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Gender pay gap hysteria could make things worse for women

4 April 2018

11:06 AM

4 April 2018

11:06 AM

Next time I hear a government minister on radio or television bemoaning Britain’s poor record on productivity I request that the interviewer puts to them a simple question: can you tell us how many man-hours have been spent by large British firms in fulfilling their legal duty to provide data on their gender pay gap – something which they must do by midnight tonight?

Whatever happened to that grand talk about taking advantage of Brexit in order to deregulate, to attract investment by giving businesses the freedom to run their own affairs and by getting the government off their backs? In January last year Philip Hammond made a speech in Germany saying how Britain was prepared to ditch its European-style social democratic model. Last autumn, Boris Johnson and Michael Gove floated the idea of Britain adopting a much more liberal approach to business following Brexit, urging the Prime Minister to “embrace a vision more aligned with pro-competitive regulation”.

That is exactly what we need to do: to counter the negative effects of withdrawing from the single market by offering businesses more freedom if they choose to relocate in Britain. To have a Singapore 20 miles off the French coast is what EU leaders fear most.

But instead, we seem to be going in the opposite direction. The government is trying to out-social chapter the EU’s social chapter. It is commandeering businesses in a grand exercise in social engineering. Worse, it is doing so in a way which utterly misses the mark. Raw statistics on the difference between the mean or median pay of male and female employees tell us nothing about discrimination, however much the equalities minister and others try to convince us otherwise. The reason why easyJet has a large gender pay gap and the Ford Motor Company does not is not because the former is run by chauvinists and the latter by enlightened folk – it is down to the different profile of jobs in an airline compared with a car manufacturer. The former has large numbers of female-dominated cabin crew at the bottom of its salary scale, the latter has male-dominated technicians.

There are numerous ways in which companies are going to be able to play with their gender pay gaps in order to ward off unwanted attention from regulators. Look out over the next few years for more firms outsourcing their cleaning, catering and other services – transferring female-dominated staff off the company payroll will work wonders in correcting an embarrassing pay gap. The rules might end up working against some female employees.

Advocates of gender pay reporting claim that companies with more women on their boards perform better (often quoting dodgy statistics collected when the male-dominated mining industry was in a slump). But if it is the case, then why the need to force companies to balance their workforces? Surely they can be trusted to make decisions which are going to lead to increased revenue and profits.

If we are going to be just another social democratic country, where government tries to regulate pay and lay down the law as to whom businesses can employ in their board rooms, there is no point in leaving the EU at all. We might as well stay in the club of other under-performing socially-democratic economies and under-perform with them.

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