A Report by the Equality Trust Into Unlawful Pay Discrimination
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Fifty Years is Long Enough: A Report by The Equality Trust into Unlawful Pay Discrimination May 2020 Photo credit: Trinity Mirror / Mirrorpix /Alamy TABLE OF CONTENTS Introduction 3 The Ten Largest Pay Gaps Among Reporting FTSE 100 Companies 4 The Ten Largest Bonus Gaps Among Reporting FTSE 100 Companies 4 Executive Summary 5 Recommendations 5 Background to Gender Pay Gap Reporting in 2020 6 The Gender Pay Gap and Pay Discrimination 6 To What Extent is the Gender Pay Gap a Consequence of Pay Discrimination? 7 The Value of Gender Pay Gap Figures in Assessing Unequal Pay 7 Observations and Recommendations From 2019 8 A Year on and What has Changed? 9 Overview of Gender Pay Gap Reporting 10 Not Enough Women at the Top? 10 Definitions 11 Market Rates 12 Transparency 13 The Unexplained and the Unnamed 14 Looking in the Wrong Direction 15 Monitoring 15 A Word on Bonuses 17 Finally, Let’s Celebrate 17 Conclusions 18 What’s Next? 18 Appendix A 19 Introduction Friday 29th May is the 50th anniversary of the passage of the Equal Pay Act 1970. Yet as recent high profile cases have shown, unlawful unequal pay, more appropriately known as pay discrimination, remains endemic. This report seeks to answer the question of whether gender pay and bonus gap reporting is contributing to the elimination of, or at least the reduction in, practices that contribute to unlawful pay discrimination. The Equality Trust has been campaigning on income inequality for over a decade, and pay discrimination is an important part of this. The research demonstrates that in countries with high levels of income inequality, we also see higher levels of mental and physical ill health, violent crime and incarceration, drug and alcohol addiction, teenage pregnancy and obesity and lower levels of social mobility, educational attainment and trust. This report examines the gender pay gap reports published by FTSE 100 companies and their identified subsidiaries, for the period ending 5th April 2019 and relies on data published on the Government portal as of 19th April 2020.1 A wider review of published gender pay gap figures for all reporting companies was undertaken to ascertain the direction and speed of travel of the gender pay and bonus gaps. Unless otherwise stated, all on-line references were accessed on 19 April. The Equality Trust would like to gratefully acknowledge the financial support of the Friends Provident Foundation that has made this report and the campaign activity around it possible. 1 https://gender-pay-gap.service.gov.uk 3 The Ten Largest Pay Gaps Among Reporting FTSE 100 Companies Company Mean Gender Pay Gap % HSBC BANK PLC 55.1 EASYJET AIRLINE COMPANY LIMITED 54.7 ANGLO AMERICAN SERVICES (UK) LTD. 50.1 BARCLAYS BANK PLC 47.4 BARRATT DEVELOPMENTS PLC 45.5 ST. JAMES'S PLACE MANAGEMENT SERVICES LIMITED 43.4 ABERDEEN ASSET MANAGERS LIMITED 42 BRITISH-AMERICAN TOBACCO (HOLDINGS) LIMITED 42 P.H. JONES FACILITIES MANAGEMENT LTD 41.9 STANDARD LIFE INVESTMENTS LIMITED 41.4 The 10 worst reporting companies within the FTSE 100 (or their subsidiaries) all have a gender pay gap of over 40%. In other words, for every £1 a man earns, on average, a woman earns 60p, and at HSBC Bank, the figure is 45p.2. The Ten Largest Bonus Gaps Among Reporting FTSE 100 Companies % Difference in bonus pay Employer (Mean) 2019/20 DS SMITH PLC 86.4 SSE ENERGY SUPPLY LIMITED 86.2 P.H. JONES FACILITIES MANAGEMENT LTD 82.5 ANGLO AMERICAN SERVICES (UK) LTD. 81.2 CARNIVAL PLC 81 BARRATT DEVELOPMENTS P L C 79.3 ITS TESTING SERVICES (UK) LIMITED 79.2 PRUDENTIAL SERVICES LIMITED 79.1 COMPASS GROUP, UK AND IRELAND LIMITED 78.2 RIGHTMOVE GROUP LIMITED 76.9 The ten worst gender bonus gaps are in excess of 75%, in these companies for every £1,000 a woman gets as a bonus, on average a man will receive in excess of £4,000. 2 See Appendix One for the full figures for the FTSE 100. 4 Executive Summary Recommendations ● There is still a shocking level of complacency Companies that want to achieve real gender pay within many FTSE 100 companies as to equality are encouraged to: the supposed absence of gender pay discrimination within their pay systems. ● Commit to undertaking and publishing a ● Companies are not, by and large, operating measure of their in-grade, (horizontal) pay pay structures that are transparent. The vast gaps. majority of companies do not advertise a ● Have an evidence-based action plan to pay rate for the job, or even a salary range. address their failure to recruit and retain These practices are recognised as ‘high risk’ women in high value roles. in terms of gender pay gaps. ● Such an action plan should be owned ● While gender pay gap reporting has shone a by a high-level