Kathryn Nawrockyi, Gender Equality Director
T: 0207 5668670
Responding on behalf of Business in the Community, which is a business representative organisation. Address: 137 Shepherdess Walk, London N1 7RQ. Business in the Community employs circa 400 people.
What, if any, modifications should be made to these draft regulations? To inform our consideration of any proposed modification(s), please explain your response and provide supporting evidence where appropriate.
1. We welcome the draft regulations on gender pay gap compulsory reporting and strongly believe that reporting gender pay data publicly will drive action from employers to close the gender pay gap.
2. The draft regulations are comprehensive. They require a range of figures including mean and median pay gaps, bonus gaps and the number of women and men in each quartile of the pay distribution. Calculating and publishing this data will enable large employers to identify where gaps lie and where women are under-represented. As a result, they will be able to action plan and ensure parity both in pay and in opportunity.
3.We also welcome the Prime Minister’s announcement that public reporting requirements will be extended to the public sector; however, it is not yet clear when public sector employers will be required to report. We believe that the same timetable for implementation should be applied to the public sector as the private and third sectors.
4.2 in 3 employees working for the public sector are women (67%) compared to only 42% in the private sector (2015), and women over 40 are overrepresented in this sector: 39% of older women worked in the public sector – compared with 33% for all women.
5.Since we know that the gender pay gap increases with age, we should encourage employers in the government guidance to also report voluntarily what they pay their male and female staff by age.
6.The draft regulations stipulate that “pay” only includes maternity pay but does not include paternity leave, Statutory Shared Parental Pay (ShPP) or adoption pay. This omission is telling and wrongly implies that mothers are the only ones to take time off for their children, reinforcing the stereotype that women are primarily responsible for childcare. This omission also has a diminishing effect on second parents in same-sex relationships.
7.ShPP is paid at the rate of £139.58 a week or 90% of an employee’s average weekly earnings, which is the same as Statutory Maternity Pay (SMP) except that during the first 6 weeks SMP is paid at 90% of whatever an employee earns (with no maximum). Thus, counting only women’s maternity pay and excluding ShPP pay would increase the pay gap in favour of men and skew the results. These should be included in the definition for this policy to be truly gender equal and statistically relevant.
8.In our first response to this government consultation, we stated our view that the threshold should be lowered to 100:
‘If we are genuinely to close the gender pay gap, we need to take greater action, faster. We see no valid reason why smaller employers should be exempt from the reporting requirements; other countries have significantly lower thresholds.’
9.We believe that if we are genuinely to close the gender pay gap, we need to reach a wider population and take greater action, faster by extending gender pay gap reporting to medium-sized employers by 2020. Therefore we maintain that the threshold should be lowered to organisations with 100 employees and over.
10. If the threshold remains at 250 employees, only 1 in 3 employees in Great Britain will be covered by the regulations and will be given information on the gender pay gap in their organisation (40% of the total private sector workforce).
11.Reporting the gender pay gap will apply pressure to companies to achieve gender equality at work, but the overall impact on gender equality in the UK will not be as significant if it only applies to large employers.
12. Medium sized employers employ 12% of the UK’s workforce and they make up a higher proportion of all UK businesses compared to large employers (0.6% vs 0.2% respectively).
13. If businesses with 50-249 employees were held accountable to report their gender pay gap, more than half of the population working in the private sector would be covered by the legislation.
14.This is all the more important since 6 in 10 people employed by medium-sized businesses work in industries where median gender pay gaps are higher than the national average.
15.Furthermore, medium sized employers generate 15% of all private sector turnover. If they are pressured into taking action to close the gender gap, they would be more likely to experience the economic and financial benefits of gender equal workforces, thus feeding more money into the UK economy.
16.50% of employers and business organisations responding to the consultation agreed that the regulations should only apply to employers with at least 250 employees.
17. However, employees hold different views. Our research, based on a sample of over 1,000 respondents, found that 39% of employees think that the regulations should apply to all employers, regardless of their size. This percentage increases to 43% for employees working for medium-sized businesses (51-250 employees) and who are currently falling outside the scope of the regulations. These employees deserve to know what their organisation is paying men and women.
18. Medium-sized businesses should not be exempt from the reporting requirements; other countries have significantly lower thresholds when it comes to reporting information on pay by gender, such as Denmark (10+ employees), Sweden (24+), Finland (30+), Belgium (50+) and Austria (150+).
19.If the threshold remains at 250 under the new regulations, there should be a provision to review public reporting for smaller employers one year after the initial implementation date.
20. Indeed, lowering the threshold involves amending the Equality Act 2010 and requires a suitable Parliamentary Bill which could take two to three years to implement. If the threshold is not reviewed until five years after commencement (2021) and takes another three years to be implemented (2024), medium-sized organisations would not have to publish until 2025 (assuming they will have one year to prepare for the regulations). This almost a decade from now. If the government is to close the pay gap, the threshold should be lowered sooner than proposed by the draft regulations.
21.The UK economy is losing out on £18 billion due to 520,000 job vacancies that businesses are unable to fill due to a lack of relevant skills. This is not an “unnecessary distraction” as suggested by the government, but a strong commitment to transparency and equality.
22. According to economist Alan Manning of the London School of Economics and Political Science (LSE), it would take 150 years at the present rate of progress to close the income gap between women and men. We cannot afford to wait any longer.