Focus: Why business isn’t tackling the gender pay gap

After almost a decade of working for a multi-million-dollar tech company in London, Abigail Cartwright found out that some of her male colleagues, who were doing the same work, were being paid up to £75,000 more than her a year.

“I thought, ‘It’s an oversight’,” says Cartwright (not her real name), a senior executive at the time. However, her grievances went unheeded by the company’s bosses, so she quit and took her employer to court. “I don’t know where I got the strength from,” she admits. “But I had to do it.”

The employment tribunal eventually ruled in her favour and she received a six-figure sum in 2016, but the long legal wrangle took its toll. “Those were the toughest, darkest times of my life. I was under psychiatric care and on antidepressants,” she says.

To fight workplace discrimination such as Cartwright’s, the Government has demanded that companies with 250 staff or more publish the average pay for men and women by April 5. So far, only 595 businesses out of about 9000 have done so, of which a fifth have revealed gender pay gaps of 20% or more in favour of men, including Clydesdale Bank (37%), accountancy giant PwC (33.1%) and asset manager Octopus Capital (38.1%).

The gender pay gap and equal pay are different things. Although the former is the difference between the average earnings of men and women, equal pay is laid down in law and requires companies to pay men and women the same amount to do the same job.

Thanks to the new reporting rules, lifting the veil on pay data could make companies more accountable.

Two dozen business, including the British Museum, said they have no pay gap at all, a situation which is highly improbable because it would mean employing an identical number of men and women on the same salary across pay grades — although this is technically possible. Just this week, banking giant Citi said its pay gap is virtually zero.

However, a handful of companies have altered their data several times since they first filed it, casting doubt over how credible it is. The UK arm of fashion house Hugo Boss changed its mean pay gap from 0% to 32.6% and then 7.2% over the course of just nine days.

“Where the information is manifestly incorrect, we will be looking at our enforcement powers,” says Rebecca Hilsenrath, chief executive of the Equality and Human Rights Commission (EHRC), the body responsible for the data.

But the database has been criticised, and calls for an audit of the figures are growing louder.

“My biggest problem with the way the Government is making businesses report their figures is that the calculations they’ve been asked to produce are creating bogus statistics,” says Kate Andrews of the Institute of Economic Affairs. “What most people want to know, when they’re informing their opinions, is whether or not men and women are being paid equally.”

A consultation is under way to decide how to punish companies that fail to share the data or report inaccurate figures. They could face unlimited fines or convictions, the EHRC says. However, this would require a change in the law, some employment lawyers have warned. Tackling inequality without a robust legal framework will be a sizeable challenge.

Another source of discord is the race pay gap. “The issue isn’t just related to women,” says Kiran Daurka, a partner at London-based law firm Leigh Day. “The Government has missed an opportunity to introduce reporting on race pay difference. We don’t have proper data to monitor what that disparity is.”

In private, many businesses are concerned that although the figures are well-meaning, they are misguided. There is a gender pay gap of 18.4% across sectors, according to recent figures from the Office for National Statistics, but some industries have a deeper issue than others.

At budget airline easyJet, for example, women’s hourly pay rates are 52% lower than men’s. The gulf exists because only 6% of its UK pilots are women — a job that pays £92,400 a year on average — and there is a shortage of female pilots, whereas 69% of lower-paid cabin crew are women, with an average annual salary of £24,800, thus skewing figures for the entire workforce. The airline says men and women are paid the same when in the same job.

Virgin Money, run by equality crusader Jayne-Anne Gadhia, is another “offender”, with a 32.5% pay gap. The bank, one of the few companies to report its pay gap voluntarily in 2016 ahead of the rules, said it was aiming to achieve a 50:50 gender balance by 2020. It recently revealed that just 35% of employees at the top of the company were women, compared with 73% in the lower ranks.

On Monday, Home Secretary Amber Rudd called on businesses to help a greater number of women reach the upper echelons by promoting more from junior rungs, changing the way they recruit and allowing flexible work patterns. Only eight businesses in the FTSE 100 have female chief executives and, of the 1060 directors on boards, only 205 are women, the most recent independent review by Sir Philip Hampton and the late Dame Helen Alexander said last year.

Questions also remain over how much action firms will take on an issue if they are one of many being named and shamed. However, with the pay gap thrust into the limelight by Carrie Gracie’s recent resignation as China editor at the BBC and the April deadline fast approaching, safety in numbers may quickly evaporate.

You’re better off at Asda… in the warehouse

Thousands of shop-floor workers at supermarket chain Asda, who are mostly women, have been seeking to be paid the same as their colleagues in Asda’s distribution centres, predominantly men, in one of the largest-ever equal pay legal battles.

Warehouse staff earn between £1 and £3 an hour more than chatty cashiers or shelf-stackers. It has been estimated that the grocer could be facing claims for compensation dating back to 2002 and totalling £100 million. Workers at Sainsbury’s are embroiled in a similar dispute over equal pay.

“People don’t talk about pay very quickly or easily, so they don’t know what their starting point is in comparison to other people,” says Leigh Day’s Kiran Daurka.