Mon 28 Jan 2019

Pay Gap Reporting - how far should it go?

This time last year it seemed that the requirement to report on gender pay gaps looked a bit like it might be falling flat.  Even a month before the deadline only about 15% of those required to report had done so and the powers available to the Equality and Human Rights Commission ("EHRC") to deal with employers who did not comply seemed fairly toothless.  However, with a last minute rush - 94% of those required to do so reported on time and all those who should have reported had done so by 1 August 2018.

This was followed up by a survey commissioned by the ECHR that found that over 60% of women working in firms with a larger pay gap said they were likely to apply for a job with an employer with a lower pay gap, and that 56% of women said that working in an organisation with a gender pay gap would reduce how motivated they felt in their role - not surprising when the pay gap is considered to be a good indicator of inequality in access to work, progression and rewards within an organisation. 

While these figures are open to criticism in terms of how accurately they have been reported it is clear that gender pay gap reporting has had an impact at a practical level - if employers want to attract and retain as wide a range of potential talent as possible then pay gaps need to be addressed. 

The success of gender pay gap reporting has also opened a door to broader discussions - initially about the ethnicity pay gap.  A government consultation on the ethnicity pay gap closed recently and it is likely to be only a matter of time before ethnicity pay gap reporting becomes mandatory.

But is it fair to stop there? 

There have been complaints about the "age pay gap" although there seems little appetite to pursue that further at the moment.  However, in August 2018 the ECHR published a report - Measuring and reporting on disability and ethnicity pay gaps - which in addition to the ethnicity pay gap also looked at the disability pay gap.  So far the statistics on both of these have tended to be based on a very basic measure of the problem - ethnic minority pay as a percentage of the pay of white employees which hides the spread of pay differential between different ethnicities when compared to the pay of white employees; and the pay of disabled employees versus non disabled employees which again hides broader differences in pay dependant upon the type of disability.  This is something which the 2016 ECHR report Fair opportunities for all; A strategy to reduce pay gaps in Britain acknowledged when finding the ethnicity pay gap to be 5.7% and the disability pay gap to be 13.6%. 

Based on these figures it seems that the argument for disability pay gap reporting is just as compelling as it is for gender and ethnicity pay gap reporting.  Some employers already gather data on a voluntary basis but the "Measuring and reporting on disability and ethnicity pay gaps" report highlights a real need for support and guidance for employers on collecting and analysing the data in a way that would allow employers to understand the inequalities faced by people with disabilities and those from ethnic minority backgrounds. 

Of course, the real test of success of the gender pay gap reporting requirements (and an indicator as to whether any other reporting requirements are likely to be effective) can't be measured by the publicity surrounding it, rather it needs to be measured against whether organisations have taken effective steps to close the gap.  There is room for some cynicism about this.  A summary of the data reported covering the year 2017/18 which was published in October 2018 by the Government Equalities Office ("GEO") found that by May 2018 only 48% of employers had published an action plan outlining how they intended to tackle their gender pay gap. 


In December 2018, the EHRC published Closing the gender pay gap which encouraged employers to publish narrative reports both explaining the reason for their organisations pay gap and providing a "time bound and target driven action plan" to address the problem.  Similar to the figures found by the GEO, only half of the sample of employers used by the ECHR had produced a narrative, only one in five had produced an identifiable action plan to address the problem, and only 11% had set themselves targets that would enable them to progress their plans year on year. 

Realistically the figures which must be reported on by 4 April 2019 may be too early to expect to show significant improvement - after all the snapshot date for these figures was 5 April 2018 which meant employers had not had the opportunity to digest the results of the reports (nor the public reaction to them) from the previous year which had closed only the day before.  For that reason it may well be necessary to wait until 2020 to identify any real change (or at least that is likely to be the excuse relied upon by any organisations whose gap has not improved, or even widened).

Hopefully, the pay gap reporting does live up to the initial promise it has appeared to show since the first round of reports were completed, and as such ethnicity and possibly disability reporting can also be used to address these areas of inequality.  As at 25 January 2019 only 820 of the anticipated 10,500 reports for 2019 have been uploaded to the UK Government website - looks like it's going to be another last minute rush. Roll on 4 April 2019……

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