Harriet Harman’s long-promised Equality Bill looks set to land employers with further regulatory burdens, while doing little to meet its ostensible objectives – themselves of debatable utility.
The concept of an overarching piece of legislation to bring some coherence to the hotchpotch of laws on equality issues developed since the early 1970s makes some sense. But unfortunately the Equality Minister’s proposals go rather further than simply tidying up.
Two main extensions of the law are proposed.
First, private sector employers with more than 250 staff are to be required to reveal details of the average hourly pay of male and female workers. Across the economy the median pay gap, Ms Harman argues, is 23%. This figure, however, is not the one normally quoted: it refers to all workers, part-time as well as full-time. International comparisons are always couched in terms of full-time hourly earnings, which display a pay gap of roughly half this magnitude. Part-time work, for sound business reasons to do with the extra costs involved, frequently tends to be paid at a lower hourly rate than full-time, for both men and women. Indeed the alleged “part-time penalty” is greater for men than for women.
The requirement to report pay gaps, already established in the public sector, will put pressure on firms to justify pay differences between individuals. This will create a lot of hassle and extra costs to firms, as it has done in the public sector – where equal pay tribunal claims have rocketed in the past year (see previous post) as a result of group actions encouraged by unions and by “no win-no fee” lawyers.
It will distract the attention of management from its prime objectives of serving consumers and thus generating the profits on which jobs, taxes and pensions depend. It is unlikely, however, to do much to reduce the overall pay gap between men and women, which results in large part from men and women doing different jobs, rather than being paid differently for the same jobs - a distinction which Harriet Harman repeatedly fails to acknowledge. Despite all the huff and puff in the public sector, and massive costs resulting from re-grading exercises consequential on pay audits, the gender pay gap in the public sector actually rose last year.
The second major innovation of the proposed Bill is the imposition on public sector organisations (which for this purpose include many legally autonomous bodies such as universities) of a duty to “consider reducing socio-economic inequalities”.
This nebulous proposal is going still further to hog-tie local authorities, hospitals and schools. These organisations, which ought to be clearly focused on delivering services to the public, already carry considerable baggage in terms of requirements to consider gender equality, environmental sustainability, employment creation, support for small businesses, trade union recognition and a host of other objectives.
It is doubtful whether much will come of this beyond endless box-ticking: governments consistently over-rate their abilities to engineer desired social outcomes. How exactly are schools to know, for example, the socio-economic characteristics of individual pupils and their parents? And what can they effectively do to offset disadvantage? But each school will have to have an approved document setting out its approach and will be regularly monitored by people employed for this purpose. Headteachers will be penalised when they fail to meet targets which bear little relation to genuinely achievable outcomes.
It is a further distraction at a time when we need to be seeking value for money from our public services, which many consider to account for too large a proportion of our shrinking GDP and should be reformed and restructured. We do not need yet more “Socio-economic Equality Coordinator” advertisements filling the pages of the Guardian.
To be fair, we have yet to see the fine print of these proposals, but they look to be another nail in the coffin of the original New Labour project to build on the benefits of the market rather than to reassert Old Labour’s tribal conviction that government knows best.
Professor J. R. Shackleton is the author of Should We Mind the Gap? Gender Pay Differentials and Public Policy.