Closing the gender pay gap: equal pay audits, or more equal parenting?

By Richard Dunstan, Working Families volunteer

Recent weeks have seen renewed calls for the introduction of mandatory equal pay audits in order to close the gender pay gap, which according to the Office of National Statistics now stands at 19.7 per cent.  This follows a set-piece speech by Gloria De Piero MP, Labour’s shadow minister for women and equalities, in which she committed the next Labour government to legislate for such pay audits, and a survey report on the gender pay gap among senior managers by the Chartered Management Institute and XpertHR.

In the Guardian, noting that, at the current rate of progress, it will take another 60 years to close the gender pay gap, columnist Lauren Laverne posed the question: “We have to wait a hundred years for the 1970 Equal Pay Act to work? Are you on glue?” Meanwhile, over on the Women in Leadership pages, the first of Harriet Minter’s five proposals to end the gender pay gap was: “make reporting on pay data mandatory”. According to Minter, this would “bring an end to the madness” of “women being paid less than men”, and “guarantee a fair and equal wage for all”. And, noting the CMI/XpertHR finding that male company directors take home £21,000 more each year than their female counterparts, the Work Foundation’s Professor Stephen Bevan found it “hard to resist the conclusion that equal pay audits should now become mandatory”.

Hmmm. The problem with that line of argument is that it assumes – or, at least, conveys the message – that (a) the gender pay gap is mostly about women being paid less than men to do the same or very similar work; and (b) this is all due to wicked employers having gender discriminatory rates of pay. Accordingly – or so the argument runs – all you have do to close the gender pay gap is shame all those wicked employers into paying their staff equally by making them conduct and publish equal pay audits.

In reality, it’s a lot more complicated than that – the gender pay gap is one of those problems that’s easier analysed than solved. Discriminatory pay by employers is just one of several factors behind the gender pay gap, and is quite possibly one of the least influential, overall (which is no consolation if you are one of the all too many women subject to such discrimination). As Professor Bevan himself notes, “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’), [and] the impact of part-time working both on pay itself and the life-time accumulation of ‘human capital”, as well as “both direct and indirect discrimination”. In 2012, research commissioned by the Government Equalities Office could find only 13 ‘equal pay’ employment tribunal judgments against employers other than the NHS and local authorities in the three-year period 2009-11, and only 41 such judgments between 2004 and 2011.

Furthermore, most if not all of those calling for mandatory equal pay audits are in fact proposing only that they be mandatory for large employers – that is, those with more than 250 employees. Yet such companies employ less than 10 million (40 per cent) of the national workforce of some 24.3 million. So mandatory equal pay audits wouldn’t bring any direct benefit to the 60 per cent of the workforce employed in small and medium sized businesses. And, in the public sector, almost four in five employers (77 per cent) have already conducted an equal pay audit. The remaining one in five could surely be exhorted to do so by ministers, without creating new legislation.

Accordingly, as supportive as I am of gender equality and of tackling sex discrimination in the workplace, it’s never been entirely clear to me how or why mandatory equal pay audits would have more than a marginal impact on a complex problem. Indeed, even if such pay audits were wholly successful in eliminating gender discriminatory pay rates, a significant gender pay gap would still remain, due to the influence of other, arguably more powerful factors – not least the substantial impact on women’s earnings of taking time out of the labour market to have and care for children.

As the economist and blogger FlipChartRick highlighted last week in a must-read post, the gender pay gap is not spread evenly among women of all ages and all pay brackets. Far from it. Citing analysis by David Richter of Octopus HR, FlipChartRick argues that “the full-time pay gap at the median [pay level] has almost disappeared for those in their twenties, with women earning slightly more than men [on average] in recent years”. And “there has been a significant fall in the gender pay gap for those in their thirties”.

Moreover, while “the pay differential for those in their twenties is fairly narrow, even at the very top level [of pay], the pay gap for those over 40 is significant at all levels of the pay distribution but much higher at the top”. In short, “age and position in the earnings distribution has a significant effect on the gender pay gap. Women over 40 and in the upper income bracket earn significantly less” than their male counterparts. That is, “the gender pay gap appears just at the point in the age distribution” when many women are taking time out of the labour market to care for young children, and “children have more of an impact on women’s pay than men’s” because it is women “who take on most of the childcare responsibilities”.

FlipChartRick concludes that:

“introducing mandatory equal pay audits might yield some interesting information for pay data geeks to pore over, but I doubt that it [would] tell us much that we don’t already know, or even whether it [would] reveal some major employers to be significantly worse than others. It is unlikely that the gender pay gap will disappear until equal proportions of women and men take equal responsibility for childcare”.

In short, a more effective means of addressing the gender pay gap would be to facilitate, encourage and support more shared parenting. But this is not something you are likely to have heard from government ministers or lobby groups such as the TUC and CBI (both strong supporters of mandatory equal pay audits for large employers).

For example, in recent weeks, as part of her “mission to promote shared parental leave” – a policy reform intended to make the proportions of women and men taking responsibility for childcare more equal – the BIS minister Jo Swinson has given a number of major media interviews, including in the Evening Standard, in the Independent, and with Family Networks Scotland. However, while Ms Swinson – another strong supporter of mandatory equal  pay audits for companies with more than 250 employers – used these interviews to make much of “recognising that dads want to have a bigger role in their child’s life from the first days” and boosting parental choice, she signally failed even to mention the gender pay gap and the central role that shared parental leave (and more shared parenting) could play in closing it.

To my mind, this is a missed opportunity that reflects yet another lack of joined-up policy thinking within government. But perhaps after May 2015 both elected politicians and the relevant campaign and lobby groups will pay greater attention to the (rather obvious) link between the gender pay gap and the need for more shared parenting. And then we might just see progress on win-win policies – such as increasing the shockingly low rate of statutory maternity, paternity and parental leave pay, and increasing the amount of well paid paternity leave – that would facilitate and encourage more shared parenting and so help close the gender pay gap.

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