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On the equal pay front, the Bill, as I understand it, will only require companies that have been found by a court or tribunal to be in breach of the Act to undertake a company-wide equality audit. I, too, have read what the CBI and others have said, and there are some reservations. We must pay particular attention to the problems of SMEs; perhaps that can be looked at later. However, there are, surely, substantial benefits. The Bill would certainly simplify the whole process and cost taxpayers less, as the noble Lord, Lord Morris, said. It was my experience as the first deputy chairman of the EOC that, once a clearer legal requirement was in force, companies made far more effort to obey it.
However, I want to concentrate on the flexible working aspects of this Bill. The younger generation of company executives know that it is in their own and their companies’ best interests if they can hold on to the talent that they have recruited and trained, but there are still too many employers of the old school who have not realised how expensive it is to keep on recruiting, retraining and churning employees, rather than investing further in those that they have already spent money on.
This Government have done a great deal to promote a better work/life balance, and I congratulate them on the initiatives they have taken, even if those initiatives have not always delivered as fully as other noble Lords and I would have hoped. More nursery provision is not enough. Encouragement of flexible working allows many more mothers to combine caring for their children. We also know that often they may be caring for their own ageing or disabled family members. Flexible working
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Women will continue to be the majority of those who live in poverty at the end of their lives, unless more drastic action is taken to make flexible working at relevant times of their lives the norm for both sexes. I thoroughly underline what the noble Baroness said about both sexes. There is clear evidence, too, that more fathers want to take a more active and responsible role in bringing up their children. Yet, although some 14 million employees now work flexibly, the vast majority are still women.
Some months ago an Oral Question was asked about how many women had used the right to request flexible working under recent European and domestic laws and to how many women it had been granted. The answer for women was quite encouraging, given that we were at the start of the process. Yet, when I followed with a supplementary question, asking how many men had asked for and been granted the same flexibility, the Minister who replied had not even been briefed on that.
Research shows a positive relationship between flexible working, lower stress and improved health and well-being, and there are many varied ways in which flexible working can be achieved—working term-time only, working from home or job sharing, for example. Almost invariably, the employer gets value for money.
The Cranfield School of Management is quoted by Working Families as having demonstrated that the cost to employers of making such adjustments was £68 million, while the benefits from higher productivity, lower turnover and reduced absenteeism were £91 million. All that this Bill proposes is an extension of the hours already available from April of this year for 16 to 18 year-olds, by sensibly anticipating the raising of the school-leaving age in a year or two to the same level. The Bill would also bring some uniformity to other groups that need the same ability to combine employment with caring—those caring for children with disabilities or special learning needs, and disabled adults. Carers play a vital role and save the state huge sums. We also know that there is high support for this right to be extended to all employees. I hope that the Bill’s proposals will be a firm step in that direction. It already happens in Holland and Germany, where employees have the right to request flexible working from all employers. We also know from research that 58 per cent of men and 63 per cent of women in this country support the move for this right to be available to all employees.
I end by stressing that given the horrendous economic situation and considerable job losses already being recorded throughout the economy, there are forecasts
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12.09 pm
The Lord Bishop of Southwark: My Lords, I wish to focus on the Bill’s second part, which concerns flexible working. The right reverend Prelate the Bishop of Southwell and Nottingham sponsored a debate on this subject in March 2008. Even in the current difficult economic climate, from these Benches we urge the Government to keep to their strategy of encouraging the right to request flexible working and to close the age loopholes.
We recognise that a major part of current government policy in combating poverty and reducing benefit dependency is maximising the number of people in work. On the other hand, the Government increasingly emphasise the responsibility of good parenting, and we support that. Therefore, we have two policies. We agree that work is good. It provides not only economic opportunities but important personal and social benefits, enabling individuals to develop their skills and talents, enhancing self-worth, encouraging a sense of responsibility and enabling individuals to make economic and social contributions to society. However, flexible working is the essential link that would help to make those two policies compatible. We need to continue to address the negative impact on employees’ family life of long hours, inflexible working and atypical working patterns. It is those in employment on the lowest incomes who work the most atypical hours without being able to control them.
Having a parent see-sawing between work and benefits because of the time demands of the work will do nothing for the security of the family income or to help combat child poverty. Nor will it help to build stability in the family. For the Government it is particularly important that, when encouraging lone parents to return to work, that work should not create such stress that those parents end up taking time off or abandoning the work because they cannot fit it in with the responsibility of looking after their children. Giving parents good, affordable childcare, a decent wage and the right to work flexibly will make a huge difference to the family’s well-being, contribute positively to relationships within the family and encourage the social, emotional and educational well-being of the children.
