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Fashion retail's gender pay gap: the next steps

3x2 gender pay gap

To view Drapers’ full breakdown of fashion retail gender pay data, click here

What does the gender pay gap data really tell us about inequality in the fashion industry?

The UK’s gender pay gap has been thrust under the microscope as the 4 April deadline came and went for companies with 250 employees or more to report the difference between how much their male and female employees earn. Under the legislation first championed by former prime minister David Cameron, six metrics must be disclosed:

  • the gender pay gap in hourly pay as both a mean and median average
  • the proportion of male and female employees who received a bonus
  • the gender bonus gap as a mean and median
  • and the proportion of men and women across four pay quartiles.

More than 10,000 companies submitted their data by the deadline. Much of the high street, including Phase Eight, Next and Marks & Spencer, where women’s mean hourly rates are 64.8%, 15.5% and 12.3% lower than men’s respectively, argue that the gender pay gap is driven by the higher proportion of women in lower-paid – but more flexible – store roles.

Gender pay graph

Lingerie specialist Boux Avenue reported the industry’s largest gender pay gap. Women’s mean hourly rate is 75.4% lower than men’s – or the equivalent of 25p for every £1 men earn. Just 9% of the retailer’s employees are male but they are all concentrated in its highest-earning pay band.

At the other end of the spectrum were Harvey Nichols, Moss Bros and Mango, which are among the handful of retailers whose women’s hourly rate is higher than men’s.

Drapers investigates what the gender pay gap data reveals about inequality in fashion retail today, and what the industry can do to redress the balance.

“A useful exercise”

Most of the high street bosses Drapers spoke to for this investigation said that collecting and analysing their pay gap figures had provided a valuable opportunity to take stock of gender diversity.

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“It has definitely been a useful exercise,” the managing director of one menswear business, who prefers to remain anonymous, tells Drapers. “I know that nobody gets paid more just because they’re a man in this organisation; it just categorically doesn’t happen. But the process has showed me we do need more women in senior roles.”

He adds: “It has been interesting to look behind the numbers. If you take the staff in our actual retail business, the results suggest that men get paid more than women. I looked at that number and thought, ‘That can’t be right.’ But because it includes bonuses, what it has showed is that although men and women have the same basic salary, men earn more on commission. Why? Is it because they are more aggressive when it comes to making a sale? Do our female [store] staff feel at a disadvantage? That’s been one of the key things we’ve learnt, and I want to find the answer.”

Susannah Donaldson, a senior associate and gender pay gap reporting expert at law firm Pinsent Mason, agrees that most businesses see the legislation as a force for good.

“The intention of this legislation is not to name and shame, although that is perhaps an inevitable side effect. The purpose is to shine a spotlight on this issue, to accelerate gender equality and encourage businesses to enter into an honest dialogue with employees and the wider public about the particular challenges they face and what they are doing to address them,” she explains.

“It has given businesses an opportunity to undertake a detailed analysis into the level of female participation and progression within their organisations and this has been an illuminating exercise for many. Given the potential for reputational damage, and the risk of enforcement action by the Equality and Human Rights Commission and equal pay challenges by employees, the stakes could not be higher.”

Number crunching

Although broadly the legislation is viewed by fashion retailers as a positive step towards a more diverse future, there are some concerns. One of the biggest fears repeatedly expressed to Drapers is that too much emphasis has been placed on the often dramatic headlines around pay gap figures, which retailers argue do not give a full or accurate picture.

“There are some big six-figure salaries within our business that massively distort our gender pay gap and make it look horrendous,” says the managing director of one mainstream men’s and womenswear brand. “Some of the highest-paid people we have are women. I happen to be a man, but I’m the managing director, so my salary is higher. If you just look at the raw statistics, it looks like men are paid much more, when we actually we have a very supportive and transparent culture.

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“What we, as an industry, need to ensure is that people are being paid properly regardless of their gender, creed or colour. There must be a more effective way of analysing this issue than this crude gender pay gap data.”

