The reporting by all large companies earlier this year was clearly a useful and positive exercise in essentially forcing organisations to take strong consideration, perhaps for the first time, as to whether they had a properly balanced workforce regarding the area of pay. This exercise will continue annually with companies required to report by April, and of course there is the hope that, gradually, there will be a reduction in the number of companies that currently pay more men higher salaries than women – which currently stands at 78%.
But aside from the obvious reputational benefits of a company reducing its gender pay gap, not least because it’s the correct thing to do and creates a better, fairer workforce, there are ultimately no sanctions or admonishments for organisations who maintain a significant gender pay gap (in favour of either men or women).
In terms purely of the reporting element, I’ve put together a series of recommendations that should be considered ahead of future reporting periods, which will no doubt continue to attract significant media attention as and when they come around:
3% should be the ‘real’ target. Companies that have a gender pay gap of no more than 3%, either in favour of women or men, should essentially be seen as having ‘no Gender Pay Gap’, and that this should therefore be the benchmark for organisations to aim for. The target of ‘no Gender Pay Gap’ as a figure of 0% is in truth unrealistic, due to regular staffing changes and pay reviews. A range of plus or minus 3% represents, essentially, a gender-balanced workforce when it comes to pay, in the same way that ‘full employment’ doesn’t technically mean every single person is in a job. Firms that are already within this range are the benchmark for all other organisations to aspire to, and need simply to continue what they have already started.
Some firms may need to increase their gender pay gap in the short-term. This is because firms who have a huge gender imbalance of workers may need to hire more women, often towards the start of their career (where there is most likely to be space within the company), and thus on lower wages and therefore pushing up the gender pay gap in their organisation. This should, over time, be balanced out for the better as some of these women rise through the company ranks. It is a sacrifice worth making, despite the obvious reputational benefits in lowering the pay gap in the short term.
The reporting threshold should be extended. Firms with 50 or more employees – not just those with 250 or more as currently required – should be required to publish their gender pay gaps. 99% of British businesses employ less than 250 people, and therefore even greater achievements with regards to reducing the gender pay gap could be made by expanding the number of firms that need to report, with a little over 10,000 reporting in 2017-18.
In March 2014, the European Commission introduced a recommendation suggesting every member should require company level Gender Pay report for companies with more than 50 employees. While this needs to be considered in line with the administrative burden this would place on smaller companies, it’s notable that the Fawcett Society, 30% Club and indeed BEIS has agreed with this recommendation.
The new reporting requirements are a good start, but could go deeper, and indeed sanctions for firms that fail to act should be clearer than simply relying on public stigma. There is some much-needed light being shone on the fact that most companies employ more men in senior roles than women, but more needs to be done to ensure the reports are genuinely useful and lead to cultural change.
In November 2017 Informi, which works to provide small businesses with advice and information as to how to grow their business, produced a report that showed the gender pay gap across a range of industries predominantly made up of small businesses stood at 13%. On a similar vein, AAT held a roundtable in October 2017, publishing a series of recommendations outside of reporting where employers and employees could work together to tackle the gender pay gap.