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Labour would punish firms for not closing gender pay gaps

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Labour will fine employers who do not close their gender pay gaps, the party will pledge on International Women’s Day.

Under a Labour government, the party said all private and public employers who have 250 workers or more would not only have to audit their gender pay, but prove they are taking action to close the gap or face a fine from the government.

The party plans to publicly consult on the policy, including with businesses, trade unions and women’s organisations, including non-departmental public bodies. The government has already introduced a legal requirement for all major employers to publish their data on gender pay and bonuses by April 2018.

Labour said it would go further and impose sanctions on businesses that had significant gaps in the pay of male and female staff. It will propose mandatory certification for large firms to have tailored action plans to close the gender pay gap, to be certified by the government every two years.

Shadow equalities minister Dawn Butler said the party believed companies needed to be sanctioned if they didn’t act on the data. “Auditing is not enough, we need action,” she said.

“Some of the companies are using loopholes to get out of giving the full picture, and then there’s no real enforcement if you are found to have a huge gap. We don’t just want people to identify the pay gap, we want the pay gap to close.”

Labour has already said organisations that can show they are working to close the pay gap are the only ones who will have access to government contracts.

 

“We will only do business with people paying their employees equally,” Butler said. “It is an incentive for business to pay women better. It is an incentive for progression.”

Employers that fail to obtain this certification would face further auditing and eventually fines, Labour said. Butler said the model would be like Iceland’s policy where employers are fined £355 a day if they do not submit their data or adequate plans to close the gap.

“We’d be looking at doing something similar,” she said. “It’s something that could quickly mount up and that’s why it’s important we look at the business case for doing this.

Huge disparity has emerged in the gender pay audit data that has been published so far this year. At easyJet, the data showed the hourly rate for women is 45% lower that of their male colleagues, and 89% of the best-paid staff are men, while 68.9% of the worst-paid are women.

At Barclays, women’s median hourly rate is 43.5% lower than male colleagues and the data revealed that women’s bonuses are 73.3% lower.

Travel group Tui has the largest gender pay gap reported to date by a major UK company, with its male employees paid more than double the female staff.

Labour has published its own gender pay audit, which found male employees earn 4% more on average than women in the party. “We do need to close that gap, even though it is smaller than average,” Butler said.

Male MPs earn 10.4% more on average than female MPs, higher than the pay gap at the BBC, analysis by the Sunday Times found last week, taking outside earnings and ministerial salaries into account.

 

Dawn Butler and John Bercow pose with an International Women’s Day flag, which will fly over parliament for the first time on 8 March. Photograph: Martin Godwin for the Guardian

Butler said the disparity among MPs showed how a gender pay gap could emerge even when employees are ostensibly paid the same amount. “The average bonus pay gap is 46.4%, it’s similar to how male MPs end up being paid more than female MPs,” she said. “It’s a difficult one to tackle, apart from promoting more women as ministers, which is always a good thing.”

An International Women’s Day flag is set to fly over parliament for the first time on Wednesday, at Butler’s suggestion, as MPs and peers mark the day with a debate in both Houses of Parliament.

The Speaker of the House, John Bercow, said the flag would “remind us of what has been achieved and how far their is to go to achieve full gender equality” and said it was an initiative supported by MPs from all parties as parliamentarians commemorated 100 years of the first women getting the vote.

 

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