UK: Is The Shipping Industry Ready For UK Gender Pay Gap Reporting?

It's an acknowledged fact that women are significantly underrepresented in the shipping industry – accounting for just 2% of the workforce globally. As major companies begin to publish data about their gender pay gaps, following the introduction of new regulations for companies with 250 or more employees based in the UK, the issue is at the forefront of the public consciousness. The national average for the pay gap between male and female full-time employees stands at 9.4% and 18.1% for all employees. Many now accept that the time has come to address this problem.

Like many other sectors, the shipping industry is wrestling with how to tackle issues around gender, whether related to pay or female representation at senior levels.

The current state of play in the industry

In the UK specifically, women accounted for just 2.6% of certified officers and 30.5% of uncertified officers in 2015. There is a growing concern that when the shipping industry starts to publish its data, the figures are going to show significant disparities even by comparison to these averages.

Many women employed in the shipping industry are disproportionately based in the ferry and cruise sector in roles that are typically low-paid and among the least secure. Officers that are female are more likely to be younger and more junior than the average male in the sector resulting in lower salaries. Further, in an industry where ex-mariners are often promoted to senior positions, a lack of female mariners leads to a lack of women in boardrooms.

The true extent of this problem will be fully revealed given the introduction of regulations requiring mandatory reporting of gender pay gaps for large private companies of 250 employees or more based in the UK. These regulations came into force on the 6 April 2017, with employers required to publish their first gender pay gap report no later than 4 April 2018 and have annual publications thereafter. This means by April 2018, a large number of shipping companies will be obliged to publish a report. This report must be available both on the company's website and the UK Government's own register and be presented in a way which is accessible to the public for three years. Some companies have already published their 2016/17 report which can be viewed on the UK Government's 'Gender Pay Gap Data' register.

Gender pay gap reporting: the new rules

The rules require the following details to be published by companies with more than 250 employees based in the UK:

  1. The gender pay gap percentage – the mean and median difference between male and female average hourly pay based on a snapshot of pay taken in April;
  2. The gender bonus gap – the mean and median difference between male and female bonuses over a 12 month period;
  3. The proportion of men and women who received a bonus in the 12 month period;
  4. The number of men and women in 4 pay bands (4 equal pay bands depending on pay of all employees); and
  5. A written statement signed by an appropriate senior individual confirming that the published gender pay gap information is accurate.

The underrepresentation of women in senior (better paid) roles makes it highly likely that most shipping employers will be reporting a significant gender pay gap. The fact that gender pay gap reporting is based on aggregate figures means that a gap may emerge even where men and women in the same role are recording the same pay. Companies are encouraged to justify any pay gap and explain any action they plan to take to address any pay gaps. It will be interesting to see if many companies decide to provide a justification for their data. Such justifications might include an explanation of: the workforce demographic, any skills shortages (which have resulted in a salary premium for those currently in the role), historical discrepancies (e.g. a previous TUPE transfer) and how complex bonus schemes have been analysed and valued for the report.

Are there penalties for failing to comply?           

For now, the answer is largely, "no". The UK Government has said that it will: publish tables, by sector, of gender pay gaps, positively highlight any employers who publish full and explanatory information and also run checks for non-compliance. The lack of a genuine enforcement mechanism for the regulations has been criticised by many, with speculation rife that the UK Government will impose financial penalties further down the line. However, because of the public nature of the register, there are still reputational risks associated with both failing to comply and with revealing a large pay gap without adequate explanation or a clear action plan.

For businesses in the shipping industry that refuse to comply (which will likely be viewed negatively) or publish shocking figures, the major risk is significant negative media publicity. Another consideration is that the figures could empower employees to bring grievances and potentially equal pay claims.

Finally, figures from a survey conducted by the Young Women's Trust reveal that a large pay gap could well hurt companies during the recruitment process – 84% of women aged 16-30 said they would consider the company's pay gap when applying for a job, while 80% would go further and compare prospective employers' gender pay data.

Despite the current lack of financial penalties, it's clear that shipping companies should pay attention to the new regulations. The potential ramifications are serious: both in terms of major reputational damage and a block on growth if they are unable to attract the best talent in the future.

What does the future hold for women in the shipping industry?

There seems to be a genuine desire for change within the shipping industry. Conferences aimed at empowering women in the industry are being held more regularly and a number of prominent initiatives have been launched to address the over-representation of men in the sector. In recent years, the International Maritime Organisation has commissioned films and books to showcase their work to encourage women to enter the industry, and to remain in it. Indeed, at their 2013 conference in Busan, members of the Organisation signed a "Declaration of Intent towards the development of a Global Strategy for Women Seafarers" and have been working to implement it since.

On the flip side, some members of the industry have raised concerns that a lack of women has led to unlawful positive discrimination, with suggestions that companies are so keen to improve their statistics that they would hire a woman over a man based on gender and might be willing to pay more too. The publication of statistics is unlikely to discourage such behaviour – if anything, it could incentivise it.

The forthcoming pay gap reporting will, at least, showcase the scale of the discrepancies at play in the shipping industry. However, to engender real change, the sector could go further. It could, for example, publish wider statistics, which go beyond the mandatory requirements. This could demonstrate the desire within an organisation to improve, and show specifically which areas of the industry need improvement, while also encouraging other companies to be proactive, leading to collective change across the shipping industry.

Adopting the 'Think, Act, Report' initiative is another good way for an employer to show that they're committed to change. This pre-existing government campaign encourages companies to consider issues around gender equality, to make a fairly simple pledge to improve and to report on how this is being achieved. Its voluntary nature and transparency is reassuring to employees and companies including Tesco, EasyJet and PwC are all active participants of this initiative.

The shipping industry cannot ignore the momentum and focus on gender equality and diversity. The industry now has a chance to embrace the drive and create initiatives which properly encourage gender diversity in the sector. After all, this diversity will only increase the levels of talent within the industry, as more and more talented women are embraced into the fold.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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