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David Cameron will force companies with 250 employees to reveal data on gender pay gap

6 min read

14 July 2015

The prime minister has announced that businesses will be forced to publish average salaries for the people they employ in an effort to address the gender pay gap.

It is hoped that the move will “pressure” firms into boosting women’s wages, as it would effectively shame employers into making a change.

Writing in The Times, the prime minister said that by making all companies with more than 250 employees reveal detailed pay data, it should “cast sunlight on discrepancies”.

He has said the government will aim to turn this around “within a generation”, so by the time Cameron’s daughters Nancy and Florence start work, the problem will have been overcome. “I want them to look back at the gender pay gap in the same way we look back at women not voting and not working – as something outdated and wrong,” he explained.

Labour had introduced legislation forcing businesses to publish annual salaries by gender in 2010, but it was suspended by the coalition in favour of a voluntary approach. Just five employers had opted to publish the statistics under the optional scheme by the end of the parliament, according to the Equality and Human Rights Commission.

Britain’s pay gap between men and women workers is the sixth highest among EU nations and worse than than the average of 34 countries in the OECD. Cameron said: “Overall, a woman still earns just 80p for every £1 earned by a man. That is a scandal.”

Education secretary Nicky Morgan, who is also the women and equalities minister, is expected to consult business leaders on the implementation of the new process. She will discuss what should be included in the information disclosed, and whether distinctions of roles will be detailed to more accurately compare the figures.

Cameron said the forced publication will “create the pressure we need for change, driving women’s wages up”. He also feels the new national living wage will help rectify the issue too.

“It’s part of a new British contract: we give businesses the lowest corporation tax in the G20, increase their national insurance allowance and cut their regulations; in return, they pay their staff properly, and fairly.”

The response so far from businesses has been mixed. The deputy director-general of the CBI, Katja Hall, said that addressing the gender pay gap was “the right priority”, but suggested publishing data “could be misleading”. The CBI will work with the government to try and establish rules that are “flexible enough to be relevant to each company”.

Tim Thomas, head of employment policy at the manufacturers’ organisation EEF, said manufacturers would support the government to introduce gender pay reporting “in an effective and balanced way”. He also warned that businesses will want to make sure data published on the pay gap “is not confused with equal pay – with the difference between the two not always obvious”.

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The Adam Smith Institute however, called the gender pay gap a “myth”. Head of communications, Kate Andrews, said: “It’s a sad state of affairs when even the prime minister is promoting the gender pay gap myth. According to the ONS, women between the ages of 22-39 working more than 30 hours a week earn on average more than their male counterparts”.

She added that the forced audits “will only promote more myths and confusion” as there “is no such thing as an ‘average salary’; education, previous experiences, negotiating tactics and unique abilities all contribute to one’s salary”. Andrews said none of this can be known by comparing “John and Jane’s annual take-home on a spreadsheet”.

It was recently announced that Britain’s FTSE 100 companies hit their target of 25 per cent female directors, with several appointments such as Diane Schueneman at Barclays, Irene Lee and Pauline van der Meer Mohr at HSBC, bringing the total up. Former business secretary Vince Cable had set that as a target for companies in 2011. Andrews said this was met “not because the government told them to, but because women, through their own abilities and determination, are thriving in the workplace more than ever before”.

Recruitment agency Sapphire Partners though, pointed out that the majority of the appointments which allowed the UK’s blue chip companies to hit their goal were non-executive roles. Some 25 women are in executive positions within FTSE 100 companies, which equates to 9.5 per cent. Kate Grussing, head of Sapphire, said the lack of women gaining executive roles “remains a challenge”. 

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