More on the gender pay gap

The Equality and Human Rights Commission has just published proposals for “voluntary” reporting of the gender pay gap in businesses with more than 250 employees. I put “voluntary” in inverted commas, because once again, not unlike the mafia, the EHRC wants everyone to understand that failure to take action will lead to compulsion.

The proposals are accompanied by two massive documents, one reporting on a survey of existing reporting practice in large non-public sector organisations (inadequate, in the EHRC’s view) and the other discussing ways of measuring and publishing information on the pay gap.

The discussion of measurement is interesting, at least for us stattos. Despite the ONS’s objections to this (see previous post), the Commission’s preferred measure is the all-employee hourly earnings gender pay gap which, since women constitute the vast majority of part-time workers (typically paid less than full-time workers in every country), suggests a huge inequality between the sexes. Of course this measure does not compare like with like in terms of employment conditions, qualifications, hours worked, previous experience and so forth. But it makes a useful debating point for activists.

Other measures are downplayed. One, for instance, would compare median hourly earnings for women working part-time with men working part-time: this shows, on the EHRC’s figures, a gender pay gap in favour of women. This is brushed aside as it doesn’t square with the overriding narrative of female disadvantage.

As an apparent concession to employer concern about the difficulty and cost of collating detailed data, and fears about confidentiality, the Commission recommends using just one indicator of the pay gap for firms employing 250-500 people. I wonder if they understand just how misleading this is likely to be?

Let me give examples based on my own research. We can’t identify particular individual firms, but we do have quite a lot of information on different departments or agencies in the public sector. They indicate what huge variations in the pay gap there can be in organisations which can be expected to have very similar policies and procedures.

Take the Office of Government Commerce, with 180 employees. In 2008 this outfit had a median pay gap of 32.6%. Yet in the Revenue and Customs Prosecution Office, with 290 employees, women had the upper hand: there was a negative pay gap of 12%. Looking at slightly larger organisations, the UK Intellectual Property Office, with 1,000 employees had a pay gap of 36.0% in favour of men. On the other hand the National Archives service, with 610 employees, had a median pay gap of 3.3% in favour of women. Or take the Health and Safety Executive (3,600 employees), with a 36% pay gap while the Disability and Carers service (6,270) had a zero pay gap.

Moving to much bigger departments, the Ministry of Defence (68,220 people) had a median pay gap of 21.3%, while Job Centre Plus (very similar size – 73,320) had a much smaller gap of just 2.6%.

There are thus huge disparities between similar organisations, of similar size, all sharing the same public sector culture of concern over equality issues, together with strong unionisation. It really beggars belief that tightly-constrained management is behaving very differently in these various parts of the public sector. These variations represent different patterns of employment, different types of skills and a host of other factors.

Turning back to the EHRC proposals: when private sector firms have their pay gaps identified, in line with EHRC requirements, you can bet large sums that Alpha Widgets, with a pay gap of 30%, will be excoriated, while Beta Commodities, with a negative pay gap, will be held up as a role model. Union activists and the media will not understand, or probably even read, the small print, and the public image of Alpha Widgets will take a nosedive.

So what? You might say. Well, for one thing setting up crude indicators like this will affect behaviour in an entirely predictable way. The quickest means for Alpha Widgets to bring down the size of its pay gap will be quietly to reduce the employment of lower-paid female workers.

John Denham recently had the courage to speak out and suggest that ethnicity alone is not a marker for social disadvantage, and that policy needed to reflect this. Will a prominent politician from either main party dare to suggest the same in relation to the gender pay gap? Don’t hold your breath.

1 thought on “More on the gender pay gap”

  1. Posted 25/01/2010 at 13:46 | Permalink

    I suppose in a way teachers should be gratified if ignorance is prominent in some public ‘debates’ — since it calls for our knowledge and skill to help disperse it.

    But I fear that some lobbyists actually know better and are telling lies in order to achieve their aims. This is truly contemptible. The gender gap is probably a good example.

    Would it be possible (maybe for the IEA) to organise one or two public debates on this subject in an attempt to enlighten the audience and shame those who propagate nonsense?

    It may be that one needs a ‘Question Time’ type of ‘debate’, where a sensible chairman could try to pin down evasive answers.

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