Mind the gap

The 29th May 2010 marked the 40th anniversary of the Equal Pay Act. Hailed as groundbreaking legislation in 1970, the Act enshrines the right of women, and men, to equal pay for equal work, acknowledging the imperative to remedy what was then, for the Dagenham machinists, a 15 per cent pay gap between women and men.

Equal pay for work of equal value – regardless of gender – is the longstanding signifier issue for women’s equality. Celebrations of the 40th anniversary of the Equal Pay Act are marred by slow progress to remedy a now stagnant gender pay gap.

Today the pay gap stands strong at 16.4 per cent between women and men for full-time work, rising to 35 per cent for part-time work, and to an astonishing 55 per cent for women working in the financial-services industry. Can we afford to tolerate the implication that in the twenty-first century women are worth less than half the value of their male counterparts?

Within weeks of assuming her role as Home Secretary and Minister for Women and Equality in May, Theresa May stood firm on the UK coalition government’s commitment to progressing equal pay. However, that government has been non-committal about the likely route of action that will be taken to tackle the gender pay gap. Fawcett proposes a radical transformation in the UK approach to pay. Transfer the onus from the individual onto the employer, with full pay audits, and in so doing equip employers with the tools to realise equal pay, driving forward a positive future for women’s equality in the UK workplace.

Mapping it out

As we continue to explore new legislative avenues to tackle the pay gap the Fawcett Society held a landmark conference on the 40th anniversary of the Equal Pay Act in partnership with the TUC, the Equality and Human Rights Commission (EHRC) and Unison. The conference convened key stakeholders from the equalities movement, the legal profession, and private and public sector employers to develop a collaborative roadmap towards realising equal pay. We discussed the legislative framework to equal pay, the business case for equal pay, the way work is organised and its impact on equal pay, as well as the attitudes that perpetuate, and have the power to affect, the gender pay gap.

Why transparency?

Why is Fawcett campaigning for increased transparency around pay? First, because transparent pay reporting is a prerequisite to unpicking the converging factors that contribute to what is now an ingrained culture of pay inequality and pay discrimination, and to developing a foolproof strategy to address those different interrelated causes of the pay gap. Transparency to build knowledge of the complexity of factors that contribute to the gap is also all the more relevant where gender meets other equality strands such as ethnicity, sexuality, disability and age.

Converging factors that contribute to the current pay gap include:

• Pay discrimination;
• Undervaluation of jobs traditionally performed by women;
• Motherhood pay penalty;
• Occupational segregation;
• Barriers to progression.

In spite of the outlawing of pay discrimination in 1970, discrimination today remains a significant contributing factor. Statistical analysis of the pay gap has revealed that direct discrimination, together with different labour market preferences and motivations (some of which will be attributable to indirect discrimination), represents 38 per cent of the gap between women and men’s pay.⁹ It is clear that we will remain ill equipped to address the widening gender pay gap without a better understanding of its causes. Transparency is key to removing misconceptions as to whether women and men are being paid equally, and ultimately, what gets measured gets done.

Moreover, increased transparency is an imperative under a legislative framework that places the onus on the individual to seek redress. The fact remains that the UK workplace plays host to a culture of secrecy around pay, which then disempowers women from seeking redress.

Tackling the taboo

The taboo associated with open discussion of pay has been perpetuated by contractual secrecy or so-called ‘gagging clauses‘ prohibiting employees from disclosing information relating to their pay and bonuses with colleagues.

Fawcett welcomes new measures in the Equality Act to prevent employers from enforcing contractual secrecy clauses on pay as acknowledgement of the imperative for transparency. This measure represents a positive step towards promoting a culture of transparency around pay and protecting employees from being penalised for discussing it. However, official policy is only half the journey. It is then for employers to challenge the culture of workplace secrecy. The realisation must dawn
that nothing short of a transformation of UK pay legislation and employer practice will achieve tangible progress towards pay equality.

The original legislation, in the form of the Equal Pay Act 1970, protects the rights of women, and men, to equal pay for equal work. While outlawing pay discrimination, the Act is weak in setting out tangible measures for the elimination of pay inequalities, however. It lacks a requirement for transparent reporting, or for concrete action on the part of employers to address pay discrepancies, with the onus on the individual employee to evidence pay discrimination in order to seek redress.

