by Rebecca Hilsenrath
Published: 28 Mar 2019
With one week to go until all employers with more than 250 staff report their gender pay gap for the second time, you’ve probably seen stories about this year’s risers and fallers, how effective reporting is, and how long it will take before the national overall gap begins to shrink.
As the enforcer of the gender pay gap regulations, we have a unique perspective on what the data says about workplace inequalities in Britain today.
The story so far
Thanks to our enforcement and communications work, alongside government, all 10,500 or so eligible employers reported their gender pay gaps for the first time last year.
It’s now the case that an organisation’s pay gap is available to all at the click of a button.
The national conversation has meant that awareness of the gender pay gap is at an all-time high, with employees, politicians, investors and the media all piling pressure on employers to reduce their gaps.
What are the predictions for year 2?
Whilst there may have been expectations that gaps will have narrowed this year, early indications show that the gap for some employers has actually worsened.
Of course the aim of reporting is to reduce any inequalities, so that women have the same opportunities for promotion and reward as men.
But this was never going to happen instantly.
There may be legitimate reasons why a gap increases temporarily while an organisation tackles the long-standing and deep-rooted causes of inequality.
For example, an employer may recruit more women into junior graduate positions, briefly widening their gap by having more young women in lower-paid roles before they can move into more senior positions.
Similarly, an employer rapidly reducing its pay gap could conceal ineffective ‘quick fixes’, such as a company outsourcing lower-paid roles in which women still predominate (such as cleaning) or excluding high-paid male partners from its reporting.
That’s why it’s crucial that employers identify the real reasons behind their pay gaps, and commit to concrete action to close them. Only then will we see real and sustainable progress in workplace equality for women.
When will we see change?
Currently, employers aren’t legally required to create specific, measureable and timebound action plans to reduce their pay gaps.
Unfortunately, despite the scrutiny provided by reporting, our research has shown that very few employers have so far committed to specific measures to reduce their gaps and to set deadlines for making progress.
That’s why we’ve been calling for the publication of action plans to be made mandatory for all employers, to ensure the regulations lead to real change.
What sanctions will employers face?
Where employers fail to report or comply with the reporting standards, we won’t hesitate to use our legal powers against them.
So far, the good news has been that simply initiating enforcement proceedings has been enough to ensure compliance and we haven’t had to take any costly and prolonged action.
All employers reported their pay gaps in the first year, and we followed up with those whose data appeared questionable, in order to verify the accuracy of their figures and ensure they rectified any errors.
The bad news for a truly uncooperative employer could be a conviction and unlimited fine, but our experience has generally been that employers seek to comply with the regulations.
And it is, of course, the right thing to do as well as the law.
I’ve always hoped this resonated with every CEO who has a daughter, a wife, a sister, not to mention what they owe the women who work for them.
Employers that don’t take the issue seriously are already facing consequences in terms of both their reputation and also employee engagement.
Our research has shown that an organisation’s pay gap affects both female and male staff’s commitment, motivation and career decisions, and so will impact their ability to attract and retain top talent.
So there are clear incentives for employers to take action.
Even then, simply reporting data on its own will only ever have a limited effect.
We’ve always been very clear that reporting is only the first step and without accompanying action from employers, pay gaps will remain unchanged.
It’s up to employers to act and if this isn’t forthcoming, publishing action plans and narratives must be made mandatory to make them do so.
Only then will we see the change we want in making workplaces fair for everyone, and for everyone’s daughters.