British Companies Must Reveal How They Pay Women vs. Men

http://www.nytimes.com/2017/04/06/business/britain-salary-gender-gap.html

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At the current rate of progress, it could take nearly a century before the gender pay gap is closed in Britain. So the government is trying to speed up the process.

Putting pressure on employers to tackle the nation’s gender pay gap, new rules taking effect on Thursday will require large companies to publish the average salaries of the men and the women they employ.

The regulation affects companies with 250 or more employees. The figures must reveal information like salary differences between men and women, differences in average bonuses and the proportion of men and women who received those bonuses.

The rules give the companies until April 2018 to report the information to the government and publish it on their websites and on a government website.

“Helping women to reach their full potential isn’t only the right thing to do, it makes good economic sense and is good for British business,” Justine Greening, the minister for women and equalities, said in a statement.

Under British law, men and women should receive equal pay for the same job, but there is still a gap between average wages when it comes to gender.

The gender pay gap in Britain was 18.1 percent in 2016, dropping from 27.5 percent in 1997, according to the Office for National Statistics.

The gap exists in large part because there are fewer women in senior roles and the women often do the jobs where pay is lower, said Jon Terry, a partner at the accounting firm PwC who advises financial clients on hiring and pay.

According to research by PwC, it would take 95 years to close the gender pay gap in countries in the Organization for Economic Cooperation and Development, of which Britain is a member.

Women’s pay has become a more prominent topic in countries like Iceland and France, where women have walked out of their jobs at the hour they generally stopped being paid equally for their work.

In the United States, decades after President John F. Kennedy signed the Equal Pay Act, women earned 79 cents for every dollar men earned in 2014, according to the Census Bureau.

Social scientist say one way to effect change is to publish everyone’s pay. Jake Rosenfeld, a sociologist at Washington University, found that salary transparency raised wages, in part because “even being cognizant of gender pay disparity” can change norms.

In New York, the City Council tackled the issue on Wednesday by voting to prohibit employers from asking job seekers about previous salaries to help “break the cycle of gender pay inequity by reducing the likelihood that a person will be prejudiced by prior salary levels.”

In Britain, many hope the regulations will prompt companies to examine why the gender pay gap exists.

“It puts such a spotlight on the issue,” Mr. Terry said. “It’s easier to see whether an organization is taking this seriously.”

Sam Smethers, the chief executive of the Fawcett Society, which campaigns for women’s rights and equality, said the new regulation, passed by the British government in February, was the most significant legal change since the Equal Pay Act of 1970.

“It’s the first time we require employers to look at their pay and report on that, so that is significant change,” Ms. Smethers said.

There are doubts about how effective the regulation will be.

“There is no penalty for noncompliance,” Ms. Smethers noted. “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.”

Some companies say the numbers do not matter in the big scheme of things. Over a quarter of senior personnel interviewed for a survey in March by the consulting firm NGA Human Resources said the gender gap was not an issue for businesses.

And about 10 percent of the people interviewed said a plan was not necessary to address gender pay gap challenges in their organizations.

Even if these companies do not have a gender pay gap, it was surprising that they did not have a plan in place, said Geoff Pearce, a managing consultant at NGA.

“Businesses need to look at what the implications are,” he said. “If it creates an issue, that can affect their ability to recruit and retain talent, and studies have shown that the more diverse a work force is, the more productive it is.”

Still, the British regulation was likely to speed up change, Mr. Terry of PwC said; companies that do not grasp the value of reporting the salary information may be persuaded to take it seriously if their reputations are at stake and they are named and shamed.

“The gender pay reporting really smacks them in the face,” he said. “If they have a pay gap of 18 percent, they will get a lot of negative press.”