Mind the Gap

Britain’s gender pay data needs a rigorous audit. Some companies have suspiciously reported no gap between the pay of male and female employees, the Financial Times reported on Thursday. The government thought transparency would help close the divide. To be credible, though, the data must be audited – and offenders punished.

By April next year, companies with at least 250 employees must publish the difference between what men and women earn per hour, expressed as a percentage. For further clarity, they must calculate the gap on both a median and an average basis. The legal requirement is part of a broader effort by the Conservative government to address inequality in the workplace. But data submitted by 15 companies identified by the FT suggests the system is open to rigging and needs a dramatic overhaul.

The mostly small companies in sectors including, retail, science and recruitment said they had no pay gap at all. For this to be true, the companies would need to employ the same number of men and women at each level of the company and pay people in equivalent jobs the same amount. That’s technically possible but highly improbable. A more plausible explanation is that companies are fiddling the data. The UK arm of Hugo Boss, the German retailer, has revised its data to show a mean pay gap of 32.6 percent and a median gap of 76.5 percent.

The solution to this mess can be found in the actions of the companies which have already reported their data accurately. They have hired external auditors to ensure the numbers are correct and that the legal document, which must be signed by a director, can be submitted in good faith. But the government will also need to check the data – and fine companies that fall short.

While it may seem harsh to shame small companies that are already dealing with a weak pound, rising inflation and soaring business rates, the gender pay gap exercise was created to expose persistent inequality in British companies – and encourage employers to fix it. Unless companies are forced to come clean, women will have to mind the pay gap.

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