Plans to force firms to publish their pay gaps won't come close to solving the problemby Jessica Abrahams / February 15, 2016 / Leave a comment
The Equal Pay Act 1970 made it illegal to pay men and women differently for equivalent work. Four decades later, men still earn an average of almost 20 per cent more than women in the UK.
The regulations put forward for public consultation last week, which would make it mandatory for companies to report on their gender pay gap, are an attempt to tackle this. It’s a simple way to force organisations to pay attention to an issue they might otherwise ignore, and it’s a necessary step: when the government introduced voluntary reporting in 2011, an embarrasing five companies chose to take part.
No legal mechanism is being proposed to force companies to close the gap; there is no requirement for them to explain themselves if the gap is shown to be large or to take steps to reduce it, as exists in some European countries. Instead, the UK’s proposed regulation will allow the public to turn jury. The penalty for companies that fail to improve is a PR headache, which will likely have a varied impact—consumer brands need to be more careful about their public image, for example, than others.
Nobody can complain that the regulation would impose an unreasonable burden on small companies, an objection often raised in relation to such regulations, since those with fewer than 250 employees are exempt. And the suggested requirements are simple: companies must declare the mean and median salaries of male and female employees (calculated, as usual, as an hourly rate, to avoid the results being skewed by the proportion of those in part-time or full-time work); the difference in mean bonus paid to men and women; and the numbers of each sex in each quartile of pay.
That’s a good range of indicators and importantly includes bonus pay. This has long been a concern for women in certain sectors, such as the City. Bonuses—which can…