Then, in 2007, we welcomed a new generation of equality legislation in the form of the public sector duties, with the gender equality duty requiring a proactive approach to eliminating historic imbalances, including unequal pay. The duty paved the way for greater transparency across the sector, and shifted the onus onto public sector employers to identify and address pay inequalities within its workforce.

One of the first universities to undertake an equal pay audit, the University of Sunderland, embraced the opportunity, and now publishes annual reports online. The data reveals that their pay gap has decreased from 20.9 per cent in 2003, when equal pay audits were first performed, to 15 per cent in 2009. The university follows the Equal Opportunities Commission’s five-step model here, taking action on any gaps that cannot be objectively explained.¹⁰

In early 2010 the Equality Bill then gained Royal Assent. Fawcett welcomes new provisions under the Equality Act recognising the imperative for increased transparency around pay. However, the measures as they stand are unlikely to have any significant impact on pay inequalities in business and civil society.

The Act provides government with the powers to require organisations with 250 employees or more to report on pay discrimination from 2013. However, the new government has not yet committed to invoking that power in three years time, and may never do so. Even if it does however, out of the 4.7 million businesses in the UK, only 6,000 would be required to report, leaving 59 per cent of the private sector untouched by these regulations.

Meanwhile, pay reporting is already very much part of the business agenda, with many progressive UK employers already having voluntarily adopted the EOC model for full pay audits in recognition of its effectiveness, not only in exposing unequal pay in the workplace, but also in enabling employers to take action. In a 2008 EHRC survey, 94 per cent of employers who had conducted pay audits said that they would do so again.¹¹

Given that leading employers are voluntarily moving towards a full pay audit model with proven effectiveness, and that the full pay audit model used within the public sector has a demonstrable impact on addressing pay inequalities and closing the gap, why the reluctance to equip a wider spectrum of UK employers with the tools to deliver full pay audits?

Learning from international practice

As a signatory to the UN Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the UK government has a responsibility to “take all appropriate measures to eliminate discrimination against women in the field of employment in order to ensure, on a basis of equality of men and women, the same rights, in particular the right to equal remuneration, including benefits, and to equal treatment in respect of work of equal value, as well as equality of treatment in the evaluation of the quality of work”.

The UK government has already acknowledged the imperative for increased transparency around pay, and the EHRC leads on consultation to develop pay reporting metrics¹² that are workable and can be implemented to best effect. However, what can we learn from our international counterparts about what works well and what works less well in practice?

Sweden and the Canadian state of Quebec are two that notably offer inspiring ‘pay equity’ legislative frameworks.

Equal pay legislation of the type currently in place in the UK places the onus on the employee to file a complaint if they feel they are being unfairly compensated. This hampers progress, however, as it requires an aggrieved (and potentially poorly paid) individual to take on their employer in what might be costly legal proceedings in order for anything to happen. Pay equity on the other hand requires the employer to take proactive steps.

In Quebec, the pay gap closed by 2.2 per cent between 1997 and 2004. The Pay Equity Act 1996 applies to public and private sector employers alike with 10 or more employees, with obligations increasing with the size of the employer. For example, employers with 50 or more employees are required to produce pay equity plans to address pay inequalities uncovered.

In Sweden, pay equity legislation, which was first introduced in 1991, requires all organisations with 25 or more employees to carry out three yearly pay equality action plans. A review of pay audits between 2001 and 2005 reveals pay adjustments for 11 per cent of employers, and Sweden also now boasts a pay gap of just three per cent for women working in male-dominated professions - negligible in comparison with the EHRC’s recent findings of a gap of up to 55 per cent for women and men in the UK financial-services sector.¹³

Legislation in both Sweden and Quebec also stipulates how job classes are to be evaluated and defined. This is essential to ensure that women and men are paid equally, not merely for doing the same job, or jobs with the same title, but also for doing work of equal value.

