Flexible approach to equal pay

The Equality and Human Rights Commission’s (EHRC) consultation on how private and voluntary sector employers with more than 250 staff can measure and report on their gender pay gap closed last week.

The Equality Bill contains a reserve power that, if a future government chose to use, could lead to mandatory reporting of organisational pay gaps if progress has not been made on a voluntary basis by 2013. The EHRC consultation sought employer’s views about the best way to practically report on these pay gap statistics.

Done well, the proposals in the Equality Bill will help, not hinder, the ability of businesses to attract talented women into all levels of their workforce. Done badly, however, this legislation could prove burdensome, disruptive and ultimately counterproductive, making businesses less, not more, able to quicken the course towards diverse, equal and inclusive workplaces.

Good for business

Ending the wide discrepancy between male and female pay is not just good for women, it is good for business. When an organisation demonstrates that it values a fair and diverse workforce, it maximises the innovation, productivity and loyalty a wider talent pool can bring. However, I’d like to issue a clear word of warning: the government must listen to the voice of employers if their proposals to ask companies to publicly report on their pay gaps by 2013 are to be truly effective.

There is no doubt that regularly putting pay data in the public domain can indeed encourage employers to remunerate men and women fairly. After all, many business people will tell you that what gets measured, gets done. But as with many seemingly progressive initiatives, the devil in the government’s suggestions is in the detail.

Opportunity Now strongly opposes proposals for a single-figure measure for pay gaps. The causes of the pay gap are many and complex; the jobs women do and the fact that women are more likely to be in lower grade jobs; the fact that women are more likely to have interruptions to their careers; and the fact that women are more likely to be in part-time jobs, which are lower paid.

Asking employers to publicly report on a single pay-gap figure would be grossly simplistic, and is proving overwhelmingly unpopular with employers – the very stakeholders the government hopes will voluntarily engage in the scheme.

Single figure pay-gap measures would undoubtedly lead to league tables of data – which is at best crude, and at worst, misleading. These league tables could drive women away from working for certain companies and certain sectors, rather than widening the playing field in which women want to work. There is a need to support every employer in making progress on their pay gaps as quickly as possible, rather than driving women from one organisation to another, which would exaggerate the problem in many places.

Masking true progress

A single figure measure would also fail to convey the effects of mergers, acquisitions and adverse economic conditions, all of which can distort the appearance of a company’s pay gap, masking any true progress towards fair and transparent pay that may have been made.

Opportunity Now would prefer to see a flexible approach that allows employers to breakdown pay data by employee grade, so that they can clearly see where in the business pay gaps are narrowing and where they are widening, and therefore take steps to address this. Businesses must also be allowed to provide a narrative context around their figures, so that the public has a rounded and meaningful picture of a company’s approach to pay equity.

We would also ask the government to bear in mind that publicly reporting on pay data is just one of a number of measures that are required to tackle the gender pay gap.

To achieve a holistic approach towards equal pay, we would advise employers to review their systems for recruitment, performance management and promotion; to re-examine the nature of their pay processes, including looking at any bonuses or rewards; to benchmark their policies against competitors in their field; and to undertake a full pay audit, taking any necessary corrective actions. Only then can real progress be made which will benefit women, business and society as a whole.

Sarah Williams Gardener, director, Opportunity Now

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