Equal Pay - is it payback time?

by Andrew Walker

One of the things that has struck me in reviewing the answers given to this year’s Britain’s Top Employers questionnaire has been the awareness of the need for better equality and diversity programmes amongst those taking part this year.

Certainly those employers who seem to have the best all round performance in terms of how they view their employees and how they then actually treat them appear to be those that are more enlightened in these areas.

And I’m not just talking about having the necessary policies in place – that would be expected from any organisation hoping to position itself as a genuine “employer of choice”. No, it’s more than that. I’m really thinking more what they are doing, than what they are saying. And of course, a large part of the success of any employee focused activity resides in how the employer behaves and how effectively it consults with and communicates with its staff.

So, as I looked through the information given by this year’s respondents, I was pleased to see such a variety of well thought out and seemingly well executed plans in this area.

But of course, the proof of the success of any initiative of this type lies in what it actually delivers. And one area where the delivery falls short of the expectation is equal pay. I don’t mean specifically amongst the companies in this year’s publication – it may be that they have completely got to grips with and resolved any equal pay issues within their respective organisations. But in the wider, general employment market, equal pay is still a big issue.

I know how incredible it sounds but it’s true. Despite the best efforts of governments, trades unions and I dare say a good number of determined, enlightened employers, the gap between male and female pay just doesn’t seem to be going away.

Recent data from the Office for National Statistics shows that across the UK the gender pay gap has closed by less than 0.5% in the last year. Setting aside the argument made by many that there shouldn’t be a gender pay gap at all, this is a worryingly small shift when the ONS also tells us that women in full time jobs still earn 17% less than their male equivalents.

Of course, the public sector has been leading the way on tackling this issue – witness some of the substantial pay outs made by a number of local authorities to correct and compensate for some long-standing anomalies amongst its manual and operative job types.

But here’s one of the problems. It’s easy to think that this kind of inequality is confined to the public sector. Surely in any modern meritocratic business there’s no place for inequality – you reward people according to their contribution irrespective of who they are. Sadly, as I will show later the evidence points to something different.

And there’s another point that the public sector experience slightly obscures. Pay discrepancies are not confined to manual and operative type roles. It’s just that if you are going to make an impact and grab some headlines either to show that you are making progress or frankly to make a point, then it’s easier to do that with a “class action” type tribunal case. So when Unison won compensation for around 1,300 female employees in Cumbria back in March 2006 this can only have raised the profile of the issue as a whole in the wider market.

In reality there are thousands of equal pay cases running and not all of them involve such large numbers of appellants. The CIPD reported recently that there were more than 44,000 equal pay claims at employment tribunals in the past year, an increase from just over 17,000 in the corresponding period of 2005/6.

And yes, many of these will be in the public sector and many will also be covering specific groups or layers within an organisation. But many will also come from private sector firms, and the types of roles in question will range from the most junior to the most senior.

I said I would provide some further evidence of the lack of progress in this regard. For the last 27 years Croner Reward has been producing salary survey data for director level roles. The participant base in this survey is largely drawn from the membership of the IoD, but the data covers a wide range of functional roles in businesses of all types and sizes.

When we started this survey, the question of equal pay just wasn’t on the agenda but since the mid 1990s we have specifically been tracking the gender pay gap in Britain’s boardrooms. Overall we have seen a steady closing of this gap, albeit at a much slower rate than could be expected.

But as the table below shows, the last 4 years have not seen any bigger improvements – indeed things are arguably getting worse.

  All Sectors Finance Services Voluntary Manufacturing Public
2007 -22% -9% -23% -26% -14% -5%
2006 -19% -14% -25% -26% -10% -0.5%
2005 -24% -35% -25% -22% -23% -7%
2004 -14% -12% -14% -12% -26% -13%

The progress made in the public sector is clear, albeit the 2007 figures are a backward step. And the manufacturing and finance sectors too show signs of steady improvement. But with the picture worsening in the voluntary and services sectors, this whole topic seems to be a classic case of “two steps forward and one step back”.

And here’s the bottom line for me. Whilst it’s great to see so much effort going in to these areas amongst the genuinely leading edge businesses who have taken part in Britain’s’ Top Employers this year, unless the rest of the market seriously tackles this issue, then the kind of pay discrimination that has always existed will carry on ad infinitum.

And that can’t be good for Britain in an increasingly competitive global economy. Discuss.

© Croner Reward - 2007

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