A Friday morning convo on closing the Gender Pay Gap through data

Susan loves Friday mornings. She’s excited about the imminent weekend and the prospect of gardening, one of her favourite hobbies. But also, this is the day when the office buzz slows down and hence it’s a great opportunity for her to sit down in the kitchen area with a cup of coffee and reflect on her work.

She’s been working as a human resources information system (HRIS) specialist in a reputable technology company in Luxembourg for over ten years, and one of her missions is to reduce, if not close, the gender pay gap in her workplace. As you can deduce, as a woman, this mission is really close to her heart.

Susan enjoys sitting in the kitchen area after all the coffee and tea drinkers have stopped by for their first caffeine intake. Except for Mario from the finance department. As the night owl that he is, he usually starts work a bit later and so, in the exact moment that he bursts through the kitchen door with his energetic vibes and a big smile on his face, Susan’s deep thinking is disrupted. She’s always a bit annoyed when this happens, and yet she manages a faint smile.

Don’t have time to read the whole blog entry? Then watch our “Blog in 1 minute” video for a quick summary of its main points:

“Hey Susan! Sorry to startle you. It’s always great to see you here on Friday mornings. How’s it going?”

“Hello Mario! No worries, I was just thinking about work and my next steps…”

“Oh, I heard you’ve been quite busy on a very important task for the company: closing the gender pay gap. Is that right?”

“Well, closing the gender pay gap might be too ambitious, but I’m working on narrowing it, that’s for sure. I’ve been working with the ‘People, Experience and Change’ team from PwC Luxembourg. They have a dashboard called ‘Data4Equality’ that’s helping me tackle this issue.”

“Do you mind if I sit with you for ten minutes? I wish I knew more about this matter and would love to learn it from you.”

“Of course!” replies Susan, now genuinely smiling. “I’m always happy when a fellow colleague, especially a male, wants to understand the gender pay gap issue. What do you want to know?”

“This is a bit embarrassing, but I would like to start with the basics to make sure I get everything right. What’s the difference between a pay gap and a gender pay gap?”

“Great question! A pay gap is normal and accepted when we are talking about two individuals with different profiles. By that I mean factors that can objectively explain a variation in the remuneration package, such as professional position, seniority, and experience, are taken into account. The gender pay gap, on the other hand, is the remaining unexplained gap after the previous elements are removed and what’s left is a difference in terms of gender. Does it make sense?”

“Yes, thanks for the explanation Susan! So, there’s equal pay for women and men when both female and male employees receive the same pay for equal work or work of equal value.”

“Well said, Mario! You got it,” replied Susan cheerfully.

“I also read somewhere it will become mandatory for companies to disclose their gender pay gap number. Do you confirm that?”

“Indeed. In March 2021, the European Commission published a directive proposal, which will in the future require organisations with more than 50 employees —so a majority of companies—, to publish their gender pay gap to improve transparency, which hopefully will lead to achieving gender pay equality. The European Parliament (EP) backed this proposal in 2022.”

“Humm… this directive proposal definitely applies to us. Have there been any updates since March 2021?”

“Yes, in March 2023, the EP adopted new rules on binding pay-transparency measures, meant to make it easier for employees to compare salaries and to expose existing gender pay gaps. So, when pay reporting demonstrates a gender pay gap of at least 5%, employers will have to conduct a pay assessment together with the employees’ representatives. If they fail to do so, European Union (EU) countries will have to impose penalties, such as fines, on these employers. Moreover, vacancy notices and job titles will have to be gender neutral.”

“So, how are we going to use the dashboard you mentioned to be transparent about the gender pay gap in the company?”

“Data, which is nowadays in abundance, will help here. But before we get into the nitty gritty of the dashboard, I would like to walk you through the benefits of gender pay equality because it might seem obvious to everyone that it’s a positive thing, but not always to what extent…”

“Sure, Susan! Go ahead.”

“So, as a business, you are making a statement about what’s important to you, about transparency. You are also demonstrating your values and showing to the world that, yes, you might have a problem, but you are also willing to work on it and solve it —and that’s a very powerful statement.”

Mario actively listens to Susan and nods in agreement.

