COMMONS

How will the Government close the gender pay gap?

09 February 2016

As businesses await the Government’s proposals for gender pay reporting requirements, Women and Equalities Committee question Minister Nicky Morgan and Skills Minister Nick Boles in the final session of the gender pay gap inquiry.

Witnesses

Wednesday 10 February 2016, Room 15, Palace of Westminster

At 10.30am

  • Rt Hon Nicky Morgan MP, Secretary of State for Education and Minister for Women and Equalities
  • Nick Boles MP, Minister for Skills, Department for Business, Innovation and Skills

Purpose of the session

Areas of particular interest to the Committee include:

  • Finding out the Government’s response to evidence the Committee has heard on the impact of gender pay gap reporting regulations, the details of which are expected imminently.
  • What action the Government is taking to tackle the gender pay gap for women over 40.
  • What plans, if any, the Government has for ensuring that the skills of women aged over 40 are fully utilised.

Background

The Government has recently announced measures to compel larger employers to publish bonus information by gender, to extend gender pay reporting rules to include the public sector, and a new scheme in which graduate employers will process applications without visible names. However, none of these have mentioned women over 40.

Chair's comments

Committee Chair Maria Miller said:

"The Prime Minister’s commitment to eliminating the gender pay gap in a generation is clear but the Committee is concerned that the policies to bring about this change are not clear and may not be adequate. We want to find out what new policies the Government might be considering and why they think gender pay gap reporting can address the structural issues many women face in accessing employment. In particular we want to investigate how Ministers plan to reduce the pay gap where it hits hardest – amongst women over the age of 40."

Reporting Regulations

Draft regulations on gender pay reporting are due to be published shortly. The TUC has argued that gender pay gap reporting "must require employers to do more than publish numbers". It thinks organisations should be required to publish an evidence based analysis of the main causes of the gender pay gap (GPG) in their organisation, along with the action they intend to take to narrow it, and then report on progress against that.

The Discrimination Law Association points out that "voluntary measures… have not managed to eradicate the GPG after over 40 years of legislation, and the position is unlikely to change from further voluntary measures. Such entrenchment requires mandatory action."

The 250 threshold?

Most of the evidence to the inquiry has called for a lowering of the reporting threshold, which currently stands at 250 employees. This excludes SMEs, which account for 99.9% of private sector companies, and the majority of third sector organisations – 68% of whose employees are women. Sixty per cent of all private sector employment in the UK is in SMEs.

Furthermore, the Committee has heard evidence that:

  • Smaller employers are less likely to have good equalities practice in place because they are less likely to have a separate HR function.
  • The additional burden of calculating the gender pay gap could be managed by some employers if they have a modest pay-roll system to generate the data with minimal additional time and cost.
  • ONS data shows that the highest gender pay gap for all employees in 2015 was in organisations with 20-99 staff.

However, business organisations have argued that extending gender pay gap regulations to organisations with fewer than 250 employees would be a significant administrative burden for SMEs.

Overall GPG: the whole story?

The Committee has heard evidence that overall gender pay gap figures may be of limited use. Women over 40 and those working part time suffer the greatest gap, and to solve this problem, data needs to be broken down by age and full-time/part-time status.

As Michael Newman from the Discrimination Law Association told the Committee:

"If the requirement is going to be effective, it needs to have detail in terms of the categories that are being recorded. We know there is a difference in terms of the gender pay gap between part time and full time workers. We know there is a difference in terms of age categories. The only way that can be measured is by feeding that into the pay reporting requirements."

Where are the women over 40?

The Committee question Nicky Morgan and Nick Boles about the Government’s plans to close the gap for women over 40, with a particular focus on the potential economic gains, on better provision for women returners, flexible working, and better provision for carers.

Evidence from Business in the Community to this inquiry highlights the specific loss of older women’s skills:

"Older workers represent a valuable untapped resource – BITC’s Missing Million research found that if the employment rate of the 50-64 age group matched that of the 35-49 age group, this would boost UK GDP by £88 billion."

Underemployment or unemployment because of family and caring responsibilities is a common problem among women over 40. 2.4 million women who are not in work want to work and over 1.3 million women want to increase the hours they work. Nearly a quarter of women aged 50 – 64 have an informal caring responsibility for a sick, disabled or elderly person. Committee Chair Maria Miller said:

"Evidence to the Committee indicates that the loss of older women in the workforce – and their skills – is damaging for individual women and bad for the economy, particularly productivity. We are particularly keen to find out what plans the Government has to support carers to work, and whether these are part of its gender pay gap strategy."

Further information

Image: Parliamentary Copyright

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