Can we close the Gender pay gap through firms?

Based off a podcast, I will be sharing my thoughts on whether firms can close down on the gender pay gap, or whether it is the responsibility of government through policy. This is an important topic and in 2024, the median gender pay gap for full-time employees was around 7.0%, meaning women earned 7.0% less per hour than men, according to the ONS. 

I intend to approach this topic with the utmost respect and do not intend to hurt anyone's feelings. All of this was written based on curiosity and I have used numbers/statistics to make my points, trying to keep a minimal amount of normative statements. Saying that, I know I'm not a perfectly diplomatic writer and if there are improvements, please do say so in the comment section. This is a skill I am looking to improve at. The reason for writing this post was due to a recent personal story I heard.

The gender pay gap itself is calculated through the difference between men’s and women’s median earnings divided by men’s median earnings. This immediately made me wonder what the difference in ratio calculated would be for women and men at the higher and lower quintiles.  At the 90th percentile, among full-time employees, the gender pay gap is about 15.5%, meaning women earn about 15.5% and the 10th percentile, the gap is much smaller, around 2.7%. Here, you may consider "smaller and big pies" but it is evident that the disparity swells dramatically at the top end. What was also considered was that women tend to require more leave with mothers take around 40 weeks of leave after childbirth with fathers typically take just 2 weeks on average. 

Pay transparency schemes are in about 50% of countries which mainly have to be mandatory by the firms itself. The podcast argues that central government analysis, like looking at social security payment may help smaller firms that don't have the powerful resources/capital to spend on reporting. However, governments also only really have a macro position and cant see the internal day-to-day conversations going on in the workplace and the type of environment that is being made by workers.

The podcast looked at how much the gap has been driven by discrimination, looking at 11 countries and huge, crazy big dataset. The professor looked at the policy implemented to aid women but also what would a women's pay be if she had the same job as a man. Another area of focus was the impact of firm's stereotypes and stereotypes in general, with around 44% of global financial services workforce being women and making up nearly 70% of the overall workforce across 25 of the largest publicly listed beauty companies. But only 36% of those in senior management roles were women.

The podcast also suggested actionable steps firms could take. Companies could implement structured promotion tracking, ensuring that opportunities for advancement are transparent and equally accessible to men and women. Another proposal was mentorship and sponsorship programs, which can accelerate women’s progression into senior roles. On the government side, mandatory reporting and standardized pay audits could provide a baseline for accountability, particularly in industries or regions where internal auditing may be under-resourced. Combining these approaches could address both the structural and cultural factors that perpetuate the gap.

Based off a podcast, I also considered the role of hiring practices and career interruptions beyond parental leave. For example, studies show that women are 16% less likely to be promoted within their first five years compared with men in similar roles, even when performance ratings are equal. Research across 20 industries found that women are underrepresented in high-revenue-generating positions, with only 28% of product development and sales leadership roles held by women globally. The podcast also discussed negotiation dynamics, noting that women are less likely to negotiate starting salaries, which can result in a lifetime earnings gap of up to $500,000 over a 30-year career.

Another factor is the prevalence of part-time and contract work. Women make up 62% of part-time employees in professional services, but these roles often have limited access to bonuses and retirement contributions, further widening financial inequality over time. Company culture also plays a measurable role; firms that actively implement sponsorship programs, flexible scheduling, and career re-entry initiatives report a 10–15% higher retention of female talent over a five-year period. These examples suggest that both structural policies and cultural changes are needed to make meaningful progress on closing the gender pay gap.

Ultimately, the discussion highlighted that closing the gender pay gap is not a simple task. It involves intersecting factors like leave policies, workplace culture, promotion practices, and government regulation. While firms can directly influence daily operations and career progression, governments can enforce systemic transparency and offer incentives to foster equality. The combination of both seems necessary if the 15.5% gap at the top end is to be meaningfully reduced. Listening to the podcast, I was left thinking that a multi-layered strategy, using data, structured processes, and cultural change, is probably the most promising path forward. I feel changing stereotypes and inertia is important too but is often overlooked.