As of today, U.K. companies with at least 250 employees have a year to publish several data points on the gender pay gap that will be compiled into a public ranking geared at eliminating the nation’s 18.1% divide. Companies will have to disclose:
- Their median gender pay gap
- Their mean gender pay gap
- Their gender pay gap for bonuses paid during the year
- The proportion of men and women in each quartile of their pay structure
The government says the new initiative—covering some 9,000 employers with 15 million workers, about half the nation’s workforce—“will help employers to identify the gaps in their organizations and take action to close the gender gap.” But what the government doesn’t highlight is that once the figures are published, the new rule does not require companies to explain their gaps or do anything to narrow them.
By contrast, Iceland is taking a more forceful approach. Last week it became the first country to introduce legislation requiring employers to prove they are paying men and women equally. Those that can’t show pay parity face fines.
The U.K.’s rule, meanwhile, relies on “naming and shaming,” a tactic that assumes the fear of landing on the wrong end of the public ranking is enough incentive for companies to change.
But is it?
Ann Francke, CEO of the Chartered Management Institute, argues that this softer approach will be effective since it invites public scrutiny and encourages companies to set targets for improvement. “That’s how businesses work, they set targets,” she says. Explaining her outlook, Francke pointed out that this tactic for corporate change has worked for the U.K. in the past. In its push to get more women on boards, the government has provided no real stick other than transparency. And while the rate of progress declined in 2016, the share of female directors in the FTSE 100 has increased from 12.5% in 2010 to 26% last year.
With that in mind, I’m more hopeful the new rule might just work.