17/07/2015 12:09 BST | Updated 17/07/2016 06:59 BST

How Should the Pay Gap Be Published?

It is reported that David Cameron is planning to enforce the publication of average male and female pay for firms with over 250 employees. To increase accountability and to enable government to monitor the effect of their policy, this pay gap should be published as open data.

Getting organisations to publish information is becoming a popular form of soft regulation. The theory is that transparency encourages changes in behaviour, that sunlight is the best disinfectant.

Other examples include:

  • the number of plastic bags issued by supermarkets
  • the time it takes for large companies to pay SMEs
  • the terms and conditions associated with bank accounts

There are three ways in which this approach works:

  1. When organisations are forced to publish information, they are also forced to monitor that information. Monitoring can provide feedback to the organisation about the efficacy of their policies, leading to them changing their behaviour.
  2. Interested third parties -- such as the media, pressure groups or even the organisation's own employees -- can monitor the published information and create campaigns around the best practitioners and worst offenders. This leads to pressure on organisations to change their ways.
  3. The government can better monitor the overall behaviour of all relevant organisations, to ensure that the data is being published, but also to track the effectiveness of their policy. If publication leads to little change, they can put in place firmer regulation.
The second and third of these mechanisms rely on easy access and manipulation of data. To illustrate the issue, we need only look at the existing publication of information about the pay gap between men and women. The pay gap is already published voluntarily by five companies, but exactly what is measured and how it is provided varies:

  • Tesco publishes a single "percentage pay gap between male and female colleagues" for each year, within a web page
  • Friends Life publishes a "gender pay differential" for each pay grade within a table in their Corporate Responsibility reports, in PDF
  • PwC publishes a "single figure gender pay gap" within the text of their Transparency Report, in PDF
  • AstraZeneca reportedly publishes their pay gap, but I couldn't find it
  • Genesis publishes a "pay equality audit", which gives the percentage of women at each pay quintile within the company, within a table in a web page

A policy that allows organisations to publish their figures embedded within annual report PDF documents means that it takes a lot of work for third parties or the government to harvest data from across multiple organisations. There are over 9000 businesses employing over 250 people: accessing each business' website to find information about their pay gap would be a massive task, both in locating the data and in turning it into something comparable.

To make soft regulation through the publication of information effective, organisations must publish data in a machine-readable format and under an open licence that enables anyone to reuse the data. In other words, they must publish it as open data. At the Open Data Institute we favour an approach where the government, regulator or other central authority:

  • designs a standard data format for publishing the relevant data
  • provides documentation and support to help organisations publish in that format and under an open licence
  • makes available validation and visualisation tools that help organisations to check that they've published the data correctly
  • specifies a method for organisations to publish data at a standard location so that it can be found by automated tools
  • harvests data from organisations and makes it accessible through a central publication hub

Ensuring that organisations publish data and not just information requires a little extra work up-front, by both government and the organisations themselves. But this results in data that can be analysed, visualised, monitored, compared and reused, dramatically increasing the utility of the published information.

Open data, which everyone can access, use and share, enables us to go beyond simple transparency. It enables us to hold organisations to account. It enables us to monitor the effectiveness of the policy. And it increases the impact that these policies are designed to have, such as diminishing the pay gap between men and women.