Why HR is silent on low and unequal pay

09 Oct Why HR is silent on low and unequal pay

By Duncan Brown – cipd.co.uk

But Duncan Brown warns that HR must not ignore the relationship between low and unequal pay

The recent party political conferences saw some eye-catching proposals to help those struggling with declining real earnings lower down the income scale. The Conservatives described the situation in terms of helping ‘hard working families’, while Labour talked of those suffering from ‘the cost of living crisis’.

Other party policies to aid low earners included upping fines for employers who flout the minimum wage rules (Labour); free school meals for all under 8’s (Liberal Democrats); and help-to-buy mortgage support for people getting onto the housing ladder (Conservatives).

I spoke at two HR events last week exploring how the HR community might contribute on the same agenda, a debate on low pay at the Employee Benefits Live conference and a seminar on equal pay at Aon Hewitt.

My perception that equal pay is one area that HR should be proactive in managing has been reinforced by the impending introduction of compulsory equal pay audits for employers who lose claims in a tribunal, as well as the extension of claims into the civil courts.

I think that voluntary audits, as recommended by the Equality and Human Rights Commission, should be the norm.

Yet inaction appears to characterise the HR and reward community on both issues at the moment.

Only half a dozen of the 50 employers at our equal pay seminar had carried out an equal pay audit, never mind thought about how to address any gender gaps revealed, displaying a real fear of ‘opening Pandora’s box’ as the seminar was provocatively titled.

Our analysis of gender pay differentials across Aon Hewitt’s UK Total Remuneration Survey database for example, reveals a 10 per cent base pay differential and a 29 per cent higher level of bonus for men over women in executive level positions.

But the vast majority of women are not in executive roles and the problems of low pay and gender inequality are closely inter-related. Almost a quarter of female employees earn less than the defined living wage level, the majority concentrated in the low paid ‘five C’ occupations (catering, cleaning, caring, cashiering and clerical) and part-time work (40 per cent of female employees), compared to just 8 per cent of male workers below the living wage level (and 10 per cent in part time work).

If you significantly increased low pay levels, say from the national minimum wage level of £6.31 per hour up to the living wage level of £7.45, you could close the gender pay gap as well.

But you also push up labour costs. Hence the basis for the fears for the adoption of the living wage expressed by CBI chief executive John Cridland, who claims that it would “lock out the unemployed and fire up inflation”.

Cridland’s warning possibly has less influence today, given that it repeats similar estimates of the catastrophic effect on unemployment that the CBI issued when the national minimum wage (NMW) was introduced, which were simply not realised.

And the fact that in real terms it is below the level it was at in 2004, and that if the NMW had increased at the same level as executive pay since its inception, it would now be some £19 per hour, possibly also makes the claim lack real bite.

But is it this fear of crossing our business masters the reason why HR is so quiet on these two issues? What do you think?

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