David Prosser: A strange way to promote equal pay

Friday 03 December 2010 01:00

Outlook Lynne Featherstone, the equalities minister, picked a curious venue to announce the Government is reversing plans for compulsory audits of what companies pay their male and female staff. The announcement came in a speech at Cranfield University's School of Management, as part of an event to promote its latest research into the progress of women in the boardroom.

The venue was odd because Cranfield's research shows exactly what happens when organisations are left to tackle inequality by themselves. Those who worry about the remarkably low number of women in the boardrooms of Britain's biggest businesses will no doubt be pleased to hear there has been an improvement over the past year: women now account for 12.5 per cent of FTSE 100 directors, up from 12.2 per cent.

The glacially slow progress that has been made on getting women on to boards underlines the limitations of the discretionary approach. Companies talk a very good game, but they fail to act unless they are forced to.

Ms Featherstone explained that the Government had decided to reverse its predecessor's plans to require companies to publish gender pay audits because it wants "to move away from the arrogant notion that government knows best". Well, businesses would certainly benefit from the widescale adoption of that policy. But if the equalities minister is suggesting the Government doesn't know best when it comes to requiring companies to do everything possible to ensure women are paid as well as men, she's in the wrong job.

The good news is that corporate governance authorities are prepared to be bolder than Ms Featherstone. The latest combined code requires companies to offer an explanation if women represent fewer than 20 per cent of their directors and there are plans to increase that threshold.

The code operates on the "comply or explain" basis, which falls short of compulsory legislation. Still, it's a more forward-thinking approach than the one Ms Featherstone adopted yesterday.

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