Monday, 24 April 2017

U.K. Firms Ready Themselves to Reveal Gender Pay Gaps: A Private Or Public Solution?

Today’s post focuses upon the upcoming raft of company disclosures in the U.K. that will detail the differences between what Men and Women are paid. The first companies to reveal their internal statistics include Virgin Money, Schroders, and Utilities company SSE, with the headline figure being that one of the companies, Virgin Money, has pay gaps of an extraordinary 36%, which is roughly twice the national average. In this post, then, we will look at the disclosures that are forthcoming and assess whether the actual task of forcing companies to reveal the gender pay-gaps is even something we should be insisting upon, or whether there is more to be done on a much bigger scale – there is clearly much that needs to be done, but the question remains of how it should be done to eradicate the pay-gap once and for all.

The new regulations, which will be monitored by the Equality and Human Rights Commission, are aimed at all companies in England (and also public bodies) that employ more than 250 people. The aim of the regulations is to enforce the disclosure of how companies pay men and women, with it being expected that 9,000 companies employing more than 15 million people will disclose this information, representing half of the workforce in the U.K. Even though it has been technically illegal to pay men and women different amounts for the same position for over 45 years with the enactment of the Equal Pay Act 1970, which was more recently amended and superseded by the relevant parts (s. 64-71) of the Equality Act 2010, the gender pay-gap still stands at 18%. The companies who have declared so far have revealed somewhat alarming figures, with Virgin Money being the headline company in this regard. The bank revealed that men who work at the company earn, on average, more than 36% than women do, and at the asset management firm Schroders, the difference is 31%. PricewaterhouseCoopers found a 15% difference, whilst SSE reported a 23.4% gap in their pay rates. Onlookers have been keen to point to the mitigating factors however, like the issue that statistics (as if often the case) may not represent the true picture. For example, the national pay gap of 18% does not, according to The Independent, take into account the fact that men hold a larger proportion of senior and high paying roles, whereas women hold a majority of the lowest-paying jobs, with these statistics that were sourced from the Confederation of British Industry (CBI) supplementing the view that ‘the way men and women are segregated into different job functions is the biggest driver of the gender wage gap’ – when these factors are taken into account, it has been stated that the actual national pay-gap is around 5.5%. The results, and the push to declare such data moreover, has elicited a varied response.

Virgin Money’s ‘People Director’ Matt Elliot is quoted as saying that as the firm had too few women in senior roles, with men making up 67% of the highest paid positions as opposed to just 26% of the lowest-paid, there is a need ‘to make consumer-service roles more attractive to men’. SSE found that 34% of men in its company received a bonus, compared to just 12% of women, and when paid the bonuses were, on average, 32% larger for men. As for the issues of bonus rates, it is hard to justify such a chasm – the fact that the firm chose to blame a gender gap in science and technology education is telling. With regards to Elliot’s comment, it seems almost remarkable to suggest that the way the company should deal with a lack of female representation is to encourage men to take lower paying jobs, rather than anything to do with the firm’s recruitment procedures. On this point, the CBI raises a point in which it states, via a report by a partner at law firm CMS, ‘if employers are not responsible for all the problems, they cannot be held accountable for all the solutions’, adding that more affordable child care and better education for women would bring women’s pay in line with men. Whilst it does remove the burden from business, it does raise an interesting point regarding the systematic assistance in this area, which a columnist in The Telegraph agrees with then they state that ‘childcare in London can easily cost £25,000 per year. For all but the super-rich, this is simply unworkable’, which is capsulated by the headline ‘the gender pay gap is about motherhood. Everything else is just noise’. The role of the government, therefore, can be seen as crucial in this area.

In terms of pure statistics, the data between this country and others shows the need for action by the state. In the U.K., it has been found that many parents are spending more on childcare than they do on their mortgage, with average fees for one child in part-time nursery and another in an after-school club costing £7,549 a year. Statistics from around Europe paint a rosier picture, but there are caveats to each statistic, with the examples of Finland being cited as needing to be understood in terms of the high tax rate, and Sweden as needing to be understood in the societal effects of the lack of ‘stay at home mums’, to quote an ‘expert’. Nicky Morgan, the Education (and Equalities) Secretary, noted the actions of the government, while maintaining that this issue is a problem for business to resolve: ‘the job won’t be complete until we see the talents of women and men recognised equally and fairly in every workplace. That why I am announcing a raft of measures to support women in their careers, from the classroom to the boardroom… at the same time, I’m calling on women across Britain to use their position as employees and consumers to demand more from business’. This has been supported by a partner at Allen & Overy, who suggests that ‘the gender pay provisions are likely to do more for pay parity in five years than equal pay legislation has done in 45 years’, with the abiding hope that firms that reveal and act upon the data in a positive manner ‘will have an advantage both with investors and in recruiting’. However, is this pro-market sentiment appropriate for this sector, and does the sentiment being offered by the market and the Government do enough?

Ultimately, the answer has to be ‘no’ on both accounts. Firstly, the sentiment does not go even nearly far enough because it focuses on the difference between men and women; what about the divergence between women, if we focus on women just for one moment, from different backgrounds? Does that not matter? Research recently found that the difference between Pakistani and Bangladeshi women and white women was 26%, whilst black African women earned only 80% as much as their white male counterparts, with the divergence between a disabled woman and non-disabled woman being 22%. These factors, and the official ignorance, or perhaps denial, of them means that the pro-market sentiment is particularly inappropriate. Yes, businesses need to do an awful lot more, but urging women to act with their custom is hardly an effective method of changing this socially-ingrained problem. The fact that 82% of firms, based upon a survey of 145 employers, were not even reviewing their pay practices in light of the new regulation, speaks volumes. The pro-market stance of the current government is clear to see, and it is continuing to affect our societal values. Businesses are at once being put under pressure to perform ‘for the good of the economy’, but also being tasked with altering deep-rooted social norms. The government, who are elected to take such action, are claiming that business should do it. The result? The result is simple – the buck is being passed. Women are not being supported by the state to compete at the upper echelons of the workplace, and are not being supported by the institutions that they work for; obviously something needs to change but the question is who will initiate that change and carry the torch for this societal need? According to the above, it is women who will have to do it by being conscientious with where they spend their money; that statement is indicative of a dire state of affairs in this supposedly ‘modern’ society.

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