Fifty years ago, the sowing machinists at the Ford plant in Dagenham went on strike to demand equal pay for work of equal value. Their stand led two years later to the introduction of the Equal Pay Act, which made it illegal to discriminate between men and women in pay and conditions.
But half a century on, the UK is still scarred by a stubbornly persistent gender pay gap. Hourly pay for women is – on average – 18.4% lower than for men. Part of this gap is due to women being more likely to work in part time roles, which tend to be lower paid, but the pay gap between men and women working full time still stands at 9.1%. While the pay gap is closing, it is closing too slowly. If the current rate of progress continued, it would take another forty years to eliminate the gender pay gap.
In order to accelerate progress in closing the gender pay gap, the Government recently introduced compulsory gender pay reporting. Under the measures, employers with 250 or more employees have to report annually on their gender pay gap – the difference in average pay between men and women at their organisation. IPPR’s analysis of the first wave of data found that four out of five large employers had a gender pay gap, and one in four had a pay gap of 20% or more.
The Government hoped that – by increasing transparency on the gender pay gap at the firm level – the regulations would focus employer attention on the gap, and stimulate further action to narrow it.
It is of course early days, and it will be a few years before we can tell if the reporting regulations have contributed to a closing of the gap. But the early signs are very positive.
First, compliance with the regulations has been impressive. 85% of employers reported by the deadline, and the Government Equalities Office have just announced that they have reached 100% compliance, with all eligible employers having now reported. Second, the regulations have really raise the profile of the gender pay gap and pushed the issue up the agenda. The pay gap reporting website received hundreds of thousands of visits and the data provoked a deluge of media attention. This was reflected within organisations too; we’ve come across a number of examples of the regulations prompting board-level conversations about gender pay for the very first time. Third, the regulations seem to have succeeded in stimulating employers both to look in detail at the causes of their gender pay gap, and to think about what else they can do to close it.
In many organisations, this has prompted significant employee involvement in the issue of gender equality. Most employers have reported their pay gap to their workforce, with many doing in-depth communication and consultation, both on what the gap is, what causes it, and what can be done to address it.
Following the success of the regulations, we should consider how pay transparency in other areas could help contribute to narrowing inequalities. The Government have already announced plans to require large listed firms to report on the pay ratio between their chief exec and the average worker, and they are looking at similar pay reporting regulations on the ethnicity pay gap too.
While pay transparency can play an important role, we should also recognise that it has its limits. Transparency on the gender pay gap can help stimulate employer action, but it won’t address the deeper underlying structural drivers of inequality, from occupational segregation and the undervaluing of women-dominated roles, to the motherhood pay penalty. So Government will have to do more to address these. But transparency seems to be having the desired impact, and it can be a powerful tool in driving action.
Joe Dromey is a Senior Research Fellow at IPPR
IPPR are currently conducting research on the impact of the gender pay reporting regulations, and on the potential for wider pay transparency. We are really keen to hear from employers on how the regulations have impacted their organisation, so if you have five minutes, please fill out our short survey.