Another retail boss agrees: “Transparency is a good thing – it’s positive for business. But it is a concern that people will rely solely on the top-line numbers without reading the full report.”

Both John Lewis, where women’s mean hourly rate was 13.9% lower than men’s and Marks & Spencer, where women’s mean hourly rate was 12.3% lower, warned against “focusing too heavily on the numbers” within their reports. Retailers have urged onlookers to instead focus on the steps they are taking to promote gender diversity.

“If our priority was purely to reduce our gender pay gap figures, we could, for example, place our focus on increasing the male representation within our most junior population,” said John Lewis’s report. “This would have a big impact on our headline figures, but it would not help achieve our aim to remove barriers to progression and offer equal opportunities to all.”

The sentiment was echoed by M&S’s head of talent, Simmone Haywood, who argued in the retailer’s report: “We believe it is much more important to focus on taking meaningful action to drive equality and inclusion, rather than simply the numbers themselves.”

Equal pay

There are also concerns that the issue of the gender pay gap is being confused in the eyes of the public with equal pay. The gender pay gap refers to the percentage difference between average hourly earnings for men and women, whereas equal pay means that men and women are paid the same amount for doing the same work. All of the retailers Drapers spoke to were confident that men and women within their businesses received equal pay.

“This isn’t about equal pay – paying one gender more than the other has been illegal since the Equal Pay Act 1970,” adds Pinsent Mason’s Donaldson. “It is about the level of female representation across a business as a whole and how easily those women can progress.”

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Mark Watson, a partner at business law firm Fox Williams, warns: “It is worth mentioning that the publicity around these figures could generate potential claims from employees against employers because, based on these stark numbers, they believe they have been underpaid compared with a man. It doesn’t follow that simply because there is a large gender pay gap, there is an issue over equal pay.”

Climbing the ladder

Fashion’s gender pay gap can, as retailers argue, be part explained by the higher proportion of women in store roles. Womenswear businesses, in particular, hold a natural appeal for female store staff, who have a closer affinity to the target customer and can may also be attracted by perks such as staff discounts.

However, it is also clear from reading the industry’s reports that too often, the proportion of women decreases the higher up the career ladder, and therefore the pay scale. Homogeneity at the top of retail is a well-documented issue and the most senior roles, such as CEOs and CFOs, are still predominately held by white males.

Gender pay gap reporting has been introduced to spur UK businesses into action and there are some positive steps being taken in the retail industry. Many high street names have outlined plans to encourage more women into senior roles and promote polices such as flexible working. However, the real proof in the pudding will lie in whether the gap narrows in future reports.

Asos, for example, where women’s mean hourly rate was 32.8% lower than men’s, has pledged to invest £1m over the next year in its efforts to create mentoring programmes for women, and enhance parental leave and flexible working policies. It will also fund 10 scholarships per year encouraging women to study STEM (science, technology, engineering and mathematics) at university.

Department store House of Fraser has also strengthened its “family-friendly” policies, including enhanced maternity and paternity pay, and will focus on encouraging more women into senior roles.

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“We are going to really focus on diversity and inclusion more broadly and one of the strands will look at women in particular,” chief people officer Michelle Maynard tells Drapers. “What was missing was a more structured approach to talent management. We want to make sure people have high potential from across all areas of the business are supported.

“It is about identifying them, making sure that they have a development plan and that we’re tracking that plan. People want to feel that they can have an impact on an organisation, and do a job that is satisfying and fulfilling. For us, it is about creating a framework where they can do that.”

Gender pay gap reporting is here to stay. Several industry observers also told Drapers that further reporting measures around ethnic diversity and disability could soon follow suit. Retail must use its gender pay gap statistics to start a wider conversation about diversity and how businesses can ensure that all employees, regardless of ethnicity, religion, gender, disability or sexuality, can reach their full potential.

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