Government axes pay parity pilot: A backwards step

On International Women’s Day, 8 March 2022, the Government Equalities Office launched an ambitious pilot project on pay transparency aimed at dismantling barriers for women in the workplace. This initiative was designed to address a persistent issue: women frequently enter employment on lower salaries than men, a disparity that tends to persist and worsen over time as salary history is used as a benchmark for new roles. According to a study by the Fawcett Society, 58% of women believe they have received lower salary offers because they were asked about their salary history during the recruitment process.

The Government’s pilot sought to mitigate this problem by requiring participating employers to list salary details on job adverts and refrain from asking applicants about their salary history. This approach was based on robust evidence indicating that such practices provide a more equitable platform for women to negotiate their pay. When the pilot was announced, the Government stated, “Evidence shows listing a salary range on a job advert and not asking applicants to disclose salary history provides a firm footing for women to negotiate pay on a fairer basis.”

Former Minister for Women, Baroness Stedman-Scott, emphasized the importance of this initiative, noting, “The UK can only grasp its full potential by championing its brightest and best, and ensuring everyone, regardless of their background, has the opportunity to succeed. We believe that increased pay transparency will build on positive evidence of the role information can play when it comes to empowering women in the workplace. It is essential that we keep women at the forefront of the levelling up agenda as we recover from the pandemic and rebuild together.”

As recently as 6 March 2024, the current Minister for Women reaffirmed the Government’s commitment to the pilot. Testifying before the Women and Equalities Committee on the impact of the rising cost of living on women, she highlighted the significance of the pilot, stating, “One of the things we are doing is a pay transparency pilot, because it also disadvantages women when pay bands are not advertised and they have to go in to negotiate what they think might be on offer—and men tend to be much better at that."

Despite this strong backing and the clear benefits of the initiative, the Government has now announced that it is abandoning the pay transparency pilot. In a letter to the Chair of the Committee, which has been made public, the Minister explains, "Following careful thought, the Minister for Women and Equalities has paused work on the Pay Transparency Pilot.”

A recent workingmums.co.uk poll of over 500 mums on pay transparency shows the majority of mums (74%) would avoid applying for a job where no pay is stated and nearly a quarter (22%) are put off applying if a pay range, rather than a specific salary.

The decision to halt the pilot is profoundly disappointing. It signals a retreat from a proactive stance on gender pay equity at a time when such measures are critically needed. The pilot represented a tangible step towards addressing systemic pay disparities that disadvantage women. By requiring salary details to be transparent in job adverts and eliminating the practice of basing salary offers on previous pay, the pilot could have set a new standard for fair pay practices across the UK.

This abandonment is not just a setback for women but for the broader goal of achieving a fair and equitable workplace. Pay transparency is a proven mechanism to empower women, reduce the gender pay gap, and promote equality. The Government’s reversal undermines these goals and raises questions about its commitment to tackling gender-based economic disparities.

While the Government has not explicitly detailed the “potential implications” behind its decision, one can speculate that, given the recent challenges in controlling inflation, the concerns may be related to potential wage inflation. The fear might be that salary transparency and the removal of salary history from negotiations could drive up starting salaries, leading to higher overall wage costs. Employers might worry that such transparency would necessitate offering higher starting salaries to attract top talent, subsequently driving up wage costs across the board. This concern, while understandable from a financial perspective, overlooks the broader benefits of fostering a fair and equitable job market where all candidates have the opportunity to be compensated fairly for their skills and contributions, irrespective of gender or previous salary history.

Regardless, employers who truly value Equity, Diversity and Inclusion (ED&I) can take independent action to uphold these principles within their organizations. Employers can voluntarily implement pay transparency by clearly listing salary ranges in job advertisements and ensuring that salary negotiations do not rely on candidates' previous pay history. This proactive stance can help mitigate pay disparities and foster a fairer recruitment process. Additionally, employers can conduct regular pay audits to identify and address any inequities, ensuring that compensation practices are both equitable and transparent. By taking these steps, employers can continue to champion ED&I, demonstrating their commitment to creating an inclusive workplace where all employees are valued and compensated fairly.

That’s why we’re committed to making recruitment fairer, faster and better for everyone. In-house recruitment teams should reflect on their practices by asking several critical questions to ensure they are promoting equity and fairness.

• Are our current recruitment and salary negotiation practices perpetuating pay disparities?
• How can we integrate salary transparency into our job postings to ensure fairer negotiations?
• What steps can we take to eliminate bias in our hiring processes, especially regarding salary history?
• Are we conducting regular pay equity audits to identify and address disparities?
• How can we create a more inclusive hiring process that supports diverse candidates?

By addressing these questions, in-house recruitment teams can proactively advance DE&I within their organizations and promote a more equitable workplace.

You wouldn't put items in your supermarket basket or get on a train without knowing what the cost is. So why do we allow companies to not put a price on things? The very act of applying for a role costs the candidate time, effort and money - irrespective of gender. In fact, the only places where price isn't shown is in the luxury goods stores - and applying for, or having a job, shouldn’t be seen as a luxury. Until everyone knows the price of things - including work - the most vulnerable in society will continue to be on the back foot.

It is crucial to advocate for continued progress. The abandonment of this pilot must not mean the end of efforts towards pay transparency. Employers, policymakers, and advocates must continue to push for measures that promote fairness and equity in the workplace. Only through persistent and collective action can we ensure that all individuals, regardless of gender, have the opportunity to succeed and be compensated fairly for their contributions.

Dean Sadler is the CEO and founder at specialist recruitment software provider Tribepad. Prior to Tribepad, after travelling the globe and working as a bus driver, Dean started a PhD in computing before joining a startup called Plusnet. He wrote the billing and CRM platform, became CIO and helped grow the business from a handful of employees to over 700, through IPO then exiting via a sale to BT. Pondering life after Plusnet, Dean was looking for a real world problem which could be addressed by technology and hit on the recruitment industry as being ripe for disruption. And so Tribepad was born.

‍