Earlier this month, new rules took effect requiring U.K. companies with 250 or more employees to reveal the average salaries of men and women at their organization. The legislation, which was announced in 2015, gives large companies until April 2018 to report and publish data about the salary differences between male and female employees, as well as the proportion of men and women who receive bonuses.
The rules are expected to affect over half the workforce in the U.K., and apply to around 9,000 companies. Proponents of the laws say that they will go a long way toward closing the gender pay gap in the United Kingdom, where women earn around 82 percent of men’s salaries.
“The gender pay gap reporting provisions are likely to do more for pay parity in five years than equal pay legislation has done in 45 years,” Sarah Henchoz, employment partner at law firm Allen & Overy, told The Guardian.
How Laws Like These Can Close the Gender Pay Gap
While at the outset, these regulations might seem like a straightforward attempt to shame companies into paying women fairly, there’s another factor at play — the effect of pay transparency on the opportunity gap.
Data collected for PayScale’s report, Inside the Gender Pay Gap, show that the uncontrolled gender pay gap is currently 76 cents on the dollar, compared to a controlled gender pay gap of around 98 cents. (The uncontrolled gap reflects the difference in pay for all men and all women; the controlled gap compares only men and women in similar job titles.) Why the difference between the two pay gaps? Because women are more likely to work at lower paying jobs and less likely to hold executive and C-level roles than men.
By focusing on average salary for all men and women at each company, this legislation reveals not only unequal pay for the same work, but unequal opportunity to attain higher-paying roles.
“Employers should see it as an opportunity not a threat. Through gender pay gap reporting they can address the productivity gap and get the best person for the job at the right level,” said Sam Smethers, chief executive of women’s rights group the Fawcett Society, in a statement reported by Reuters.U.K. legislation will require companies not only to reveal unequal pay, but unequal opportunity to attain higher-paying roles.Click To Tweet
‘No Penalty for Noncompliance’
Speaking with The New York Times, Smethers notes one potential flaw in the rules.
“There is no penalty for noncompliance,” she said. “Not requiring an action is a real weakness. It’s not just about the numbers; it’s about engaging with the problem you’ve got.”
Further, recent research shows that fewer than half of U.K. employers can access detailed salary data sufficient to report on these differences.
“A survey of 145 employers by Totaljobs revealed that 82% were not reviewing their gender equality and equal pay policies in light of the new legislation, while 58% did not have complete salary information across roles and gender,” reports Alexandra Topping at The Guardian. “More than a third were failing to review salaries to guard against gender discrimination.”
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