officer in the company light on the extent of gender pay and bonus and be reported to and overseen by the gaps within companies (the highest gender Remuneration Committee. pay gap reported by a FTSE 100 company ● Commit to eliminating those elements of this year was just over 55%), it has not seen their pay and reward structures defined as the necessary cultural shift that would lead ‘high risk’ by the Equality and Human Rights to the action necessary to rapidly close the Commission. gap. ● Adopt a policy of salary transparency or in ● At the current rate of progress, evidenced the interim, a contractual policy of a ‘right to by comparing the average pay gap among know’ so that women can ask for and receive reporting companies for 2019 with that for details of the pay of potential comparators.3 2018, it will take almost 200 years before the ● The requirement for reporting on the gender gender pay gap is eliminated. pay gap should be expanded to include companies with more than 100 employees. ● Pay gap reporting should also be expanded to include ethnic and disability pay gaps. 3 We of course acknowledge that people of all genders can be unlawfully underpaid, but in the vast majority of cases pay discrimination works to the detriment of women. Our recommendations should be read as applying to people of all genders concerned about unequal pay. 5 Background to Gender Pay The Gender Pay Gap and Pay Gap Reporting in 2020 Discrimination In 2017, the Government introduced a requirement The gender pay gap measures the average hourly for companies with more than 250 employees to pay of men and compares it with the average hourly report details of their gender pay gap,4 with the first pay of women (it is then reported as both mean and set of figures published in 2018. While gender pay median values). There are two main causes of the inequality is a major issue in its own right, it is also a gender pay gap. The first is what is known as the significant contributor to overall income inequality. ‘vertical gap’, which is caused by the fact that there Recent data from the Office for National Statistics are more men in senior roles, or higher graded (ONS) concludes that the gender pay gap for all work. In short, it is caused by a disproportionate employees in 2019 stood at 17.3%, although it was failure to appoint or promote women to higher paid considerably less, 8.9%, among full-time employees. roles. There are a number of factors that contribute The difference between these figures comes from to this cause, ranging from direct discrimination (for the fact that there are more women working in part- example, a belief that women are not good enough time jobs, which for gendered reasons, tend to be or that they would not fit in), indirect discrimination lower paid.5 (for example, a failure to make the work or the workplace accessible to employees with caring Companies that employ over 250 employees in responsibilities, which disproportionately impacts the UK are required to report on their mean and on women) and a combination of occupational medium gender pay and bonus gaps, as well as segregation, structural issues in education and figures relating to the percentage of men and in the labour market and economy. The first women who receive a bonus, and the distribution element of the gender pay gap - failing to appoint of men and women across four pay quartiles (the women to high value roles -will at times be a proportion of men and women in each of four consequence of institutionalised and structural segments from lowest to highest paid). Companies gender discrimination. That is, discriminatory are also encouraged to produce a commentary on practices within individual companies (institutional the data.6 discrimination) and/or a level of disadvantage experienced by women in wider society (structural There is a twelve month gap between the date that disadvantage). the data relates to and its publication. In 2019, 10,828 companies reported on their gender pay But while important and, to some extent, shameful, gaps as of 5th April 2018. The average pay gap within the vertical pay gap is not the only factor driving those companies was 14.19%. Due to COVID19, the the gender pay gap. There is also a horizontal Government waived the obligation to report this pay gap, arising from a failure to pay men and year, and as a consequence reporting fell by almost women equally for doing like work, work rated as half, with 5,453 companies reporting their gender equivalent, or work of equal value. This element pay gaps as of 5th April 2019. The average pay gap of the gender pay gap is expressly unlawful, and within these companies was 14.12%, a closing of has been, on the day this report is published, for the average gap within reporting companies of just half a century.