FAIR PAY IN THE UK
The Equality Act requires companies with over 250 staff to publish their gender pay gaps. Ever since its enactment in 2017, there has been a flurry of reactions: What does gender pay gap reporting actually mean? How does it help companies reduce their pay gaps? And, the ever-present elephant in the room, what will generally happen with this issue following Brexit?
This article was published on FPI – the Fair Pay Innovation Lab in September 2019.
In good company
The UK has taken its place among the esteemed ranks of Iceland, France and Norway in their codification of pay transparency. Embracing radical transparency is no small feat for a country known for valuing privacy and discretion so highly. Indeed, the same nation that sets standards for hedge height in order to protect the sanctity of individuals’ back gardens has also committed itself to laying pay structures bare for all to see. So while an Englishman’s home may remain his castle, the workplace is becoming more and more unequivocally open.
The goliath 2010 Equality Act brings together no fewer than 116 different pieces of legislation protecting women and other groups from discrimination on the basis of age, race, disability, and other factors. Among those statutes are two sets of regulations that require both private and voluntary-sector organizations as well as public bodies in England, Wales, and Scotland to publish data on their gender pay gaps if they have 250 or more employees. Companies are given the freedom to choose the means by which to analyze their gender pay gaps, and can select whichever tool best suits them from a number of software options such as Gapsquare. They then produce a written statement confirming the accuracy of the calculations, signed by a senior manager, along with a narrative explaining why the gap exists and how the company intends to close it.
This final step allows firms to reflect on their pay structures, their hiring habits, or other contributors to their particular pay gap, thereby giving them the chance to take ownership over its correction. Also, firms are in control of how that information is individually portrayed – the only stipulation is that it must be accessible somewhere on their own websites. The data is also compiled on a government website available to all.
At first glance, the gender pay gap seems to be closing, and particularly among young people. Among full-time employees between 18 and 39 years old, the gap is close to zero. Zoom out a little to include all employees, regardless of age, however, and the rate is at 18%, two whole percentage points higher than the EU average. This disparity doesn’t only correspond to the inclusion of a wider spectrum of ages, but also to the over-representation of women in part-time work, which tends to be lower paid. Indeed, the average hourly rate for full-time employees is five pounds higher than that of part-time workers.
And just like the UK’s Nordic and European neighbors, occupational segregation appears to be the reason that the gender pay gap in certain fields of labor continues to be so intractable. The Office for National Statistics reports that the gap is at its widest in skilled trades and the smallest in sales and customer service. See how your occupation fares here.
Equality means business
Despite some cynicism surrounding a lack of sanctions, the Equality and Human Rights Commission (EHRC), the body responsible for enforcing gender pay gap reporting rules, cleaned up shop, taking 100 employers to task for submitting rather suspicious-looking data. It also sent letters to 1,456 companies in April 2018 and 47 in May 2019 (both dates past the respective reporting deadlines), to demand the required data. They have also published the names of those 47 organizations who’ve still failed to submit their pay gap information, much like the “naming and shaming” of the French model.
Gender pay gap reporting has opened new opportunities for companies to be able to correct other discriminatory practices as well. The Department for Business, Energy, and Industrial Strategy and the Race Disparity Unit are carrying out consultations on ethnicity pay reporting by employers. A parallel set of reporting for ethnicity gaps will allow commercial enterprises of all kinds to fully commit to radical transparency. This in turn will enable them to design a fair pay strategy tailored to their particular needs, thereby making them more attractive employers and businesses.
Life after Brexit
As October looms on the horizon, some have expressed the fear that the progress already made will be lost in the scramble. As businesses will have to face questions of how, with whom, and where they will operate after the borders are closed, pay equity may fall by the wayside.
But there is reason to be optimistic. For one thing, the majority of entities narrowed their gender pay gaps between the 2017/18 and 2018/19 reporting periods. And even those who didn’t still have opportunity to make a public commitment to fair pay. The BBC, for example, has published a report on how to achieve a proportion of 50:50 throughout its company and has reduced its gender pay gap by 1/5th over the past year. These activities came in the wake of an investigation led by the EHRC after it was revealed just how many women were underpaid compared to their male counterparts. At the Guardian, meanwhile, the pay gap has fallen to just 4.9% from 8.4% in just one year. But the real winner is Marriott Hotels Limited, whose hourly wage gap is precisely 1.1%. This just proves once more that fair pay could be achieved overnight, provided the desire exists. Perhaps Ryan Air and Easy Jet would do well to learn from their peers in the media and hospitality.
Lastly, there is hope to be found in the fact that the Equality Act has sparked a national discussion on wage justice. There is certainly no dearth of articles, instructional materials, op-eds, and other media surrounding not only the pay gap reporting itself, but fair pay in general. It’s no mistake that the Government Equalities Office chose the tagline, “Gender pay gap: Closing it together.” For it’s only through the exchange of best practices that businesses will find strategies to get themselves to Planet Fair. And the UK may need to get there now more than ever!
HENRIKE VON PLATEN,
Henrike von Platen is an expert in finance and business information systems and administration. Henrike founded the FPI to better support companies in the practical implementation of sustainable pay strategies. Her goal is pay equity for all, and preferably within her lifetime.
Henrike von Platen is also a specialist in economic development and location optimization. She is a member of the university council at Hochschule München (the Munich University of Applied Sciences), and belongs to a specialized group of certified supervisory board members at AdAR, the supervisory board’s working party.
Henrike von Platen believes that women and money belong together. She is convinced that pay equity could be possible tomorrow. A passionate paraglider, she knows that if you want to fly, you can.