Why is he worth more than her?

More than 30 years after the Equal Pay Act, women's pay still lags behind men's. But Denise Kingsmill hopes her review of women's employment will change all that, she tells Linda Tsang

Do you know how much the person at the desk next to yours earns? If your colleague is a man and you are a woman, then he is likely to be earning 18 per cent more than you a year.

The issue of equal pay is a perennial one, and not just for those earning six-figure pay packets. Women are competing with men for equal pay and equal treatment at all levels, so it is probably no coincidence that Denise Kingsmill, deputy head of the Competition Commission, was asked in April to carry out an independent review of women's employment and pay.

She was appointed by Tessa Jowell, but since the election, the ministerial responsibilities have gone via Baroness Morgan, at the Cabinet Office, to Patricia Hewitt, at the Department of Trade and Industry (DTI). The report is due next month, with a view to inclusion in the pre-budget review if its recommendations require funding.

The Kingsmill review comes more than 30 years after the Equal Pay Act came into force, in 1970; the Sex Discrimination Act came into effect in 1975. Both pieces of legislation have since been amended and have essentially taken a stick rather than carrot approach to ensuring that men and women are treated equally in the workplace. Mrs Kingsmill, an employment lawyer by qualification, sees her involvement as useful because of her legal background. "I understand more now about the way business thinks", she says, "and can put across the business argument in a language the business community understands.

"You have to recognise that chief executives are charged with maximising shareholder value, and almost anything else is a distraction, so you have to be able to put your arguments across in a way that enables them to understand how they can maximise shareholder value. The report will be in the form of a Competition Commission report, with the same sort of weight and authority – there will be serious practical solutions. This is an opportunity to make a difference in an area where I have spent a large part of my career, so I am determined that it will have an impact and be a practical way forward."

The review involves consultation with both the public and private sectors, trade unions, and overseas organisations. She is backed by a team of six civil servants, plus outside consultants, including academics. She says that the work is increasing exponentially as the review proceeds. More than a quarter of the people employed in the UK are in the public sector, and two-thirds of those are women. The NHS is Europe's biggest employer and has estimated that it loses £200,000 if a doctor leaves, and £34,000 if a nurse leaves.

But employment conditions and pay are not just an issue for the public sector. Mrs Kingsmill says: "Most organisations have been receptive – sophisticated companies recognise that people are their big issue for long-term success, and that that is where they should concentrate their efforts, energies and resources; that is what this review is all about. Many companies have good polices but no means of measuring how effective those policies are."

In her own profession, she says that the legal community has been very positive – the Law Society has agreed to undertake a voluntary pay review, and a number of major law firms have decided to undertake similar reviews, and they will appear in the report. Other professions, too, have already looked at their own practices. The "big five" accountancy firm Deloitte & Touche was reported in Fortune 500 magazine as having found in its own organisation that women were paid according to performance, whereas men were paid according to potential. If a man made three mistakes, the view was that he had the potential to get over them; if a woman made three mistakes, then the company view was that she was not up to the job.

Mrs Kingsmill comments: "This is an unconscious response, not necessarily institutional sexism – companies are not deliberately setting out to pay women less, but it takes sophisticated organisations like Deloitte to adapt, because it is in their best interest to address those issues, in terms of retention and promotion – and success."

She adds that pay is not always the issue: even in the legal profession, if men and women working together are doing the same job, the pay is the same. But generally, she adds: "There is a huge problem of attrition. Women are not coming through; women leave, no matter how much money is thrown at them; but the pay review can open the door to seeing where the problem is. One of the problems in both the public and private sectors is that women cluster in low-status areas."

Until recently, this was seen as a women's problem, but it is now acknowledged as a problem for business. Flexible working and other family-friendly policies floated by the Government are a recognition that such ways of working are no longer stigmatised as the "mummy" track. Mrs Kingsmill says that, apart from a dinosaur response from an investment bank that said it had no dual-career people – there were women in senior positions, but they had a "house-husband" – the organisations have been positive and receptive to the review and proactive.

One recommendation likely to be included in her report concerns the 60 per cent rise in industrial- tribunal claims. Mrs Kingsmill will consult with employment lawyers on a workplace right of disclosure. She says: "You can't get discovery about what a co-worker is earning until you issue proceedings, and I would like to see disclosure to a third party such as Acas, so that it can be dealt with more quickly. Obviously, if the employer refuses, then it will go to the tribunal, but if there is disclosure at an early stage, it can be dealt with; or if it is disputed, then that can be dealt with at a tribunal."

She acknowledges that men's and women's careers are different. "Women's careers are more fractured, whereas men have a single point of entry. In the US, executives are, on average, 10 years older, and that is advantageous for women – there is no question that my own career developed considerably after my children left home."

Some areas, such as the retail sector, are generally better in this field, and she also cites a curious research finding by the Women in Journalism project: that up to the age of 35, women journalists do slightly better than men, then, after that age, they tend to "disappear". She explains: "It is a confidence thing. There is research to show that if there are 10 characteristics for a job, and a woman sees three she can't do, she won't go for it; if men see three they can do, they think, 'That's the job for me.' "

"The aim now," she concludes, "is the carrot approach of better performance, productivity and competitiveness – not: 'You must do it or else.' In one year, things should be well on their way, and in five, I hope that, if the recommendations are implemented, the pay gap will be halved. Under the age of 30, the difference in headline pay for skilled men and women is about 3–4 per cent; after 30, it widens out and never comes close again – which means that UK plc is losing out."