Mind the gap

Can pay transparency help break the growing epidemic of pay inequality in the UK?
Photo: James Cullen / CC BY-NC 2.0 / Flickr

It is one of the most enduring taboos of British society.

From sex to swearing, decades of progressive liberalisations have given successive generations the social freedom to speak candidly and act expressively. But, curiously, money – and particularly the size of your pay packet – remains a closely guarded secret to be revealed only for the purpose of a mortgage application or some other administrative necessity.

For the British, asking a person’s salary or revealing your own is as much a taboo as pushing in a queue, and will usually elicit the same panicked, awkward and quietly indignant response.

No more silence over pay

But the British silence over pay is being slowly tested.

In the wake of the 2008 global financial crisis, there was widespread anger when it was revealed that many of the top executives at British banks, including those which had to be rescued from financial collapse by the UK taxpayer, were continuing to be awarded vast pay bonuses. The magnitude and the very nature of these bonuses were unfathomable to the average British worker in the face of such catastrophic financial meltdown.

The crisis drew attention to a wider and growing problem of pay inequality in the UK. According to a 2017 report by think-tank the High Pay Centre, the bosses of FTSE 100 companies are now paid a salary equal to 130 times that of their average employee.

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This ratio has almost trebled in the past two decades; in 1998 the average FTSE 100 Chief Executive was paid 47 times the salary of their average employee.

To add insult to the injury, this widening of the pay gap has happened within the context of stagnant wages for most workers. After almost a decade of austerity, including a long-lasting cap on public sector wages, the Resolution Foundation has estimated that by 2022 the average UK pay packet will still be £20 lower than it was before the financial crisis struck.

A debate over pay gap in UK

The furious debate over earnings has also focused on the gap between men and women, and widespread anger has forced the UK Government to begin to take action. From 2017, any organisation with more than 250 employees is required to publish its gender pay gap – the difference between the average earnings of men and women.

In the first wave of disclosures since the requirement came into force, companies such as Ladbrokes, EasyJet and Virgin Money have all reported gender pay gaps of more than 15% in favour of men.

The revelations show that women frequently find themselves in positions of lower seniority. At EasyJet, for example, where women are paid 52% less than men on average, reported by the BBC, the overwhelming majority of pilots are men while the majority of lower-paid cabin crew are women.

In itself, this indicates that women frequently have less opportunity to reach positions of power. But significant gender pay disparity has also been exposed within pay bands – that is, women being paid less than men for doing the same job.

In one high profile case Carrie Gracie, a senior BBC journalist of 30-years, resigned and criticised the Corporation’s pay culture after learning that her male counterparts were earning significantly more than she was.

Time for pay justice

Many organisations, indeed many countries, recognise the need for pay justice.

More than 3,800 UK businesses have voluntarily committed to paying all employee at least the Real Living Wage (currently £8.75 or £10.20 in London), which is calculated based on the cost of living.

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In the recently published gender pay gap data some organisations, such as the British Museum, reported little or no pay disparity. While other organisations, such as the human rights charity Reprieve, have clear and transparent rules about how much they pay their employees – which includes publishing their pay, and a maximum pay ratio between the highest and lowest paid workers.

In Sweden, a country with a relatively low gender pay gap of 6% between men and women doing the same jobs, there is little taboo over discussions of pay. All individual income tax returns are published annually and publicly available.

What’s to hide?

Critics of pay transparency argue that it could demoralise employees or create a false perception of unfairness, as Wall Street Journal reports,  because individual performance might be more complicated to measure than a job title implies. But maintaining order is not an argument for protecting an injustice.

Indeed, the idea that pay transparency could lead to uncomfortable revelations suggests that there is something to hide.

The growing chasm between the executive and worker pay, and the gender pay gap, points to a pertinent question: how much is our work worth?

In reality, salaries are not linked to the true value of our labour, or to the practical cost of living our lives. Instead, they are an expression of power and powerlessness.

The gender pay gap exists because too often men have found themselves in positions of power and, as a society, we have chosen to value the work of men more than the work of women.

Likewise, the growing gap between worker and executive pay is a victory for the opportunities of the powerful over the necessities of the powerless. Pay transparency would expose the inequalities in our pay packets and create space for debate.

The time for full disclosure is upon us.

Ben O'Hanlon

Ben has an MA in International Relations and Development studies from the University of East Anglia in the UK, where he explored power relations in the international garment industry. He has worked on a pioneering Security Sector Reform project in Lebanon, which has been successful in adopting a community model of policing as an alternative method of addressing the country's security challenges. He has also researched working conditions on banana and pineapple plantations in Ghana, and is a founding trustee of a charity which supports the advancement of better end of life care provision in the country. Based in London, Ben currently works for a human rights charity which challenges poverty and injustice by forming global partnerships and calling for systemic change.
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