Pay Audits and Unintended Consequences
The government is to press ahead with plans to force large firms to disclose data on the gender pay gap among staff.
A consultation on the measure – introduced in the final months of the coalition – is to begin on Tuesday.
David Cameron will say the move will “pressure” firms into boosting women’s wages, as he vows to eliminate the gender pay gap “within a generation”.
BBC News Website 14 July 2015 : David Cameron to set out plans to tackle gender pay gap
This is all very well – few would argue with “equal pay for equal work” – but may argue how you define “equal work”.
Whenever a measure is proposed it is always useful to consider (hypothetically!) how you would subvert it; usually there is an opportunity for the Law of Unintended Consequences to come into play.
A simplistic headline “gender pay gap” figure could be immensely damaging due to this law kicking in.
This could happen for a number of reasons, possibly best illustrated with some examples.
A care provider has a gender balanced management team (let’s assume with no gender pay gap), but it has an overwhelmingly female front-line workforce. Most carers earn little more than the minimum wage. A headline figure for this company would show a huge gap – and the company would be “shamed” by a simplistic headline “gender pay gap” figure.
What is to be done?
Arguably carers should be valued more – but the customers of care providers (in many cases local authorities, in other cases the elderly themselves – frightened by the “monthly cost”) don’t want to pay more.
Sacking the male executives would improve the figure. As would overpaying a few female executives.
Having a recruitment freeze on female carers and only taking on new male carers would improve the situation. But:
- Such a discriminatory recruitment policy is probably illegal
- Most care customers prefer female carers
- There are not enough male carers
A technology company recognises that it has an overwhelmingly gender imbalanced workforce so it sets out to attract more women with suitable potential – sending their best female employees on school visits, on university recruitment “milk rounds” etc. – and manages to recruit a more gender balanced intake for training in their technology.
Consequently it has more female new starters – who are paid less than more experienced senior (and historically mainly male) staff. The gender pay gap has widened – and the company, that has done all the right things, gets “shamed”.
There is little they can do to correct this – there are not many skilled experienced women to recruit into the senior technical roles. So to correct the gender pay gap they may have to disproportionately recruit women into roles like HR and Accounts – a discriminatory (and stereotyping) policy that is probably illegal. “We had to discriminate to get our gender pay gap figure right” probably does not wash as a defence.
So we can conceive that companies can be penalised for doing the right thing. The Government will have to be cleverer than a simplistic headline figure of average pay per female vs. average pay per male.
It is also quite probable that companies will find ways to subvert the figure to continue to discriminate – particularly in companies where people are on individual contracts rather than on rigid graded jobs. This can be due to blatant discrimination but there is also a “natural prejudice” to follow the status quo, believing that no outsider can do the job better than an incumbent, tending to recruit in your own image, and believing that someone who does the job in the same style as you is “automatically good”.
The trend in many companies is towards individual jobs with specific job descriptions rather than lots of people filling one generalised job definition. Unless the government plans to have “job evaluation” inspectors trying to assess “equal pay for equal work” I can see lots of wriggle room for subverting the public gender pay gap figure.
Comparability is a thorny issue. Is a tube train “driver” (of an automated train) more or less valued than an air ambulance pilot?
“Equal pay for equal work” is meant to cut across job definitions; local authorities have had discrimination action taken against them when comparing for instance (female) cleaners against (male) dustcart operatives.
I guess the four main ways of assessing the worth of a job are:
- Measures of input: what does the worker have to put into the job (how many hours and how much “sweat” per hour).
- Measures of output (dresses sewn, bins emptied, bricks laid, bottoms wiped)
- The “value” of the output (“value added”, “contract value”, domestic mortgages value agreed, corporate loan value agreed)
- Pure market forces – what has to be paid to “get (and keep) the staff”?
Within a company different means of assessment may apply and apply in different ways. A technological “leader” may get a market forces rate based on their rarity, whilst the accounts assistant may get paid a lower rate because of ready availability of accounts skills. A director may successfully argue that his “executive assistant” is “invaluable” and should receive a rate that reflects how much they are valued.
The government plans are out to consultation. It will be interesting to see if they find a pay gap measure that is not liable to subversion or the Law of Unintended Consequences – or whether they kick the whole issue into the long grass as “too difficult”.