More than forty years after the Equal Pay Act the gender pay gap for senior women over 40 is now 35%. Data published today by the Chartered Management Institute (CMI) makes depressing reading, especially when, at the current rate of ‘progress’, the gap will take another 80 years to close. Among company directors, men are taking home on average £21k more each year than their female counterparts and the average annual bonus paid to men is just over £53k compared with just under £49k for women.
The causes of the gender pay gap have been studied extensively. A range of factors are frequently shown to have strong explanatory power, including occupational segregation (and a lower societal value placed on so-called ‘women’s work’), the impact of part-time working both on pay itself and the life-time accumulation of ‘human capital’, and the effects of both direct and indirect discrimination. The analysis conducted by my colleague Prof Sylvia Walby at Lancaster University and Dr Wendy Olsen (now at Manchester University) for the Equal Opportunities Commission in 2004 remains one of the most authoritative. Their analysis of data shows that for each year of full-time education, hourly wages increase by 6%. For each year of full-time employment, hourly wages increase by 3%. However, for each year of part-time employment, hourly wages decrease by 1% (in addition to missing out on the 3% gain that each year of working full-time brings) and for each year of interruptions to employment for childcare and family care work, hourly wages decrease by 1% (again, in addition to missing out on the 3% gain from each year of full-time employment). Cumulatively, over a career, these disadvantages are hard to overcome for many women – even those who attain high levels of seniority. And this is before direct and indirect discrimination is factored in.
Three years ago the government launched its Think, Act, Report framework. It was ‘business-led’ and was intended to challenge the gender pay gap by encouraging firms to publish data on pay differentials by gender. The idea was that a voluntary scheme within which businesses pledged to be transparent would begin to erode the differences without the need to resort to regulation. Earlier this month, it was revealed that 200 firms have signed up to the initiative but that only four have provided data on the gender pay gap.
Of course, it would be great to think that businesses could be mobilised to act on the gender pay gap through voluntary action. Sadly, it would also be futile & naïve. The government has decided that it prefers voluntarism to the enforcement of section 78 of the 2010 Equalities Act which requires employers with over 250 staff to measure and publish data on their gender pay gap. In June it closed yet another consultation on Equal Pay audits, and later this year is expected to make it mandatory for firms who lose employment tribunals on the grounds of gender discrimination to conduct an equal pay audit. Given that it is now more expensive for an employee to take out a tribunal claim, and only employers who are proven to be discriminatory will have to conduct an audit, it feels like the government regards them more as a punishment rather than a preventative tool to support good practice.
In the light of today’s CMI report it’s hard to resist the conclusion that equal pay audits should now become mandatory and that we take urgent steps to erode a gender pay gap which, despite all the best intentions of the original Equal Pay Act, remains a national embarrassment which we seem determined to avoid tackling.
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