Large firms will be forced to reveal the difference between the average earnings of male and female staff from next year, a move David Cameron believes will "pressure" companies to improve women's wages. A consultation on the measure is being launched as the Government announces the target of getting women into at least a quarter of boardroom seats at the UK's biggest firms.
At present the gender pay gap stands at 19.1% -- meaning a woman, on average, earns around 80p for every £1 earned by a man. Britain suffers from the sixth-highest pay gap in the European Union. Writing in the Times, Cameron said he aimed to close the gap within a generation and said the compulsory National Living Wage for over 25s unveiled in last week's Budget would play an important part.
The prime minister wrote: "Higher pay is something we want for everyone. That is why the Chancellor announced the National Living Wage, which starts next April at £7.20 and will reach over £9 by 2020. This will primarily help women, who tend to be in lower paid jobs. It will help close the gender pay gap. But we need to go further, and that's why introducing gender pay audits is so important."
The consultation will examine exactly what, where and when firms will have to publish and when the disclosure rules -- due to be on the statute book within 12 months -- will come into force.
Minister for Women and Equalities Nicky Morgan said she was "delighted" that the 25% target for female board membership -- set in 2011 -- had been met, but said there was "no room for complacency when it comes to securing equality for women."
"That is why today, we are committing to eliminating the gender pay gap in a generation," she added. "This is not just the right thing to do, it makes good business sense: supporting women to fulfill their potential could increase the size of our economy by 35%.”
Responding to the Tories’ announcement, Gloria De Piero MP, Labour's Shadow Minister for Women and Equalities, said her party welcomes the progress companies have made "on increasing the numbers of women in non-executive positions on boards," however noted that the number of women in executive positions in the FTSE 100 "has risen by just four since 2012."
"Nicky Morgan says she's 'not a fan of targets', but it's the 25 per cent target that's driven progress on non-execs," said the shadow minister. "It's time the Government set equally ambitious targets for women in executive positions and ensured more women reach top decision-making roles."
Lib Dem former equalities minister Jo Swinson said: "Yet again the Prime Minister fails to recognise the urgency of tackling the gender pay gap. It is more than 40 years since the Equal Pay Act, so saying we can afford to wait for another generation to close it is, to put it mildly, unambitious.
Commenting on Cameron's announcement, Kate Andrews of the Adam Smith Institute said it is a “sad state of affairs when even the Prime Minister is promoting the gender pay gap myth.” Andrews noted that according to the ONS, women between the ages of 22 – 39 working more than 30 hours a week "earn, on average, more than their male counterparts.”
"Forcing business with more than 250 employees to publish their ‘pay gaps’ will only promote more myths and confusion,” she said. “There is no such thing as an ‘average salary’; education, previous experiences, negotiating tactics, and unique abilities all contribute to one’s salary, none of which can be known by comparing John and Jane’s annual take-home pay on a spread sheet.”
"FTSE 100 companies have met the proposed target for 25% female board members not because the government told them to, but because women, through their own abilities and determination, are thriving in the work place more than ever before. But leave it to the government to try to usurp their achievements," she said.