Let's Fix the Gender Pay Gap in the Right Way

Today, with great trepidation, I accepted the challenge of discussing the gender pay gap on Radio 4 Woman’s Hour. It was a fantastic opportunity for me to explain why I believe passionately that we should finish the job of closing the gap in the right way.

Overall, the gender pay gap, as measured by the Office of National Statistics, stands at around 9% - the lowest in British history. This compares to a pay gap of 17% in 1997. Indeed, in many cases, women below the age of 40 are now earning more than men.

I want the current pay gap to close further, in the interests of economic growth and social progress, and, thankfully, progress continues.

This is why I could not bring myself to support a recent Bill that would risk the progress we’ve already made without awaiting the results of recent new initiatives by the Government. The Bill aims to ‘force’ private companies with more than 250 staff to publish data, as yet unspecified, about employees pay, which could cost businesses in the region of £70m.

This is the wrong approach and I voted against the Bill for several reasons.

First, the voluntary reporting scheme “Think, Act, Report” already encourages businesses to report their gender pay differences on a voluntary basis. It’s working, because companies want to attract women by pointing out how much better they are than their competitors, despite the burden of reviewing, analysing and reporting pay differences. Already within just 3 years, 250 major businesses like Tesco and AstraZeneca have signed up to the scheme. It is this kind of self-interested company behaviour, coupled with existing legislation and changing social attitudes, which is eroding remaining pay differences.

Secondly, the notion of “equal pay” can be a straitjacket. If a woman outperforms her male colleagues, she should be paid more, not the same. That is good business sense and sends out the message that all workers will be paid according to how much they contribute. If employers feel obliged to artificially pay all women and men the same amount, this may have the perverse effect of reducing the salaries of many women who would, in normal circumstances, have received more.

Thirdly, while the legislation was tabled with good intentions by Sarah Champion MP, it simply cannot ensure that women are free from unfair pay discrimination at work. Do we really think that the sexist behaviour will disappear because of further parliamentary disapproval? Changing social attitudes is more complex than issuing diktats. Enacting bureaucratic regulations that do not fulfil their objectives will only worsen the public’s distrust of politicians to improve the situation.

Finally, the focus of this Bill is wrong. The pay gap is more often due to career choices than open discrimination. As a tech-mad, social science graduate who chairs the Parliamentary Office of Science and Technology, I know what a challenge it is to encourage young girls to follow a career in science or technology, despite the financial benefits. I want my daughter to feel comfortable applying to work in industries that up to now have been male-dominated. To imply that the pay gap is mostly caused by nasty businesses, deliberately discriminating against their female employees is outdated and misleading.

There is a better way to close the gender pay gap

There are many ways in which we can continue to improve the situation.

1.   Thankfully, we enjoy a vibrant job market and falling unemployment. We must continue creating a business-friendly environment with lower taxes and lighter regulation where businesses can thrive in competition with each other for customers and staff. Successful businesses will recognise that it is in their best interests to pay women on broadly equal terms and market their companies as a welcoming environment for existing and potential employees. If not, they simply won’t hire and retain the best staff. These competitive pressures will continue to do the heavy lifting. Companies fight to recruit and keep the best employees, as shown by marketing which frequently describes their gender-friendly conditions.

2.   More work can be done to promote and best practice among businesses. The Institute of Directors, Federation of Small Businesses and other trade bodies are doing great work to highlight the huge benefits of female-friendly workplaces.

3.   We must raise awareness of the law, but that isn’t enough on its own. We must make it less stressful for employees to report discriminatory practices by an employer. If someone is being treated unfairly, they should use existing discrimination laws.

4.   If we are considering compulsory pay-gap reporting, rather than inexpensive but regular surveys, then this work must begin in the public sector. If any Government thinks that adding tens of millions of administrative costs to business will really improve the gender pay-gap overnight then the Government should consider paying contractors to collect the data. We cannot demand that private companies undertake costly reviews if public institutions do not have their house in order first.

5.   Everyone can support the great work of charities and campaigners who help women enter and succeed in work. For example, the Mentoring Foundation supports women in overcoming career barriers. This is far more valuable than what a distant Government Department could ever do.

6.   Lastly, we must continue to allow evolving working practices for families. Work environments have improved through more flexible working practices thanks to new technology as well as Government reforms to benefits, childcare support and parental leave.

Reasons for optimism

The Government has been helping by making laws to help working parents with childcare costs, extending paternal leave so that fathers can share more of the responsibility (and joy!) of bringing up their children, raising the tax-free threshold so that families keep more of their money and reducing the “jobs tax” so that businesses can hire new employees more cheaply. These changes help women find work and earn enough to support themselves and their families.

Remnants of the gender pay gap certainly remain, but the solution does not lie with restrictive, narrow legislation. Society is moving forward with its attitudes to women in work. Businesses and their employees will continue to drive the necessary changes so that mothers and working women are properly rewarded for their work without discrimination.