The independent research examines the impact of the regulations on employers, how they could be improved, and whether pay transparency in other areas could help narrow pay inequalities.
IPPR's study, based on findings from a survey, interviews and focus group of 60 employers, calls for employers to publish information on a wider range of pay inequalities in annual Fair Pay reports.
The research found that the regulations have pushed the gender pay gap – and gender inequality more broadly – up the agenda, prompting a board-level focus on the issue for the first time in many organisations.
Most importantly, they have spurred action; four in five (81.3 per cent) large employers have considered or taken further measures to narrow gender pay inequalities as a result of the regulations. A similar proportion expect the regulations to incentivise more employers to reduce the gap.
The research also found that – despite initial unease – there was strong employer support for gender pay reporting, with four in five saying the regulations should be maintained. Employers were also willing to consider extending transparency to other areas including ethnicity, an option on which the Government is currently consulting.
The think tank recommends that Government should now extend transparency to tackle the UKs ethnicity and disability pay gaps, and other inequalities. Its report argues that each large employer should publish a new annual Fair Pay Report setting out:
- The gender, ethnicity and disability pay gap at the organisation
- The proportion of workers paid below the real Living Wage
- The internal pay ratio between the chief executive and the average employee
- A fair pay narrative, detailing the employer’s understanding of their pay gap, and their plans to tackle them.
It says the additional burden on employers who already collect pay data for the gender reporting requirements would be small, compared with the radical extension of pay transparency it would produce.
The report also calls for transparency to be extended beyond large employers to cover medium sized firms with 50 or more employees, though with a more limited and less frequent reporting requirement, and a transition period to allow time to adjust.
IPPR suggests that in order to tackle illegal unequal pay – where women are paid less for work of equal value – employers should also publish pay ranges by role to employees within their organisation. Workers should be given a ‘right to request’ comparison data of pay levels, and the right collectively to trigger an independent equal pay audit.
Helen Corden, employment partner at Pinsent Masons comments on the findings of the research:
It's clear from the findings and recommendations of the IPPR report that the Gender Pay Gap Regulations are just the beginning. Investors, employees and the media will be able to track progress against company action plans and will start asking what companies are doing next in terms of ethnicity and disability reporting and the wider fair pay agenda. Those companies wishing to be seen to be leading the way in this area need to start preparing now and owning the issue. For example, consideration needs to be given to how they are going to address the "fair pay" agenda; and how they are going to deal with increased pressure for pay transparency when discussing the issue of pay has always been, and still is, a taboo subject. By moving beyond gender pay and equal pay to consider fair pay, companies can prepare themselves for future reporting requirements and challenging questions.
To view the full report, please visit http://www.ippr.org/research/publications/the-fair-pay-report