Is the consultation focusing on the symptoms of inequality not the cause?

The government’s recently issued consultation paper ‘Closing the gender pay gap’ outlines plans to implement section 78 of the Equality Act 2010, a provision that has lain dormant for five years.

The new arrangements will require employers with 250 or more employees in the UK to report on their gender pay gap on a regular basis. The consultation paper asks for views on exactly how, when and where this reporting should occur. It raises some fundamental questions, including:

  • which employees should be in scope. The proposals suggest self-employed consultants and apprentices will be included
  • whether an employer should report on the overall pay gap figure, or whether that should be broken down and distinguish between part-timers and full-timers.  Should the reporting identify gender pay differences by reference to job grade or job type?
  • if an organisation does not have a pay and grading system, how will job types be defined?
  • should reporting requirements focus on base pay – if so, does that mean that overtime, bonuses and other important elements of the reward structure will be excluded?
  • should businesses be required to report annually or less frequently, and should the information be set out on a company website or in annual returns to HMRC?

There are also some important questions about implementation, including the suggestion that the new requirement should be introduced over a phased period, so that larger employers (500 and over employees) are given earlier compliance dates than those employing between 250 and 500 employees.

There is, however, a more fundamental question to be asked about the whole thrust of these new proposals.  The truth of the matter is that the issue that needs to be tackled is not the gender pay gap but the gender talent gap.

In March this year the Women’s Business Council, set up by government and working with the government’s Equalities Office, issued a report (pdf) identifying the reasons for the gender pay gap.  Both the council’s report and the government’s consultation paper recognise that the causes of the gender pay gap are “numerous and varied as the consultation’s foreword by Nicky Morgan MP puts it.

The reasons for the pay gap stem from women’s career decisions and the careers advice they receive, the sectors within which they predominantly work and their subsequent career progression within those sectors. It is not about discriminatory pay decisions.

The aim of the new reporting requirements seems to be to shine a light on each organisation’s pay gap and, by implication, the gender make-up of its workforce. However, the reporting and analysis that results will only be useful and effective in challenging organisations if there is a sufficient level of meaningful data reported.  Reporting on pay alone may not make any difference if it focuses on the symptoms but not the cause.

King’s College economics professor Baroness Alison Wolf is reported to have responded to the proposals with the view that forcing companies to publish pay statistics “will do nothing whatsoever about the things that are really a problem for poorly paid women and which have nothing to do with wide spread overt pay discrimination, for which there is no evidence at all any more anyway”. She described Prime Minister David Cameron’s high profiled support for these provisions as “gesture politics”.

So, will the proposed reporting provisions be effective in tackling the real issues behind gender inequality at work, however they are implemented?

  31 Jul 2015 (partner at law firm Fox Williams) Personnel Management Magazine