explain their impact on the overall remuneration package (professional position, seniority, experience, managerial responsibilities, academic background).

The gender pay gap is the remaining unexplained gap after the previous elements are taken out of the equation. If we remove these factual elements, what remains is called the gender pay gap.

Now how do we act on reducing it? The first step towards more equality is to acknowledge both gaps by identifying, quantifying and understanding them.The Pay Gap will invite you to deep dive into your workforce demographics and structure, how fast or slow a particular gender may navigate across your pyramid of grades and reach the top. The Gender Pay Gap will be your alert signal to immediately adjust unacceptable (and discriminatory !) salary differences that are not substantiated on factual and objective elements. The principle is simple : equal pay for women and men is a reality when both female and male employees receive the same pay for equal work or work of equal value.

A gender pay gap control centre

At PwC Luxembourg, we base our analysis on a tool named LOGIB, developed by Geneva University and the Swiss Federal Office for Gender Equality (FOGE). This tool is certified and recommended by the European Commission and Ministry of Equality between Women and Men of Luxembourg. With this software, we leverage the anonymised data of your organisation while giving it the necessary structure for an analysis that allows a reliable measurement of both gaps.

We then centralise all the insights from the analysis into one dashboard named Data4Equality, that provides you with a comprehensive and powerful visualisation of the factors/causes involved. This dashboard allows to highlight the gaps, but also serves as a means to understand where they are created and gives you valuable guidance about the remedial action plan to reduce them.

The dashboard also helps to understand and highlight another gap that often triggers the pay gap.

This one can be called the “proportion gap” and reflects the fact that we witness more men in higher levels of the hierarchy, because, historically, they’ve been the place for men. Solving the gender pay gap is one thing but, the distribution of female and male among grades should also be carefully monitored and understood to reduce your overall pay gap.

On a journey towards more inclusion and diversity in the workplace, understanding and reducing the gender pay gap is a key impactful action that can make a difference for your company and your people.