Latest initiatives closing pay gap

Business has a role to play in
helping to further reduce the salary divide, says Susan Anderson

The CBI supports the
Government’s new plans to tackle the pay gap, which it believes will be
workable for business and effective for women in the workplace.

Workable, because the
proposals focus on promoting good practice rather than imposing the
straitjacket of rigid, impracticable legislation. And effective, because they
recognise that the key to closing the pay gap is to remove the barriers that
restrict women’s choices in the labour market.

Job segregation – the
fact that women tend to work in lower-paying sectors – and the effects of
childcare responsibilities are the key causes of the 18 per cent gap between
male and female average earnings. Plans to improve advisory services for lone
parents, so they can get proper help on childcare, job-hunting and training,
should make it easier for mothers to return to work.

The idea of using the
Employment Service to promote parent-friendly working patterns among local
firms is good, as employers are increasingly looking to provide greater

Encouraging women to
consider high-paying, traditionally male-dominated professions will also be
critical. The proposal to work with the ICT sector should help tackle job
segregation and complements employer-led initiatives in sectors such as

Non-discriminatory pay
systems are important and the CBI recognises the need to promote good practice
on equal pay. Yet there is no holy grail that can guarantee gender equity.

What we can do is
improve the support, guidance and expertise available to help employers review
their pay systems. That is why CBI members – such as Unilever, Sainsbury’s,
HSBC, Shell, BT and Prudential – are backing plans to develop voluntary equal
pay review tools. A key priority will be to make sure the model is practical
and flexible so it can deal with the increasing complexity in pay practices.

Commentators argue
that the Government should have introduced statutory pay reviews. But this
approach ignores the facts.

First, any rigorous
review of the academic evidence shows that employer discrimination makes up
only a small part of the pay gap. The Equal Pay Task Force’s claim that 25 to
50 per cent of the gap is down to discrimination is based on flawed research.
These figures fail to strip out factors other than discrimination, such as the
effects of individual career choices, and therefore overstates the extent of

Second, the experience
of statutory pay auditing in Canada suggests that upward wage adjustments
following a statutory review would be minimal – although the administrative
burden on businesses would be high.

Quibbling over the
academic evidence may appear pedantic, but proposals for action must be based
on sound evidence. And legislation has to be both proportionate and effective.

Radical new
legislation is not appropriate – but there is scope to make the existing law
work better.  That is why the CBI
supports the Government’s proposals to speed up and simplify equal pay tribunal

The persistence of a
pay gap is unacceptable but recent evidence looks promising. The gender pay gap
for 25- to 29-year-olds has closed to about 5 per cent. For female executives,
the difference has dropped from 38 per cent to 8 per cent in the past decade.

The CBI believes that,
alongside existing initiatives such as the National Childcare Strategy, Working
Families Tax Credit and the National Minimum Wage, the Government’s proposals
should have a significant impact on delivering equality for women in the

By Susan Anderson,
director of HRDirectorate at the CBI

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