How to end the UK’s gender pay gap

More than three decades after the equal pay act, the gender pay gap still stands at about 19%, with the average British woman earning around 80p for every £1 earned by a man.

David Cameron believes he has a few ways to narrow the gulf and has vowed to eliminate it “in a generation”. But for many people that is clearly too long to wait.

There is little that employees can do for themselves to secure equal pay overnight, but what is there to stop their employers simply wiping out any disparity at their firms in one fell swoop? Nothing, it turns out.

New government rules are coming in that will force bigger employers to publish their pay gap. The idea is to name and shame the worst offenders, but there are no legal requirements for employers to actually close the gap.

But here’s a simple idea: an organisation that finds there is a pay gap between its male and female employees could just raise women’s pay.

That is exactly what one London start-up has done. What’s more, it plans to repeat the exercise every year.

Marketing agency Brainlabs analysed pay across its 40 or so staff and found a difference of 8.6% between average men’s and women’s salaries. So it raised women’s salaries by an average of 8.6%.

Managers consulted with all the staff first and gave them three options: do nothing; raise women’s salaries by an average 8.6%; or, give male employees a pay cut.

The issue was put to a vote and the consensus was to raise women’s pay (no one went for the third option).

There were some objections – including the argument that there are not as many women to choose from in the tech industry to fill senior roles, according to Brainlabs director Sophie Newton. But for most that was no reason to leave a pay gap.

Newton, a 27-year-old maths graduate, views the radical move as turning the gender pay problem on its head. Rather than waiting for policies and practical changes to level up men and women’s pay over time, the employer levels the pay and then works backwards to make sure that individuals’ pay represents value for money for the firm.

By vowing to do the same audit and level average pay every year, Brainlabs hopes to keep everyone involved in recruitment and setting salary levels on their toes as the company grows. It now has 60 employees and will have more than 80 by the end of the year.

The company is calling this annual levelling-off a “pay gap tax”.

“We are penalising ourselves with this tax if we didn’t get it right as business owners,” says Newton. “It’s saying, first of all there is a pay gap problem and we are going to fix that. But it’s not just a pay problem, it comes down to whether the environment is fair and equal, how hiring and promotion work. We are working back to fix each one of those.”

Brainlabs is not alone in running out of patience. The University of Essex recently revealed it was raising female professors’ pay, to bring their average salaries level with their male counterparts. It found there were no other significant pay gaps at other levels but with a one-off pay rise for professors it wants to ensure the university-wide pay gap is closed when the new academic year begins in October. The university expressed “impatience” at waiting for the gap to close by other means and highlighted a widespread gender pay problem at professorial level in higher education.

Similarly to Brainlabs, the university is not just raising women’s pay but taking other steps to combat unconscious bias, such as ensuring senior staff encourage female professors to apply for pay rises when appropriate. It also plans regular pay audits.

Time will tell if this approach works and whether other employers will be prepared to give it a try.

When large companies – those with 250 or more employees – do finally begin publishing their pay gaps in 2018, the government plans to use the numbers to compile league tables. It promises to highlight sectors where pay discrepancies need tackling most.

But there is a risk that just revealing big gaps will achieve little more than confirming what disgruntled workers already know. Highly qualified jobseekers might be able to shun the worst offenders, some consumers may even boycott the most inequitable brands, but it will make little difference to Britain’s overall pay gap.

Ministers know this, and so alongside the gender pay reporting rules they have also extended flexible working rights and brought in shared parental leave, meaning that for those families able to afford it, fathers can take time off work to care for small children. The government says the National Living Wage introduced in April will primarily help women and narrow the gender pay.

The good news is that female employment rates have been rising and the pay gap has been narrowing.

The bad news is that there is still ample evidence that many women are starting out their working lives on worse pay than men, partly because they are going into sectors where pay is lower overall. As long as such patterns continue the UK wide gender pay gap will endure.

An analysis by the Trades Union Congress found young women with vocational qualifications earn 15% less than their male peers. That was an even bigger gender pay gap than the 10% between young men and women with academic qualifications.

The organisation said the wide vocational pay gap was partly down to the fact that women work predominantly in sectors where pay is poorer and they remain a “rarity” in better paying sectors such as engineering and construction.

In 2015, just one in 40 vocational qualifications in construction were awarded to women. By contrast, in health and care, women dominated, with 64% of vocational qualifications.

Gender pay reporting by itself will not change those imbalances. What is needed is better careers advice and more work to break down stereotypes.

And then there is the motherhood pay penalty. For those women who do start out on similar pay levels there is still a big chance that having children will mean they end up falling behind financially.

More flexible working rights are helpful, but opportunities are still too rare for men and women who want to work part-time because they have caring responsibilities.

To change that will take nothing short of an revolution in employer thinking. They might know flexible working can boost morale, productivity and employee retention, but such potential gains appear to be too little incentive to prompt radical change. The same goes for equal pay.

If incentives aren’t working, perhaps penalties will. It’s time for everyone – ministers included – to contemplate a pay gap tax.