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Theresa May: Fair Play on Women's Pay

Speaking today at KPMG in London to highlight the issue of equal pay for women and how to tackle the pay gap, Shadow Minister for Women Theresa May said:

"It is 37 years since the Equal Pay Act received Royal Assent but this pay gap remains stubborn and significant. In Britain, women earn on average 17.2 per cent less than men. For part time workers the gap is larger at 38 per cent. As a result, the average woman is estimated to lose or forego £300,000 over her lifetime.

"After the Equal Pay Act, the gap narrowed quite quickly, but since then, it has remained stubbornly high. And Labour has failed to bring it down: official figures show that the pay gap actually increased last year. And statistics from the Chartered Institute for Management show that male earnings are growing at a faster rate than female earnings - despite the fact that women are getting promoted younger and faster. The Chartered Institute for Management found that the average female team leader is five years younger than her male equivalent; the average female 'department head' is three years younger; and the average female director is four years younger.

"So why does the pay gap persist? Why has it remained so stubbornly high? Because its causes are deep and complex, and yet the tools we have to fight it are blunt and inadequate. Government action has focused on straightforward discrimination - but while that remains a factor, the pay gap is also caused by other issues. So if we are to overcome the pay gap, we need a proper analysis of its causes and intelligent, targeted solutions.

"Government research shows that as well as outright discrimination, the pay gap is caused by interruptions to the labour market, usually due to motherhood; the subsequent loss of experience relative to other employees; and, often overlooked, the types of career women choose to take up. Our work puts the causes of the pay gap into the following four categories:

1. outright discrimination, when women earn less than men for the same work

2. the need for women to seek flexible and part-time work

3. differences in human capital, such as education levels and work experience

4. women's own career choices

"Clearly, the extent to which a government could intervene to address each of these factors varies. The first - outright discrimination - is of course legally and morally wrong, and government must intervene to prevent this sort of behaviour. But one problem with the current approach is that if a woman plucks up the courage to take her employer to a tribunal, even if she wins her case her employer is not required to ensure that he is not discriminating unfairly against other female employees. They each have to go to the tribunal. Our policy addresses this unfairness and ensures that guilty employers have to change their practices for all their employees not just the one who went to court.

"Of course as we go further down the list of causes of the pay gap, they are more subtle and therefore harder to address. Clearly, these causes will not just be dealt with by passing law after law - legal change might help, but only if it is part of a package that addresses the deeper systemic and attitudinal problems.

"Good employers are leading the way in that change in attitude. Here at KPMG, over a 3 year period 99 per cent of applications to work flexibly have been approved. 95 per cent of women returning from maternity leave are still employed after 12 months. Perhaps it is no wonder that it has been ranked in the top three of places that women want to work.

"Our proposals address all the causes of the pay gap and will deliver:

1. Compulsory pay audits for employers who are found to be guilty of discrimination

2. A new 'reasonableness' test for the 'material factor' defence - tightening existing law

3. An extension to the right to request flexible working to all parents of children aged eighteen or younger

4. New measures to help women into work and up the careers ladder

5. Support for young women to make broader and more ambitious career choices

"When the statistics I mentioned earlier were published by the Chartered Institute for Management, Harriet Harman's only response was to issue warm words - or more accurately, lukewarm words. In sharp contrast, we have concrete proposals: built on careful analysis, they are measured, thoughtful and will make a real difference to Britain's working women. The gender pay gap is wrong, and it's unfair. It's time for fair play on women's pay."

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