Businesses will be forced to publish gender pay difference

David Cameron has pledged to close the gender pay gap.

by Jack Torrance
Last Updated: 24 Aug 2015

The Government today confirmed plans to force large businesses to publish details of what they pay men and women they employ, in a bid to shame them into levelling up the gender pay gap.

The idea was floated by the previous Labour Government in 2010 and resurrected by the Liberal Democrats earlier this year, but the Conservative Party was thought to be largely opposed to such a plan. The Government also said its new ‘national living wage’ would deliver a disproportionate boost to women’s pay.

‘Today I’m announcing a really big move: we will make every single company with 250 employees or more publish the gap between average female earnings and average male earnings,’ the prime minister, David Cameron, wrote in The Times. ‘That will cast sunlight on the discrepancies and create the pressure we need for change, driving women’s wages up.’ Cameron is the father of two daughters and is on record saying they have motivated him to even things up.

Precise details of how the new rules will work have not been finalised and the Government is launching a consultation into how they can be enforced fairly and efficiently.  Business groups didn’t seem too sure how they felt about it. While Federation of Small Businesses national chairman John Allan said the organisation welcomed the consultation, the CBI (whose members are generally thought of as being predominantly large businesses) didn’t seem so keen.

‘Addressing the gender pay gap is the right priority – and we should set a target for reducing it,' said the group’s deputy director general Katja Hall. 'While we believe publishing pay gap data could be misleading, we will work with the Government to ensure that rules on what is published are flexible enough to be relevant to each company.'

The news came along official confirmation that FTSE 100 companies had hit their voluntary target of getting 25% of board directors to be women by this year. That’s good progress, but critics rightly point out that most of those are non-executive roles – the figure for executive positions is closer to 10%, and is likely to be closed more slowly.

Increasing board diversity isn't simply a question of fairness - a greater range of perspectives is now seen by many as a major business benefit. A literature review published by the Chartered Institute for Personnel and Development found that while there's evidence boardroom affirmative action can lead to a dip in share price and short-term profits, it can also bring improved innovation and a more stable workforce.

Whether today’s announcements represent good news in the battle for gender equality or not, it’s at least good to see that the Government is taking the issue seriously.

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