However, legislation alone may not be the answer. Robust and effective mechanisms must also be in place to ensure that the legislation is enforced. It is useful here to compare the positions in both Sweden and Quebec. In the latter case reluctance from small employers to comply with pay equity legislation has been noted. In Sweden, an Equalities Ombudsman is in place demonstrating a significant investment in enforcing compliance. Quebec lacks a well-funded independent regulatory body, and in spite of the narrowing of the pay gap by 2.2 per cent, only 44 per cent of small businesses and 56 per cent of large businesses have completed pay equity plans.¹⁴

Meanwhile, in October 2009 we learnt that the UK has once again slipped down the international league table for gender equality, where countries are benchmarked for fair pay among other indicators.¹⁵ Slow progress in tackling the gender pay gap is fast becoming a thorn in our side.

In Sweden and Quebec, as well as domestically within the public sector, we have seen how increased transparency in pay reporting, combined with an onus on the employer to remedy identified pay discrepancies, can achieve impressive results. We must now acknowledge the imperative for a transformative approach, which transfers the onus from employees to employers, and compels workplaces to shine a spotlight on pay in their workforce.

A recent Fawcett poll established that 89 per cent of women and 81 per cent of men support the introduction of a legal requirement on employers to check they are paying female and male employees equally, and to take action if pay gaps are uncovered.¹⁶

References

1. Mean figure, Annual Survey of Hours and Earnings, 2009;

2. Equality and Human Rights Commission (EHRC), Financial Services
Inquiry (2009);

3. EHRC, Pay Gaps Across Equalities Areas (2008);

4. EHRC, Pay Gaps Across Equalities Areas (2008);

5. EHRC, Pay Gaps Across Equalities Areas (2008);

6. EHRC, Pay Gaps Across Equalities Areas (2008);

7. EHRC, Pay Gaps Across Equalities Areas (2008);

8. EHRC, Pay Gaps Across the Equality Strands (2009);

9. W. Olsen and S. Walby, Modelling Gender Pay Gaps, The Equal Opportunities Commission (EOC), 2004;

10. http://services.sunderland.ac.uk/hr/equalityanddiversity/equalpay/equalpayaudits;

11. Equal ay Review Survey 2008, p.41;

12. http://www.equalityhumanrights.com/fairer-britain/gender-pay-reporting;

13. http://www.sweden.se/eng/Home/Work-live/Equality/Equal-Opportunities/Closing-the-pay-gap--an-uphill-struggle/ 07/10/09; Financial Services Inquiry, EHRC, (Sep 2009);

14. Côté and Lassonde ‘Status report on pay equity in Canada’, National Association of Women and the Law, Quebec, (June 2007), p.8;

15. World Economic Forum ( from 9th position in 2006 to 15th position in 2009);

16. Ipsos MORI interviewed a representative sample of 1,055 British adults aged 16+ by telephone between 2 and 4 October 2009. The interviewees consisted of 438 men and 617 women. Data is weighted to the profile of the population.

For more information on the Fawcett Society’s work around equal pay, and to join the national campaign, visit www.fawcettsociety.org.uk.

The gender pay gap: Quick facts:

• 16.4 per cent for full-time work;¹
• 35 per cent for part-time work;
• In the financial-services sector the gender pay gap rises to three times that of the economy as a whole, at 55 per cent for full-time employees.²
• The diversity of women’s pay inequality
• All ethnic minority women experience pay gaps relative to White British men, Pakistani women can expect to be paid 26 per cent less, Black Caribbean women are paid 14 per cent less, and Chinese women nine per cent less;³
• Indian women are paid 18 per cent less than Indian men;⁴
• Disabled women have a pay gap of 22 per cent relative to non-disabled men;⁵
• Women of all religious denominations have pay gaps relative to Christian men, and
  these are highest for Sikh and Muslim women (22 per cent);⁶
• On average, disabled men can expect to be paid better, not only than disabled women, but also than non-disabled women;⁷
• Data on how lesbian and bisexual women are affected by pay is extremely scarce, as none of the UK national datasets used for pay-gap analysis identify sexual orientation;⁸
• The gender pay gap widens with age. Women’s pay falls behind in their late 30s, and from this age onwards they experience substantial pay gaps relative to prime age men (aged 40-44 years);
• UK occupational segregation by gender is significantly more pronounced than in other European countries.