“This, of course, can increase employees’ efficiency and motivation, it improves their morale, and it can attract top talent and retain the talent you already have. As you may know, today organisations are facing a competitive talent landscape, and diversity, equity and inclusion (DE&I) are key here. Basically, companies need to offer a unique and authentic DE&I value proposition to bolster attractiveness and retention.”

“Oh, I see, I see. And what are the benefits for employees?” Mario asks.

“Ha! I was just getting there, Mario. As an employee, it can positively affect the engagement you feel towards the company and increase your psychological safety feeling. It can also create a positive bias towards management and a relationship, respect and trust towards your leaders. It’s a win-win for everyone involved.”

“That’s for sure. Thanks for taking the time to explain this to me because you were right: I’m 100% convinced that closing the gender pay gap is a good thing, but never thought of the exact reasons behind.”

There is a short pause, but then Mario asks, “Can we go back to this dashboard from PwC Luxembourg now?”

“Absolutely! So, it’s a user-centric dashboard that really helps someone like me: someone who’s responsible for collecting employee data and compiling reports for department leaders. It enables me to easily spot and understand when there’s a gender pay.”

Susan continues explaining: “The dashboard is super objective. It uses a software named LOGIB, developed by Geneva University and the Swiss Federal Office for Gender Equality (FOGE), which is certified and recommended by the European Commission and the Ministry of Equality between Women and Men of Luxembourg. With this tool, I can gather the anonymised data of our company, mainly different employee characteristics, such as education, years of service in the company, responsibilities, function, skills, among others.”

“Alright. What happens next?”

“Then, it structures the data for an analysis that allows a reliable measurement of both gaps —a pay gap and a gender pay gap. Remember the difference? Afterwards, the dashboard centralises the insights and does the matching! I mean, it will show me whether the people with the same characteristics have the same salary or not. If they don’t have the same salary, why is that? Usually, the differentiator is the gender, so this is how I get to the gender pay gap.”

“Wow! How interesting. What else can the dashboard do?” Mario asks, visibly intrigued.

“‘Data4Equality’ allows to highlight the gaps, but also helps me understand where they are created and gives valuable guidance on what actions should the company take to reduce them. Of course, the ‘People, Experience and Change’ team assists me with clearing, gathering and putting the data together so that we can make an analysis.”

“And that’s that? Do you then report the results to management?”

“Sure thing! However, the point of the exercise is to do something about the results. That’s why I work with the ‘People, Experience and Change’ team to prepare a strategy so we can narrow our gender pay gap.” 

“Does this strategy impact other Human Resources topics?”

“Yes, it does. For instance, retention and recruitment. That’s because once you start moving one of the aspects of diversity, normally all the others will follow.”

“Can I ask you, as a HRIS specialist, how do you see the potential of this dashboard?”

“For me, this is really the start of a transparency era in HR processes. What I really like about the strategy we apply to Inclusion & Diversity (I&D)—and PwC Luxembourg does it too—, is that we use data to drive everything we do. Because we may have several events throughout the year and a high number of female employees, but if you look at the data it might tell you that’s not enough and there’s more work to do. Data are facts, you can’t refute them.” 

“I guess it’s better to work in a company that has a high pay gap but is transparent about it, than one that hides whether it’s a big or small pay gap…” Mario intervenes.

“You’re totally right about that, Mario,” says Susan. “You know, a big plus about this dashboard is that we can always add more data and information that can really serve as a differentiator in the strategy we apply later on. And if we continue working with PwC Luxembourg, they will be able to do a predictive analysis in a few years…because they also treat promotions in the dashboard.”

“That’s fantastic! So basically, if you gather enough data you can say: ‘Look, this is where we have been, where we are now, and where we could be in the future if we take action…or not,” Mario wraps up.

“Yup! I would like to mention that the dashboard also helps to understand and point out another gap that often triggers the pay gap—the ‘proportion gap’. It mirrors the fact that we observe more men in higher levels of the hierarchy, because, historically, it’s been like this. Hence, 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 the pay gap.”

Susan goes on: “My last point is that it’s a very rich and versatile tool. We can use it for other types of projects and add other aspects that we might want to know.”

“Well, ‘Data4Equality’ is definitely a great idea and a step towards achieving gender pay equality in the workplace. No doubt! But I think the journey to get there is a tortuous and probably long one. What challenges still remain and what changes still need to happen, do you think?”

