Gender pay gap reporting: Let's get on with it

Blog posts

8 Mar 2016

Duncan BrownDuncan Brown, Head of HR Consultancy

Five statistics in a very reasonable four pages of draft regulations, that’s all it is. With an even more reasonable 18-month lead time for employers to get ready for it.

That’s the requirement contained in the final consultation on mandatory pay gap reporting for employers with more than 250 employees in Great Britain, as issued by the Government Equalities Office (GEO) in February.

The actual figures required will be:

  • the difference between the median and mean pay for the men and women in the organisation;
  • the proportion of men and women receiving bonuses and the mean difference in bonus payments (notoriously susceptible to gender bias); and
  • the number of male and female employees in quartile pay bands (which will help to demonstrate that, as I find in my work on equal pay audits, for many employers the problem is not unequal pay for work of equal value, but a lack of women in senior and high paid roles).

Your eight-year-old offspring would be able to work most of it out for their homework.

Yet the response from some employer bodies was predictably and depressingly that of the eight-year-old who doesn’t get their way: ranging from the CBI’s opposition to an over-simplistic ‘box ticking exercise’, and to league tables and ‘naming and shaming’ (not actually referenced anywhere in the regulations, though the information will have to be supplied each year to government and published on the organisation’s website); to the British Chambers of Commerce who are ‘cautious about the introduction of measures that reduce a complex issue to a set of headline statistics’ and argue for more time for piloting and coping with ‘the regulatory burden’.

Have they forgotten that the original Equal Pay Act was passed over forty years ago? How much more time do we need to start making real headway in closing the stubbornly persistent gender pay gap? Today’s United Nations-backed International Women’s Day may be themed this year around 'Planet 50-50 by 2030' yet the UK seems to still have a long way to go, ranking at 30th out of the 33 countries currently in the OECD’s female employment ranking.

The UN has estimated that the gains to the global economy of equalising pay and employment opportunities for men and women would be worth trillions of dollars while PwC estimates gains to the UK economy of £170 billion if we could match Sweden in terms of rates of female employment and earnings

And yet still we have this typical knee-jerk reaction of some employer bodies. It took the Chartered Management Institute, perhaps not coincidentally led by a woman, the excellent Ann Francke, to agree with Equalities Minister Nicky Morgan who launched the draft regulations and draw the sensible conclusion that:

‘Unconscious or unintentional gender bias is still alive and well: The transparency of reporting on gender pay and the gender pipeline will be a watershed in accelerating change…Simply put, what gets measured gets managed – and what gets published gets managed even more…Shining a light on what men are paid versus women at every level, as well as monitoring the percentage of women at every level, is proven to speed up progress.’

Government in Britain is not alone in intervening to address the failure by employers to take sufficient action to address our stubbornly persistent 18 per cent mean earnings gap. In late January the Obama administration announced executive action aimed at the USA’s 21 per cent gender pay gap, requiring companies there with 100 or more employees to report to the federal government how much they pay their employees, broken down by gender, and race and ethnicity. State governments in California and New York have also acted in the past quarter to strengthen their equal pay requirements and the penalties for failing to address them. Perhaps setting an example for the UK in terms of the need for enforcement, the Federal Equal Employment Opportunity Commission recovered over half a billion dollars in 2015 as a result of its litigation and enforcement activity.

Of course, some employers have taken steps already to investigate and address their gender gap. Computer giant Intel’s annual report for 2015 entitled ‘strong progress and more to do’ and anticipating the California reporting requirement, revealed that employees with the same role at the same level achieved identical 100 per cent equal pay rates. But rather than sitting on their pay laurels, the firm announced a whole range of initiatives to promote higher rates of female representation at senior levels, including enhancing its parental and sabbatical leave programmes, and setting itself the goal of becoming the first technology business to reach full representation of women and minorities throughout the US.

Supporting the optimism of Francke’s observation, following the brave complaints of two female employees, the chief executive of Salesforce Marc Benioff was amazed at the scale of the gender pay gap revealed by an audit he ordered of their 17,000 employees. He has invested $3 million over the past year in addressing these inequities.

I would like to see the UK reporting proposals progressively extended as in the US to include smaller employers and these other diversity strands, with IES’s current research work with the Equalities and Human Rights Commission revealing some worrying big earnings gaps, particularly for the disabled.

But personally I think the GEO have achieved a masterstroke in delivering on Nicky Morgan’s intention of being both ‘proportionate and effective’: balancing campaigners’ and trade union demands for far more extensive mandatory reporting, with employer opposition to more employment ‘red tape’. The Chambers of Commerce somewhat ironically responded that ‘Gender pay gap figures also need to be put into context - businesses should be able to explain these figures.’ Precisely! Though a relatively simple set of statistics is all that is required to be published, there will now be far stronger incentives for employers to carry out equal pay audits to understand and explain, and then to address the pay gaps so revealed.

Like it or not, gender pay gap reporting is coming and my GEO contacts tell me that very little, if anything, is likely to change now in the draft regulations. So, like Intel, why wait for the implementation deadline, why not make a start on calculating and reporting straight away and get on with addressing any gaps you find? Whatever the initial costs, your business and the UK economy and society has much to gain.

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IES contact Duncan Brown, Head of HR Consultancy, Institute for Employment StudiesDuncan Brown

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