UK Government Statement on Gender Pay Gap

News April 7, 2020

It is with deep concern that the Women in Governance team reflects on the alarming joint statement by the United Kingdom’s Minister for Women & Equalities, Liz Truss, and Equality and Human Rights Commission Chair, David Isaac. On Tuesday, March 24th, an announcement was made regarding the suspension of gender pay gap reporting for employers in the UK:

“We recognize that employers across the country are facing unprecedented uncertainty and pressure at this time. Because of this we feel it is only right to suspend enforcement of gender pay gap reporting this year.”

We cannot help but feel that women’s rights have once again been put aside, neglecting women’s invaluable contributions to the economy and the corporate world. The private sector needs to leverage all its workforce potential and, to do so, governments should prioritize pay equity and this is especially true during our response to the COVID-19 crisis. Women already enter this crisis paid on average 17.3% less than men, which exacerbates the economic impact of COVID-19 for an already marginalized group. This pay gap rises to as much as 35% in some parts of the world. As a result of COVID-19, employers will be executing mass layoffs and pay reductions as a means of bolstering their viability. Furthermore, the consequences of quarantine and social distancing have increased women’s unpaid workload as well. Inequities in pay will increase dramatically if not diligently monitored and corrected. It is Women in Governance’s belief that we should not let COVID-19 and its impending economic impacts thwart progress to gender equality; what gets measured gets done, and what is legislated more so.

The UK government’s decision to suspend gender pay reporting does very little to demonstrate that it is prioritizing and considering its female constituents.

Women in Governance understands that given the current state of the economy, it can be helpful for organizations to be relieved from certain fiscal burdens. However, we strongly believe in the need to maintain the application of gender pay gap reporting. The enforcement of women’s rights should be an unwavering standard.

The monitoring and correction of inequalities in pay, composition of decision-making bodies, and labour workforce in general, are crucial for a successful recovery and the creation of a more resilient future. This is the best way to develop timely responses to existing gaps, which in turn generates a more robust female talent pipeline. Multiple studies have shown that diversity acts as a safety mechanism in times of crisis, in big part due to the major benefits gained from women and men’s complementary approaches to decision-making, risk management and problem resolution. Research conducted by McKinsey&Company revealed that companies which have cultural diversity and gender diversity outperformed non-diverse companies by up to 35%. Further, following the global downturn in the economy in 2008, companies that were diverse recovered more rapidly.

A future with a gender equal workforce is a brighter one where we are all better prepared to overcome emergencies, a plethora of research demonstrates women’s ability to manage risk effectively. In the corporate world, this is demonstrated by what is known as the “glass cliff phenomenon”, which holds that women are appointed as leaders primarily when there is a high risk of organizational failure. It is also worth noting that the likelihood of survival for firms with a female CEO stands at 60%, compared to 49% for firms with a male CEO.

The problem is far from solved in Canada, as the most recent data from Statistics Canada reveals that in 2018, women still earned 13.3% less per hour, on average, than men. On the issues of gender equity, the UK often serves as a model for Canadian legislation as is the case with the “comply or explain” governance structure or Ontario’s Pay Transparency Act. We sincerely hope that our legislators will refrain from adopting such highly counter-productive measures as the one taken recently by the UK government.

This is not the time to regress by renouncing long-awaited policies which we’ve fought so hard to implement and repeating old patterns which have held back half of our population. We urge you to heed to Simone de Beauvoir’s cautionary words “Never forget that it will be enough for a political, economic or religious crisis for the rights of women to be called into question. These rights are never acquired. You will have to remain vigilant throughout your life” and avoid this type of action which will surely be detrimental for both women and men in the Canadian society and economy.