Pay inequality and the limiting effect of the business case

In the United Kingdom, the business case for equality continues to be the primary method of encouraging employers to take positive steps to prevent pay discrimination on the basis of sex and race. Lawmakers have been reluctant to impose positive duties on employers which would require them to examine their pay practices and root out conscious and unconscious biases, due to the perceived administrative and financial burdens that this would impose on business. Instead, various campaigns by government, the Equality and Human Rights Commission and business and human resources networks have focused on the economic and reputational benefits that can be attained by diversifying workforces and providing fair wages. Employers are told that they will enhance their reputation by voluntarily conducting and publishing analyses of their pay systems, making it easier to attract and retain high calibre employees, consumers and investors who are drawn to fair and transparent organisations. Voluntary analysis is also presented as a method of offsetting the risk of negative publicity and litigation.

This paper challenges the efficacy of this reliance on the business case, on the basis that it has a limiting effect on employers’ commitment to rooting out discriminatory pay practices. It draws on the example of voluntary equal pay auditing – a practice which is intended to reveal whether there are instances of unlawful unequal pay between female and male employees who perform work of equal value. Using content analysis, the paper examines a sample of 30 equal pay audit reports released by UK employers across the public and private sectors. It finds that, where employers are motivated primarily or solely by the business case for equality, audit reports are likely to lack detail, accuracy and usability. With reference to comparative experiences in jurisdictions with mandatory auditing, the paper suggests that the intangible benefits that employers might derive from voluntary action are insufficient to prompt them to engage meaningfully in the auditing process, or to commit to effective follow-up action that might reduce wage inequality. The sole reliance on the business case, and the consequent lack of oversight of employers’ voluntary action, permits employers to limit or distort data to present their pay practices in the best light. The paper concludes that the business case for positive action on wage inequality serves only to maintain the status quo, and cannot serve as a catalyst for the elimination of pay discrimination.