Gender pay gaps favouring men must be closed, report says

Gender pay gaps favouring men must be closed, report says

The House of Commons Business, Energy and Industrial Strategy Committee has published its gender pay gap report, Gender pay gap reporting, in which the Committee focuses on the adequacy and effectiveness of the gender pay gap reporting requirements introduced by the government with effect from April 2018. It also considers the measures that businesses need to take in order to reduce and eliminate this gap.

The report is the first publication of the Committee's inquiry, Corporate Governance: Delivering on fair pay, which was launched in March 2018. The Committee’s report identifies the UK as having one of the highest gender pay gaps in Europe.

As a first step to reduce the gender pay gap, the report suggests that more companies should be required to report on their gender pay gap, why it exists and on what they are doing to close it.

The report conveys the Committee’s view that by widening the gender pay gap reporting obligation, businesses will be required to take responsibility for the impact of their own policies, practices and culture, thereby giving businesses an obligation, not just to reflect change, but to drive it.

What the report shows

The gender pay gap reporting requirements were introduced by the Equality Act 2010 (EqA 2010). Under EqA 2010, all public and private sector organisations with more than 250 employees must report their gender pay gap statistics on an annual basis. Public sector organisations were first required to report on 30 March 2018 and private sector organisations were first required to report on 4 April 2018.

Organisations are required to publish their statistics and upload them on to a dedicated and searchable government website. Currently, only around half the UK workforce are expected to be covered by the present reporting requirements.

The report notes that while the median gender pay gap across the economy is 18% in favour of men at organisational level, new figures reveal that gender pay gaps of more than 40% are not uncommon in some sectors and that 78% of organisations report gender pay gaps in favour of men.

The report finds that, of the employers analysed, 1,377 (13% of the total) have gender pay gaps in favour of men of more than 30%.

The report also highlights a range of initiatives that have been used, with differing levels of success, to enable women to make the fullest possible contribution in the workplace and to be rewarded accordingly.

Committee’s recommendations

With evidence showing that the gender pay gap is higher in smaller businesses, the report calls on the government to widen the net of organisations required to publish gender pay gap data to those with over 50 employees (currently, it catches those with over 250).

It recommends that organisations should be required to publish, alongside the figures, an explanation of any gender pay gap and an action plan for closing the gap. It suggests they should then report progress against this action each year, as part of their normal reporting requirements.

It also calls for clarification of the way in which the remuneration of equity partners is included in the gender pay figures, before the 2019 figures are published. The report notes that the exclusion of the highest paid people in organisations made ‘a nonsense of efforts to understand the scale of, and reasons behind’ the gender pay gap and that the government was wrong to omit the remuneration of partners from the figures required by law.

‘A monstrous injustice’

Committee chair Rachel Reeves MP said, ‘Gender pay reporting has helped to shine a light on how men dominate the highest paid sectors of the economy and the highest paid occupations within each sector. Our analysis found some companies have obscene and entirely unacceptable gender pay gaps of more than 40%.

Transparency on gender pay can only be the first step. The gender pay gap must be closed, not only in the interests of fairness and promoting diversity at the highest levels of our business community, but also to improve the country’s economic performance and end a monstrous injustice.’

Source: Report: Gender pay gap reporting

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