The Government is consulting on how best to improve the effectiveness of Equal Pay legislation and thus eliminate discriminatory practices,  such as not putting salary bands or levels on recruitment adverts.  Often these practices disadvantage women more than men. Making people haggle is not a great way to welcome anyone into one’s organisation and evidence shows that women who haggle over their salary (when they do at all) are often viewed negatively when compared to men. However, this isn’t just a ‘women’s issue’. This matters to men too. Fairness is a core ingredient of performance. The evidence suggests that employees who believe they are treated fairly are more likely to trust their leaders, cooperate with colleagues, contribute discretionary effort, support organisational change and remain with their employer.

This does not mean that fairness requires everyone to receive the same reward. It requires employees to have confidence that rewards, opportunities and decisions are justified and determined through fair processes. And this goes to the nub of the Government’s consultation. In recruiting practices, fairness would demand transparency over salary, benefits and discretionary pay otherwise candidates have no idea whether the job is worth taking. This matters to both genders equally.

For equal pay is not just about equity and fairness. It is also about productivity and growth. There is now growing evidence that greater transparency over pay (including at the recruitment stage) does have a positive impact on performance.[1]

Researchers at Coventry University and Birmingham City University studied UK companies between 2005 and 2023, using the introduction of mandatory gender pay gap reporting in 2017 as a policy intervention. Their dataset covered 34,935 firms. The study found that mandatory reporting of pay ratios improved sales growth compared with organisations outside the reporting requirement. This effect was larger in female dominated industries.

High performance organisations know that employees are more likely to trust management when decisions are made consistently and when they believe managers will act fairly even when outcomes are disappointing. Trust matters because organisations depend on employees making decisions without constant supervision, sharing information and cooperating with others. And high-performing organisations depend on employees doing more than the minimum required by their job descriptions. This is often described as discretionary effort. Transparency about pay is therefore integral to encouraging men and women to give of their best.

The other important factor to note when looking to entrench equal pay cultures is that paying both genders fairly encourages a better balance for those with caring responsibilities. Work is an integral part of people’s lives and both women and men should feel that their work enables and complements other parts of their lives. Equal pay is critical to ensuring that there are fewer resentful carers locked out of the labour market at home, and fewer resentful workers forced into overtime to make ends meet and never being at home. Often women find themselves in the first category and men the latter. So, let’s support the government’s efforts to close the loopholes in the equal pay legislation. For we need women to flourish at work as we need men to be able to spend more time caring at home.

Nick Isles

CPRMB

[1] British Journal of Industrial Relations, 64(3), 497–518

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