New rules requiring UK companies with at least 250 staff to report gender pay gaps should be extended to small companies with more than 50 staff, according to the Commons business, energy and industrial strategy committee.
British companies should also be forced to publish how they plan to narrow their gender pay gaps, says the committee’s report.
The report also notes that while the median pay across the economy is 18% in favour of men, at an organisational level, the new figures reveal gender pay gaps of over 40% are not uncommon in some sectors and that 78% of organisations report gender pay gaps in favour in men. New analysis by the committee finds that 1,377 employers (13% of the total) have gender pay gaps in favour of men of over 30%.
The committee notes that only around half the members of the UK workforce are expected to be covered by the present reporting requirements. It says evidence shows hat the pay gap is higher in smaller businesses and calls on the Government to widen the net of organisations required to publish gender pay gap data to those with over 50 employees.
The report recommends that organisations should be required to publish, alongside the figures, an explanation of any gender pay gap and an action plan for closing the gap, against which they must report progress each year, as part of normal reporting requirements.
Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee said: “The gender pay gap must be closed, not only in the interests of fairness and promoting diversity at the highest levels of our business community, but also to improve the country’s economic performance and end a monstrous injustice.
“A persistent gender pay gap shows that companies are failing to harness fully the talents of half the population. The penalties of working part-time, both financial and in terms of career progression, are a major cause. Companies need to take a lead. For example, why aren’t they offering flexible working at senior levels? They must look at why they have a pay gap, and then determine the right initiatives, policies and practices to close it. Chief executives should have stretching targets in their Key Performance Indicators and be held to account for any failure to deliver.”
The Committee’s report calls for clarification of the way in which the remuneration of equity partners is included in the gender pay figures before next year’s figures are published. It notes that the exclusion of the highest paid people in organisations made “a nonsense of efforts to understand the scale of, and reasons behind”, the gender pay gap and says that the Government was wrong to omit the remuneration of partners from the figures required in the Regulations. The report recommends that the Government uses the guidance to clarify how data on partner pay should be calculated and included in time for the publication of data next year.
TUC General Secretary Frances O’Grady welcomed the report and said: “Thanks to the reporting rules, we know much more about how bad the gender pay gap is in many large companies. But merely shining a light on a problem doesn’t solve it. We need stronger rules that cover more employers and require them to set out what they will do to close their gender pay gap.”