Gender Pay Gap Disclosure

In the UK, companies with more than 250 employees are being forced to disclose the “gender pay gap” between men and women: If they were wise, they would disclose so much more.

There is no doubt that, in the past, women got a tough deal when it came to pay. Most companies had different pay scales for men and women, with women earning a fraction of the pay of men doing the same job. To listen to the hype in the press at the moment, you could be forgiven for believing that this was still the case, but it is just sheer nonsense.

There is a statistical difference between the average pay of men and women, but that does not imply that employers pay women less just because they are female. Forget altruism: companies exist only to make money. Even charitable organisations exist only to maximise the money available to donate to their good causes. The idea that there is some patriarchal plot to keep down the wages of women is so far removed from the reality of business as to be almost laughable. If employers believed that they could pay women less for doing the same job, at the same level, and with the same results, they would all employ women rather than men at all levels. If CEO’s felt that having more women on the board would increase the profitability of their companies, they would do so.

Up to the age of around 40, there is virtually no pay gap between men and women. For younger graduates, women earn more than men. There are several reasons why the wage gap increases in later years: all are reasonable and logical, but to see them you have to abandon the “women are always the victims” mantra. So what are these reasons and why do I think that companies should disclose more pay gap information rather than less?

 

Career Gaps and changes of career: This is the probably the biggest reason for the pay gap. It is still the case that women are much more likely than men to take time off work to look after the children. This will slowly and inevitably change as young women now often earn significantly more than their partner. I know more than one couple where the woman will have to go back to work to pay the mortgage, leaving the man at home. Neither are particularly happy with the situation.

If society, largely due to years of feminism, undervalues “stay-at-home mums”, it undervalues much more “stay-at-home dads”. Again, this arises from decades, even centuries, of men being regarded as the breadwinner, and those who don’t win the bread, risk losing the respect of both their partners and society in general. There are other reasons why both men and women may take a career break, or change careers, and I would suggest that they too would suffer financially as a consequence. So, my suggestion to companies disclosing pay information would be to show their salary distribution not only by gender, but also by years of experience in either the company itself, or a comparable company.

Performance: I worked for many years in a large company and salaries were vastly different amongst those doing nominally the same job. This was due to both experience, mentioned above, and the outcome of performance reviews.

Generally, performance related pay is thought to be a good thing and companies will do their best to retain, reward and promote their best performers. Companies exist to maximise profit, not to socially engineer equality between employees. I have no idea how women perform relative to men in different jobs, but, if I were an employer, I would find a way of bringing performance into my pay disclosure. In other words, and I don’t know the answer to this, are women (or men, for that matter) paid less because of their gender, or is it really related to relatively poor performance.

Choice: In our affluent society, we have the privilege of a relatively high standard of living. We have much more freedom than those in many other societies to choice jobs and careers that reflect our interests.

We all know that girls at school are now put under a lot of pressure to enter science and engineering, and I am sure that there cannot be a schoolgirl in the country who does not know that she has the freedom to go in that direction if she wishes. Nevertheless, it is still the case that, completely by choice, girls and boys still gravitate towards different subjects. This is not a patriarchal plot, it just reflects different priorities and interests. Similarly, many women choose to work part time, even after the children have flown the nest. This is not wrong, it is a choice, but it does influence average earnings. If I was an employer, I would relate the number of employees in part-time or lower paid jobs to the number applying for those jobs. If there are twice as many women working part time, does that reflect the proportion of women applying for jobs of that type.

In summary, I believe that employers are being set up to appear to be sexist in their pay policies with no real basis in fact. They should preempt the accusations by presenting all the evidence they can to show that differences in pay are due to many factors, but are not directly related to the gender of the employee.