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David Cameron’s equal pay action is a welcome surprise – but it won’t close the gap

My pay’s bigger than your pay. from

David Cameron caught some by surprise when he announced a new consultation by the government equalities office aimed at “closing the gender pay gap”. Although the Conservative party’s 2015 election manifesto included a pledge to “achieve full gender equality”, many of the proposals under this heading looked more like vague promises than explicit commitments to action.

The Conservative approach to change in the workplace has typically been to encourage companies through voluntary measures. This was exemplified by the coalition government’s objective to increase the proportion of women in the boardroom. In contrast, these new commitments will require companies with over 250 employees to publish the pay rates of the men and women they employ. This may herald a recognition of the fact that that encouragement alone may not effect change, and a tougher approach to employer foot-dragging.

Time for transparency

The UK currently has the sixth largest gender pay gap in the EU. Although it has fallen in recent years, much of this change is due to a worsening of men’s pay, rather than an improvement in women’s. As the prime minister acknowledged in his press statement, tackling the gender pay gap will take a lot more than getting better data at company level.

For one thing, the proposals concern only bigger companies which form a minority (considerably less than 1%) of British businesses. Many of the private-sector companies in those sectors which employ a high proportion of women, and tend to pay lower-than-average wages – such as retail, catering, and care activities – will be excluded from the scope of the initiative. There is also evidence that bigger companies tend to have smaller gender pay gaps than smaller businesses within the same sector. Nevertheless, bigger companies employ a substantial proportion of the workforce (around 40%) and have the capacity to set wider standards about workplace practice. Moreover, the data obtained from these companies has the potential to inform future policy and equality group campaigns.

The public respond to Cameron’s announcement.

Pay transparency can contribute to this agenda of change. Predictably, the CBI and other business organisations have been quick to argue that any statutory requirement to provide gender pay data will increase administrative costs. But governments in many other European countries have found ways to provide online data support tools to make this exercise easier for companies, as well as ensuring that the data collected can be easily tracked and benchmarked. Allowing companies too much flexibility in how they provide the data would create such confusion as to render the entire exercise meaningless.

The Danish example

In Denmark, it has been mandatory since 2006 for companies with more than 35 employees (where at least ten are men and at least ten are women, to allow comparison) to publish annual gender pay statistics. But even where the national statistics agency has provided strong data management support, there have been big gaps in reporting and follow-up. The Danish example demonstrates the importance of ensuring that employee workplace representatives not only have full access to the pay data, but also receive support and training to help them understand and deal with it. It also shows that governments need to monitor reporting very closely, to ensure that companies are aware of their responsibilities and have access to appropriate statistical tools. Finding ways of spreading “good practice” to address identified pay gaps will be another challenge for the government in the future.

Whether this initiative represents more than a gimmicky act of “political cross-dressing”, as some newspapers have suggested, or signals the start of a more serious attempt to tackle under-investment in pay and productivity by British companies, will become clear throughout the current consultation. But one thing’s for sure: it will take more than this initiative to eliminate the gender pay gap. This task will require a multi-pronged, long-term agenda of change, which includes investment in childcare (which continues to be costed out of the reach of many families), efforts in education to tackle gender stereotyping, initiatives to improve the quality of part-time work, as well as moves to share leave entitlement more equally between men and women.

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