Susan replies, chuckling: “Wanna guess how long it will take to close the global gender pay gap?”

“Humm, no idea. But from your expression, I can tell it will take a while…”

“Yeah, sadly. According to the World Economic Forum 2022 Gender Gap Report, it will take 151 years for women and men to reach parity worldwide. But before the pandemic the average was 99.5 years. So, COVID-19 added 30 more years to it.” 

“Oh golly. That’s waaaay too long, Susan. Why’s that?” Mario asks, looking a bit disheartened.

“When it comes to the pandemic specifically, women tend to be the first ones to sacrifice their career to stay home with the kids, to clean and cook. But historically, it’s bigger than that. It took women longer to get into the labour force and when they did they were underpaid and under-experienced.”

She explains further: “At some point, I think there was a transfer of knowledge from men to men on how to negotiate salaries and promotions, and how to have a presence at work. Women are still learning these important skills, so we are at a disadvantage”.

“Humm… I guess biology also gets in the way of career advancement, but it shouldn’t…” Mario intervenes.

“Oh, right on, Mario! Yes, unfortunately, women still suffer the pregnancy penalty—they are more likely to miss a promotion, or experience discrimination or lack of opportunities because of this. Plus, they may face difficulties reentering the workforce after the pregnancy.”

Susan carries on: “Lastly, women around the world still face a disproportionate share of unpaid care and domestic labour, such as household responsibilities. In fact, did you know that, according to a Statec study from 2012, women in Luxembourg spend around 16 hours per week doing household chores, while men, in comparison, spend 8 hours? So yeah, systemic issues like these can lead to women earning less than men because it prevents them from focusing on their career as much as men do.”

“Seriously? I hope this disparity has decreased in the meantime. So, a systemic change needs to happen!” points out Mario. “I have one last question for you, Susan. Do you know how Luxembourg and Europe are doing in terms of gender pay equality?” 

“Yes, I’m well informed on that. According to Eurostat, women in the European Union are still paid 12.7% less on average per hour than men —this is data from 2021. In other words, for every euro a man makes, a woman makes 0.87 cents. Luxembourg has now a privileged position as the only country in Europe with a gender pay gap in favour of women with +0.2%. So, that’s good news and it means we are going in the right direction. Estonia, on the other hand, has the biggest gender pay gap in Europe —20.5%— and still a long way to go.”

“And the reasons behind these numbers are…?” Mario inquires.

“…the ones I mentioned: sectoral segregation, unequal share of paid and unpaid work and, of course, pay discrimination,” Susan replies immediately. “However, the largest part of the gender pay gap remains unexplained and can’t be linked to worker or workplace attributes such as education, occupation or the economic activity the person works for.”

“What do you mean, Susan?”

“I think it all circles back to the beginning of our chat, Mario. More transparency in pay would help bring to light unjustified gender-based pay differences and understand the reasons behind them. Hence, tools like ‘Data4Equality’ are fundamental!”

“You bet, Susan! Well, this was an extremely interesting and eye-opening conversation. I can’t thank you enough for answering all my questions. But I believe I stole enough of your valuable time, so I’ll leave you to your reflections.”

“Don’t worry, Mario. It’s not really wasting my time when I’m raising awareness on this issue and potentially recruiting a new ally. Because, believe me, we need all the allies we can get!”

“You can definitely count on me as an ally from now on. I will spread the word, Susan. Thanks again, and please continue with the good work and keep me posted!”

“Will do, Mario. Thanks for your support and interest!”

Want to know more?

Visit the ‘People, Experience and Change’ webpage or get in touch with the team behind ‘Data4Equality’: Vinciane Istace, Niklas-Alexander Theobald, Arun John Ambat, Maria Bravo, Christopher Rossa, and Eraldo Acchiappati. They will be happy to answer any questions you may have. 

You can also read this article on RTL Today and listen to the PwC Luxembourg TechTalk episode, ‘The One on Data For Equality’, to know more about the dashboard.

What we think
Maria Bravo
Maria Bravo, Advisor, People, Experience and Change, and Diversity & Inclusion Officer at PwC Luxembourg

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.

Niklas-Alexander Theobald,
Niklas-Alexander Theobald, Senior Manager, People, Experience and Change, at PwC Luxembourg

“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.

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