M6K125 London, UK. 4th March, 2018. Thousands of people including politicians, celebrities and activists gather at Old Palace Yard outside the Houses of Parliament in London to take part in March4Women, an annual event to celebrate International Women's Day and 100 years since women in the UK first gained the right to vote. The event, organised by CARE International, aims to highlight inequality faced by women and girls around the world and campaign for gender equality and women's rights worldwide. Credit: Wiktor Szymanowicz/Alamy Live News
Thousands of people celebrate International Women's Day in London in March © Wiktor Szymanowicz/Alamy

Small businesses should be required to publish gender pay gap figures alongside big companies — and all submissions should include plans for how to tackle gender pay disparities, say MPs.

The business, energy and industrial strategy committee on Thursday called for reporting on the difference in hourly earnings between male and female workers to be widened to include all companies with more than 50 employees.

Under government rules introduced last year, companies and public sector organisations with more than 250 employees must publish mean and median gender pay gaps, the proportion of men and women in each quartile pay band and the differences in average bonuses between genders.

The data, published in April, revealed that three-quarters of large UK businesses paid men more than women, with an average median pay gap of 9.7 per cent. It also showed that men were far more likely to have higher paid roles within most companies. On average, companies’ highest paid quartile was 63 per cent male.

The BEIS committee said that, because there was evidence that pay gaps were highest in small companies, the reporting requirement should be expanded to smaller companies and it recommended that all employers should report what action they were taking to reduce their gender pay gap.

“Transparency on gender pay can only be the first step,” said Rachel Reeves MP, who chairs the committee. “The gender pay gap must be closed, not only in the interests of fairness and promoting diversity at the highest levels of our business community, but also to improve the country’s economic performance and end a monstrous injustice.”

The committee warned that if plans for tackling the pay gap were not published, the impact of reporting would fade after the “novelty” of publishing figures wore off. MPs also said that reporting action to narrow the pay gap would help avoid “misinterpretation” of the figures.

Claire McCartney, diversity and inclusion adviser at the Chartered Institute of Personnel and Development, said the new requirement would mean companies, “need to take the time to understand the reasons why the gaps are there, think about what needs to be done sustainably to reduce them and then take meaningful action”.

The committee also criticised the government’s guidelines for how to report gender pay as unclear, which increased the burden of reporting on companies and meant that many of the figures were inaccurate.

The MPs said that while there was an argument for a “big bang” approach in the first year of reporting, when all the data were published on the same day, in future it might be better to allow companies to include the gender pay data in their annual reports to reduce costs.

Meanwhile, on Wednesday, the Government Equalities Office, which collects the gender pay gap data, published a “What Works” guide to closing pay disparities.

The GEO recommended including more than one woman in shortlists for recruitment and promotions, using standardised skill-based tasks rather than unstructured interviews and advertising negotiable salary ranges for jobs.

“These actions have been tested in real world settings and found to have a positive impact,” the GEO said.

The guide pointed out that some other programmes, such as training in unconscious bias and leadership development have had “mixed results”. It added that diversity training can frequently backfire, as it may bring to mind “unhelpful stereotypes” and lead to resentment.

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