What a difference half-a-year makes. Only recently, the political consensus seemed to be that the government should take action over equal pay, where necessary compelling firms to carry out audits and make the required pay adjustments. If anything, the Conservatives were ahead of Labour on this issue, with Theresa May arguing for mandatory equal pay audits in October 2007.
But yesterday, the Equalities and Human Rights Commission told the government that the economy is now too fragile to impose equal pay reviews on businesses and recommended that the proposal on compulsory audits be removed from the equalities bill due to be published next month.
There is some sense in this move. Many public sector organisations, forced by freedom of information requests and no-win no-fee lawyers to bring their pay inequalities out into the open, have faced crippling pay bills. Correcting wage inequalities and covering up to six years worth of back pay has almost bankrupted many local authorities. Last September, the government allowed them to take out an extra £455 million in loans to cover the costs. In normal times, such a huge aid package would have made headlines but, when set against the billions being advanced to the banks, it seemed like a relatively small amount.
Nevertheless, if public sector organisations have found themselves with huge pay bills after equal pay audits it is a reasonable assumption that private sector organisations would be hit with similar demands if they too had to make their pay levels public. These cases could include pay claims going back several years. As the EHRC has realised, at a time when many companies are struggling to survive, such a move could push many of them into bankruptcy.
Not surprisingly, this has been seen by many women’s rights campaigners as a sell out. Beatrix Campbell was quick off the mark yesterday, accusing the ECHR of betrayal almost as soon as its suggestions were published. Katherine Rake, director of the Fawcett Society, said:
We must not get caught in this trap of saying in difficult times we will trade in women’s rights.
Their anger is understandable but if these claims bankrupt employers there will be no-one left to pay the newly won equal pay rates. The cheque for compensation and back pay might come with a P.45 and a redundancy notice, as the employer files for insolvency.
This argument is not just about equal pay. It raises questions about many of the assumptions behind employment legislation and our general attitude as a society to questions of fairness and justice.
Much of our employment legislation was framed during a period when progressive assumptions prevailed. By that, I mean that most people belived society would get progressively fairer and progressively more prosperous, as it had done for much of the twentieth century. But are those assumptions still valid? As we enter what many people believe will be the worst economic downturn since the Second World War, the belief that we are still on that road to a fairer and wealthier future must, at the very least, be called into question.
An article I read a month or so ago, written by Max Hastings, came to mind as I was writing about this:
Seldom in peacetime has change come upon a society so rapidly and brutally. In a matter of months, the assumptions on which we have run our lives for decades, above all that of national prosperity, are out of the window. Yet, although reason tells us the game is up and that almost anything could happen, it remains hard to acknowledge how dramatically our lives must alter.
We face a long and painful voyage of exploration, to discover how Britain can earn its living through the next generation, in the face of irresistible global competitive pressures. Never mind the oil refinery contracts – millions of western jobs have moved to Asia, where goods are made much more cheaply. No government can force them to come back.
British workers will keep pay packets only if they perform skilled tasks which others cannot, or provide their services for substantially smaller real rewards than they have received in the past.
When this recession is over the world will not go back to how it was. It never does. In all probability China and India will emerge relatively stronger than before. Employment rights are weak in India and almost non-existent under China’s repressive regime. Will the West’s economies, battered by recession and facing stronger competition than ever before, still be able to afford the equality laws and employment protection that the years of plenty allowed us to get used to?
Like most of our employment laws, equal pay legislation was a product of a time when western countries enjoyed economic dominance and, therefore, relative prosperity. We assumed that things would continue to get better. The economic downturn and what comes after it will severely test these assumptions. In an unfair and unequal world, it might be that we can no longer afford our drive towards greater fairness and equality. The EHRC’s capitulation on equal pay could be a sign of things to come.