Gender pay gap reporting: a comparative analysis
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The UK must catch up with other countries on gender pay gap reporting if it’s to see faster progress on equality between women and men, according to a new report.
The report, which analyses gender pay gap reporting legislation in 10 countries around the world, was prepared by the Fawcett Society and the Global Institute for Women’s Leadership at King’s College London, and was supported by research provided on a pro bono basis by law firms Latham & Watkins, Castrén & Snellman and BBA Fjeldco, with facilitation by the Thomson Reuters Foundation.
Compared with other nations, the UK is “unique in its light-touch approach” to asking employers what actions they’ll take to address any identified gender pay gaps, the report says.
Gender pay gap reporting in the UK has been suspended this year due to the coronavirus crisis, but in previous years it has not been mandatory for UK private sector employers to publish an action plan to tackle such pay gaps, and the Government Equalities Office estimated that in 2018/19 only around half elected to do so. With regard to public sector employers, only Wales requires them to produce such plans, as part of their obligations to reduce wider socio-economic inequalities.
Just one other country from the 10 analysed in the report – Austria – does not make it compulsory for all relevant private sector employers to submit an action plan in at least some circumstances.
Other countries have much more robust systems in place. In Australia, relevant private sector employers are required to provide details on the availability and use of a range of different policies, including those relating to recruitment, retention, flexible working and employer-funded parental leave.
Under French legislation, failure by relevant private sector employers to gain an adequate score across a set of gender pay gap indicators means an action plan must be agreed either through negotiations with trade unions or consultation with employee representatives within an organisation.
Without a requirement to produce a plan to close gender pay gaps, there is a risk that employers simply won’t take the action that is necessary. Lowering the minimum employee threshold for gender pay gap reporting would also enable us to get a more complete picture of how women are managing through the current economic disruption, and other countries show that it can be done in a way that isn’t an extra burden for smaller employers.– Laura Jones, Research Associate at the Global Institute for Women’s Leadership at King’s College London
The report also calls for the minimum employee threshold for gender pay gap reporting to be lowered. In England, the reporting requirement only applies to private and public sector employers with at least 250 workers.
This is five times the median of 50 for the countries analysed, and second only to Germany, meaning pay disparities in smaller companies are going undetected. By contrast, in Sweden the threshold is just 10 workers.
The UK government has previously rejected calls to include small and medium-size private sector employers within the scope of gender pay gap reporting legislation due to concerns that the metrics required would be too onerous to collect. But the report notes that these employers are included in legislation from other jurisdictions, and that it is possible and common to vary the reporting requirements by employer size.
In Belgium, for example, the legislation applies to private sector employers with more than 50 workers, but they are required to collect and submit less information on remuneration than private sector employers with 100 or more workers.
With Covid-19 deepening existing inequalities, it’s critical that gender-based disparities are properly monitored. Unless this is addressed, and we have a more complete picture of how women are faring in the labour market, we will never progress global efforts towards reducing the gender pay gap, thereby growing our economies. It brings the UK a step closer towards achieving this goal, and more in line with best practice in other countries.– Antonio Zappulla, CEO of the Thomson Reuters Foundation
Finally, while the report highlights that the UK is at risk of getting left behind by other nations on some aspects of gender pay gap reporting, it also recognises where the country is leading. The UK system is a model of transparency, alongside Germany’s, and has seen high levels of compliance, with 100% of eligible employers reporting in 2019 – higher than other countries, such as Sweden.
There is another opportunity for the UK to lead in this area, the report says, by collecting and reporting information on pay disparities between workers from different ethnic backgrounds. This would allow employers to produce intersectional data, providing a much more detailed view of work-based inequalities.
The Fawcett Society has separately drawn up legislation to address this data deficit and the shortcomings identified in the UK’s gender pay gap reporting system. It would also modernise equal pay law to give women the right to know what a male colleague earns if they believe they are not being paid equally for doing equal work or work of equal value. The Equal Pay Implementation and Claims Bill 2020 has been laid in the House of Lords and will soon be laid in the Commons by Stella Creasy MP on 20 October.
Gender pay gap reporting has been a useful way to get employers to reflect on pay inequality in their organisations and to begin to address it. But it needs to be reintroduced as soon as possible with key changes made to make the system more effective. It is particularly important that we now move to ethnicity pay reporting alongside gender pay reporting. This is long overdue.– Sam Smethers, Chief Executive of the Fawcett Society