Government targets the private sector over equal pay

The Government Equalities Office has launched its Post Your Pay Gap initiative. The idea is that companies use the online system to calculate the gap in pay between men and women then post it on the web-site. It’s a bit like a corporate confessional – “We know we’re doing wrong but we will try better.”

But just in case there isn’t a mad rush from private sector organisations to post their pay gaps, the equalities secretary, Harriet Harman, has said that she might consider compelling them to do so. As she told Personnel Today:

We’re asking people to post their pay gap voluntarily, but we have got a backstop in the Companies Act, which means we can make people do it.

Now, before you start going on about ‘typical New Labour interference’, or something like that, remember that, last autumn, Theresa May called for compulsory pay audits in the private sector too. The chances are that, whoever wins the next election, companies will be forced to come clean about pay inequalities.

When no-win-no-fee lawyers began to exploit the gender pay gap in public sector organisations, there was a rash of expensive claims. Last week, the government had to bail out local authorities with a £450 million aid package, just to help them meet their legal obligations. £35 million was given to Liverpool to settle one-off back-payments to staff including dinner ladies, cleaners and care workers.

But this is not just a public sector problem. Earlier this year, a CIPD study revealed that fewer than half of the 600 organsations surveyed had carried out an audit of equal pay. They therefore have no idea whether they are breaking the law or not. The chances are that, if they were compelled to hand over their pay data, the lawyers would find some easy pickings.

The smart organisations will tackle this before they are compelled to release the data and before it becomes a problem. The trouble is, there are not many smart organisations about. If banks, which, for the most part, are run by very clever people, can go on kidding themselves that they will always be able to borrow in the money markets and that they don’t need to look too closely at mortgage backed securities, what hope is there for an outbreak of rationality elsewhere in the corporate world? It is human nature to avoid messy and expensive problems like equal pay, especially when times are difficult and there is a pressure to concentrate on making money.

My bet, then, is that many firms will just hope that this issue goes away or that the politicians forget about it. Three years from now, there will still be companies with huge equal pay time-bombs ticking away. That’s the point at which the government, followed by an army of lawyers, will decide to attack the issue and a lot of organisations will find themselves faced with very large bills.

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2 Responses to Government targets the private sector over equal pay

  1. jameshigham says:

    That is a most interesting thrust by the government and it needs publicizing.

  2. Rick says:

    James, I’m surprised there hasn’t been more fuss about this.

    Perhaps it’s because there is so much else going on at the moment. Also, I think many private sector firms are in denial about it. They still see conflicts over equal pay as a public sector problem and not something that will affect them.

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