Mandatory gender pay gap reporting has ‘naming and shaming effect’ on driving equity

Employers are taking action to reduce their gender pay gap due to concerns of the ‘naming and shaming effect’ poor pay equity can have on their ability to attract the best talent.

This is according to new research conducted by Jack Blundell, an Economics PhD student at Stanford University.

Since the introduction of mandatory pay gap reporting in the UK, Blundell’s analysis found that the gender pay gap had narrowed by two percentage points at affected employers.

This change was due to an increase in female workers’ wages and a decrease in male workers’ wages, as opposed to a change in the gender balance of employees within the workforce.

In particular, the group driving this change are those earning a higher salary at the start of their career.

In order to attract the right talent for such roles the study suggested that employers would need to keep working on their gender pay gap and publishing the results.

Over 1,900 UK employees were surveyed as part of the study, and the majority said that they primarily engage with gender pay gap information through the media. Eighty-five per cent of respondents said that they were able to name employers who were doing poorly on pay equity as a result.

Of this group, younger, highly educated women were the group found to be most reactive to pay gap information.

Typically, this group would also be looking for roles that afford them a career with rapid wage growth and the potential of progression to high-salary positions.

The wider the gender pay gap, the more the data suggested to prospective female candidates that there is a lack of representation of women among the highest earners, therefore they may be unsupported in their goals.

The research therefore concluded that: “Employers may find it optimal to reduce pay gaps due to fear of being named-and-shamed in the media. Being highlighted as having a high gender pay gap may dissuade productive and highly educated female workers from joining the employer, and convince current employees to engage in outward job search.”

The findings also raise concerns about the damaging effect the government’s suspension of mandatory gender pay gap reporting for 2020 will have on women’s careers, and overall progress toward pay parity.

It also adds to other recent findings that showed the importance women pursuing careers in the typically male-dominated STEM fields place on a prospective employer’s gender pay gap when accepting a new role.

Blundell’s full paper, Wage responses to gender pay gap reporting requirements, was published 7 October 2020.

Further reading:

Coronavirus putting women’s careers at risk

Keeping momentum with gender pay gap reporting

Black Voices Report renews call for mandatory ethnicity pay gap reporting