Earlier this month David Cameron set out plans to force large firms to reveal data on the gender pay among their staff. Here Jill Rubery explores the possibilities and pitfalls of the policy.
The rather surprising conversion of the Cameron government to the need for large organisations to conduct and publish equal pay audits has generate renewed interest in the vexed question of how to reduce the persistent gender pay gap. Gender pay audits have been at the forefront of demands for tackling unequal pay for some years with proposals for compulsory compliance constantly watered down into voluntary plans. Now that compulsory audits are likely to happen there is the major question whether this u-turn will have any real impact. If not these audits may quickly be consigned to the rubbish bin of unnecessary red tape along with the gender auditing of government policy that Cameron happily jettisoned in his first term as prime minister. Failure would therefore set back the campaign to do anything sensible about the gender pay gap.
So as someone who has never been convinced that prioritising gender pay audits was the right way to go, I now find myself concerned to make certain it delivers some tangible long term benefits. To be clear I certainly think compulsory gender pay audits are a useful tool within a wider set of measures to reduce gender pay inequality. Above all else they could signify a move to increased transparency over who is paid what within organisations. The trend towards individualised pay and the collapse of collective bargaining fixing detailed wage structures has markedly reduced information on actual pay practices. Without knowledge, injustices do not come to light and organisations have carte blanche to fix pay without any need to justify their practices. Scrutiny from the outside could make those setting pay think twice and wonder what the impact of wide gender pay gaps will have on their external brand and on internal motivation and morale. It could even start to change social norms and make it acceptable to talk about pay. While pay remains a private matter there is little chance of reducing inequalities, let alone the gender pay gap.
So what are the risks? The first is that internal organisation-specific pay audits divert attention from the main causes of the gender pay gap, namely the concentration of women in low paying sectors and organisations. We could have full gender equality within all organisations but still a large aggregate gender pay gap if women are more concentrated in lower organisations. The problem is not that male care workers get paid more than women but that all care workers are underpaid. Raising the national minimum wage will help- except in the case of social care no extra money is being provided in care budgets so it may just lead to more time pressures and less care.
The second risk is that gender pay audits will not reveal anything of interest. If all we get is an aggregate gender pay gap then organisations may find it easy to claim that this is because men and women are currently doing different jobs without providing any detailed data to support it. Even worse some may exclude part-timers on the grounds they are different from full-timers – if they remain ignorant of the EU’s part-time workers’ directive requiring equal treatment in pay . Even worse they may provide separate pay gaps for full-timers and part-timers, as is common practice even in official statistics. It is really no comfort that women part-timers earn more than male part-timers when we know that part-time work accounts for 44% of women’s employment compared to 13% of male employment. The gap with male full-time pay widens from 9.4% for full-timers to 19.15% for full-timers and part-timers combined. Even the apparently narrow gender pay gaps for full-timers are not cause for hope: female full-timers are rather a select bunch, much higher educated on average than male full-timers so the gender pay gap for full-timers in a gender equal world should reveal a positive premium for women not a negative one.
So if the gender audit is to be meaningful what do we actually need to know? What is important is how organisational pay practices contribute to the gender pay gap. For example, how common is it for men recruited in the same job to receive a higher starting salary; do women receive the same pay rises and bonuses as men once in post; and what are the differences in basic pay and in extra pay such as bonuses between departments and grades where men are mainly found and those where women are mainly found? Some of these differences may be considered ‘justifiable’ but without the information no-one knows. This is all complex stuff and has not necessarily been recorded let alone analysed by organisations. But a pay audit must mean what is says on the tin-an examination and scrutiny of the pay structure not simply a reporting of outcome averages. We can debate how much should be in the wider public domain but if those audits are to change the culture towards transparency the audits themselves need to be transparent, at the very least to those most closely involved – the current employees of the organisation.