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MPs recommend gender pay gap reporting be extending to companies with over 50 employees - pay gap in some sectors “obscene”

Derek du Preez Profile picture for user ddpreez August 2, 2018
An influential select committee highlights that the information and communication sector has the fourth worst - out of 19 sectors monitored - gender pay gap in the UK.

Equality diversity women
We at diginomica and diginomica/government have long made it a priority to report on tackling diversity issues within the technology and digital sector, as we believe that not only is it important and fair, but that a diverse organisation which is representative of society will always be a more successful organisation.

Which is why, despite it not being digital specific, the latest report by MPs on the Business, Energy and Industrial Strategy Select Commitee, looking at the latest gender pay gap data submitted by companies with more than 250 employees across the UK, is significant.

It recommends that the data collection, which has only started being released this year, be extending to smaller businesses with 50 employees or more, as the evidence shows that the disparity between men and women’s hourly pay can be even higher in smaller organisations.

At the aggregate level, the median across the economy is 18% in favour of men. At and organisational level, the new figures reveal that gender pay gaps of over 40% are not uncommon in some sectors. And some 78% of organisations reporting have gender pay gaps in favour of men.

However, interestingly, out of the 19 sectors monitored, information and communication (the technology sector) has the fifth largest highest gender pay gap, when looking at average median hourly wage, at approximately 17% in favour of men. The worst sector is construction at nearly 25% higher hourly wages for men. The smallest pay gaps were in Health and Social Care and accommodation and food, with under 5% pay gap.

But only around half the members of the UK workforce are expected to be covered by the present reporting requirements, which is why the government is calling for it to be extended to smaller organisations.

The report also recommends that organisations should be required to publish, alongside the figures, an explanation of any gender pay gap and an action plan for closing the gap, against which they must report progress each year, as port of normal reporting requirements.

Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee said:

Gender pay reporting has helped to shine a light on how men dominate the highest paid sectors of the economy and the highest paid occupations within each sector. Our analysis found that some companies have obscene and entirely unacceptable gender pay gaps of more than 40 per cent.

Transparency on gender pay can only be the first step. The gender pay gap must be closed, not only in the interests of fairness and promoting diversity at the highest levels of our business community, but also to improve the country's economic performance and end a monstrous injustice.

A persistent gender pay gap shows that companies are failing to harness fully the talents of half the population. The penalties of working part-time, both financial and in terms of career progression, are a major cause. Companies need to take a lead. For example, why aren’t they offering flexible working at senior levels? They must look at why they have a pay gap, and then determine the right initiatives, policies and practices to close it. Chief executives should have stretching targets in their Key Performance Indicators and be held to account for any failure to deliver. Our report recommends that the Government requires all organisations with over 50 employees to publish annual gender pay gap data from 2020.

The Prime Minister spoke about the ‘gender pay gap’ as a ‘burning injustice’ and of closing the gap for good within a generation. It’s now time for the Government and businesses to deliver on that ambition.

The report adds that the UK has one of the highest gender pay gaps in Europe. And this must be closed, not only in the itnerests of fairness, but in order to improve the country’s economic performance. It notes, as we have done many a time, that the penalties of working part-time, both financial and in terms of career progression, are a major contributory factor to the continuing failure to fully utilise the talents of women.

Simply put, the new figures expose how “men dominate both the highest paid sectors of the economy and the highest paid occupations within each sector”. The MPs state that businesses must take responsibility for the impact of their own policies, practices and culture.

The report adds:

It is up to individual companies to diagnose the causes of the gender pay gap in their own organisations and apply the best possible remedies. But all will need to demonstrate leadership and commitment at the highest level that has not been su ciently evident up to now. Where leaders are not showing the necessary degree of effectiveness, they should be held to account.

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