The Link Between Pay and Happiness

Tuesday, April 3, 2018

We all want a more productive workforce, one that reflects the customers we serve and the communities we are a part of. To do that, it is important to create a more gender balanced and diverse working environment for our employees. 

The gender pay gap has recently become a key issue in the minds of many, with all companies with over 250 employees having to publish reports on any disparity between the average pay of men and women in the company.

While equal pay is required by law, the gender pay gap is more complex. The Equal Pay Act of 1960 prohibits any discrimination based on gender. Equal pay means that men and women being paid the same amount for doing the same job. Seems simple enough. The gender pay gap however, describes a measure of the difference between men’s and women’s average earnings across an organisation, rather than those who are simply in the same role.

The UK’s current gender pay gap (9.1%) means that in 2017 women ‘stopped earning’ on the 2nd of November. In short, they effectively worked for free for the rest of the year due to the difference in their salaries compared to men. As organisations begin the process of reducing the gap, it’s important to understand the differences between equal pay and the gender pay gap, as the terms are often used incorrectly.

The gender pay gap is an equality measure that shows the difference in average earnings between women and men, it is this gap that companies are having to disclose in their gender pay gap reports.

The likelihood is that if you’re reading this you have recently completed your pay gap reporting, or at least have looked at the data, but there is something that you have probably missed. Something that we at Personal Group think is integral to company success - workplace happiness. Our recent survey revealed that there is a substantial workplace happiness gap, but not skewed the way you may think.

It seems that, despite being paid significantly less on average than men, women are happier in the workplace. Women over 50 seem to be the happiest demographic in the workplace, with over 50% stating that they would describe themselves as happy often or most of the time. Unfortunately, men appear to be unhappy at work irrespective of age, with one in three across all age ranges never or rarely feeling happy at work. Just under half (45%) of female staff are happy often or happy most of the time compared to only 38% of their male co-workers.

There are several factors that could be causing the gender happiness gap, and many of them overlap with those already identified as contributing to the gender pay gap. Could the same reasons women are paid less be the cause of men’s workplace unhappiness?

Common Causes

The highest paid sectors are male-dominated

Women often end up employed in sectors that offer a narrower scope for financial reward, and the highest paying sectors are currently disproportionately made up of male employees. 

In our recent survey we found that happiness levels for senior managers and department heads varies greatly by gender. 95% of female company owners and directors would describe themselves as happy at work at least some of the time, versus only 70% of male directors and company owners. With more men in these positions than there are women, the 30% of male company owners and directors who say they are never happy at work makes up a large proportion of the UK’s senior management.

The pressure on women to be the primary carer for children.

Due to societal pressures, and the lack of companies offering shared parental leave, women are often expected to be the primary carer of their children with men having to use annual leave to supplement the 2 weeks paternity leave they receive at the birth of their child. It is also very common for mothers to return to work part time in order to continue caring for the child. Due to the rising costs of childcare it is often uneconomical for them to return to their previous working hours, or to return full time.

Obviously, working part-time entails a reduction in pay equal to the reduction in hours worked. However, the difference in years of experience of full-time work, or of having taken time out of the labour market can negatively affect a woman’s long-term career progression.

Research by PwC shows the UK could increase GDP by 9% if it increases women in work from 68% to match Sweden’s 73%. Career progression for each gender varies greatly after having children. HR News reported that Men were more than twice as likely to be promoted following having children compared to women. 79% of men either retained their current role or moved into a more senior one after having children, whereas almost a third of women (31%) took a part time role or moved a lower pay grade.

Interestingly, while women are happier in the workplace, they have become increasingly more dissatisfied with their lives outside of work. The pressure to be the primary caregiver could also be a contributing factor to their declining happiness outside of the workplace, which would inversely affect their happiness while at work.

Additionally, according to our survey, the unhappiest women by age group are 30-49 year olds with a quarter of them saying they never or rarely feel happy at work. This shouldn’t be particularly surprising, as these women are likely juggling work and caring obligations, which can lead to increased stress levels.

Stereotyping

Women make up 47% of the workforce, but only 35% of managers, directors and senior officials. Only 6% of FTSE 100 CEOs are women and they earn on average 77% less than their FTSE 100 male counterparts. To illustrate the gender disparity, in 2016 there were more FTSE 100 CEOs named David than there were female CEOs. This disparity is not always a conscious act, but assumptions that women won’t want to accept a promotion, or are unable to do so, as it will interfere with their home life, can result in them being overlooked when the opportunity for promotion arises.

This means that men have a larger number of role models in senior positions in the workplace, however, this may also be a contributing factor to their unhappiness at work. They would be more likely to compare themselves to other men in the company who hold positions such as manager, director or CEO, which could lower their sense of self-worth.

The causes of the gender gaps are too complex to be discussed in their entirety here, and they will vary from sector to sector, and different organisations may have different key areas. If we want to pin point the causes within our own companies, we need to start asking ourselves some tough questions. 

This article is part of a series discussing the issues of gender pay and happiness in the workplace. Articles will be published weekly. 

Download the full report

To coincide with our gender pay gap report, we also surveyed over 1200 UK employees about their happiness, enthusiasm, pride, and efficiency at work.
If you want to know more about our findings then download the full report below. 

Download

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