Legislation aimed at tackling the gender pay gap focuses too much on monitoring the problem rather than actually fixing it, according to a study published ahead of tomorrow’s 5 October reporting deadline.
The research by King’s College London and the Fawcett Society analysed gender pay gap reporting regimes in the UK and five other countries. It found the UK ranks joint-bottom for the strength of its system, partly because it does not mandate that employers with pay gaps take steps to address them.
Researchers scored the countries across 11 indicators, awarding the UK a score of four out of 11 – joint-lowest with Australia. By contrast, Spain, which was graded the best, scored 8.5.
Professor Rosie Campbell, director of the Global Institute for Women’s Leadership at King’s College London, said: “At one point, the UK led the field on gender pap reporting – but it’s now falling behind other countries that are going further, faster.
“The transparency that enabled naming and shaming of poorly performing organisations and highlighted success stories was groundbreaking, but other nations are currently doing more, importantly compelling companies to act on identified pay gaps, so they don’t just track the problem but also do something about it. This is vital: gender equality is both an urgent economic goal and a moral imperative – one we mustn’t lose sight of in the wake of a pandemic that has disproportionately impacted women.”
The research involved interviews with more than 80 stakeholders in Australia, France, Spain, Sweden, South Africa and the UK, including government officials, employers, trade unionists, academics and gender equality advocates, all with in-depth knowledge of gender pay gap reporting regimes.
Those interviewed in the UK were all but unanimous that organisations with gender pay gaps need to be compelled to produce action plans with clear goals and timelines, spelling out how they intend to improve hiring practices, progression, promotion and policies around family leave and flexible working, in order to address pay disparities between women and men.
Researchers praised the UK for the transparency of its reporting system, as well as its high levels of compliance, which enables scrutiny of employers by the public, media and others – but says this pressure is not always enough to drive organisations to action.
At one point, the UK led the field on gender pap reporting – but it’s now falling behind other countries that are going further, faster” – Prof Rosie Campbell, Kings College London
Other countries analysed in the report do mandate action. In France, companies that fail to address identified gender inequalities can face heavy penalties of up to 1% of their payroll.
According to the Government Equalities Office (GEO), between 2017-18 and 2018-19, roughly half of gender pay gaps reported by UK employers narrowed. While this suggests the GPG reporting system is having a positive effect, it’s important to recognise that almost the other half of reported pay gaps went in the other direction, widening over the same period.
Ann Cairns, executive vice chair of Mastercard and global chair of the 30% Club, said: “There is a saying ‘what gets measured gets done’ but it’s clear that in this case it’s just a start. Gender pay gap reporting is a good thing. It would be encouraging if more companies did this voluntarily. Because they would be acknowledging it’s a problem, being transparent and then hopefully taking actions to close the gap.
“Reporting without owning the problem is unlikely to yield good results. That’s why the UK ranks low on this list. But, in my view, fining companies to make them comply is a very poor way to achieve good results. There is so much companies can do to close the gender pay gap to make the workplace more equitable, from implementing unified parental policies to ensuring they have balanced slates for interviews and succession plans.
“Antoine de Saint-Exupéry, the French writer and aviator once said ‘a goal without a plan is just a wish’. Let’s do more than blow out the candles and hope that our wishes come true.”
A further way to improve the UK system, the study says, would be to lower the minimum employee threshold, which at 250 staff “lies well above” the other countries surveyed. In Sweden the threshold is 10 employees, while in Spain it will be 50 from next year.
The study makes the following recommendations to improve UK gender pay gap reporting legislation:
- Establish a legal obligation to publish action plans
- Lower the minimum employee threshold
- Introduce automatic fines for non-submission of reports, and
- Increase the capacity of the GEO and Equalities and Human Rights Commission to provide better guidance and support and conduct more rigorous monitoring and analysis of submitted data.
Felicia Willow, interim chief executive of the Fawcett Society, said: “Unfortunately, this report clearly shows just how far behind the UK is from comparable countries in reducing its gender pay gap.
“Reporting without action is not enough. Employers must be required to publish action plans and take meaningful steps to help our country achieve the myriad economic benefits that gender equality will bring.”
The legal analysis of the study was carried by TrustLaw with support from law firm Bowmans.
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