Flexible working arrangements can work for employers, too. There is little evidence that long hours bring increased productivity. The organisation Working Families says that its recent research with Cranfield School of Management shows a positive relationship between flexible working hours and individual performance. It argues that in the current economic climate maximising productivity and performance will have to be a priority. Many employers now recognise the link between flexibility and organisational requirements, even for low-income employees, with higher productivity, lower turnover and reduced absenteeism.
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We congratulate the noble Baroness, Lady Morris, on sponsoring the Bill, and we hope that it meets with every success.
12.12 pm
Baroness Gould of Potternewton: My Lords, I start by declaring an interest as the chair of the Women’s National Commission, which is currently discussing these issues at great length.
Although I have reservations about the proposals in the Bill, I have no reservations about the principles of the noble Baroness or the intent behind the Bill to eliminate inequalities in the workplace and provide greater support for working families. It is that latter point on which I wish to start my comments.
Supporting families in balancing work and home has been a key plank of the Government’s employment policies since the establishment of the Work and Parents Task Force in 2001, followed by the Employment Act, which, I regret to say, at that time the Opposition opposed, the extension to carers in 2007 and the Walsh review in 2008. The aim of all those actions has been to support families in finding working hours to match their caring responsibilities, whether for children or for adults in need of care or, all too often, for both. Families must have genuine choices about how they balance work and caring responsibilities, which are now more complex with the many changes in family structures and the development of more intricate family arrangements, which have shaped income, living standards and working patterns.
Alongside supporting families, it has been important to enable businesses to plan and manage their workforces effectively, and there is no question that employers have benefited. As the noble Baroness rightly said, employers who have adopted flexible working have benefited not only from lower levels of sickness and absenteeism but from improved retention performance. There is clear evidence of a positive relationship between flexible working and individual performance—a view that is endorsed by the British Chambers of Commerce in its briefing on the Bill, although at the same time it opposes the detailed proposals before us. However, more needs to be done to raise awareness of the right to request flexible working among employees and employers.
The Government’s regulatory impact assessment, which accompanied the recent Walsh review, showed that extending flexible working to parents of older children could lead to savings for employers. As the noble Baroness, Lady Howe, said, the annual cost to employers of making adjustments to working patterns stood at £69 million, compared with the benefit from higher productivity, lower turnover and reduced absenteeism of £91 million. Therefore, I think that the argument for extending this right to parents of older children is made.
The in-depth Walsh review, after consultation with a wide range of stakeholders, recommended that parents with children up to the age of 16 should be able to apply for flexible working, a view which the Government accepted and which is due for implementation in April this year. The amendment before us was considered by Imelda Walsh but rejected on the grounds that over the age of 16 a child is a young adult and is therefore
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On the question of equal pay, while there has been a reduction in the median overall gender pay gap since 1997 from 27.5 per cent to 22.6 per cent in 2008, in accord with other speakers, I am stating the obvious by saying that progress has been slow. There are many factors in the continuing pay gap which have to be overcome. The gender pay gap is complex and encompasses many factors besides pay discrimination: differences in men’s and women’s labour market experiences; skills and education; occupational segregation; lack of quality of part-time work; historical culture; and gender stereotyping.
An analysis by the Women and Work Commission, chaired by my noble friend Lady Prosser, suggested that, if more women moved into higher-skilled, higher-paid occupations and if more moved into the labour force or increased their hours, the potential benefits for the UK economy could be worth £15 billion to £23 billion or 1.3 to 2 per cent of GDP. That shows that no country can afford to ignore the skills and talents of half its population. So, clearly, this historic inequality has to be tackled.
The Conservative policy document, Women in the World Today, says that these amendments to the Equal Pay Act would tighten the law by introducing a “reasonableness test” into the Act, but all the evidence from those who work on the ground on these issues suggests that in reality that would not be the case. A “reasonableness test” implies a subjective test, with courts required to view the justification of the factor giving rise to the pay gap from the perspective of the employer—for example, knowing what the employer knew and how it operated in those particular circumstances—and it could be considered reasonable to use that factor as a determinant of pay, regardless of the discriminatory effect it has on women.
It is also difficult to decipher what an “objectively justified as reasonable” test means, as it becomes jumbled up with “objective justification”, which is the standard defence for indirect discrimination. That might add further to the already complex and labyrinthine case law, lead to further confusion in the tribunals and courts and delay further the already very slow process of equal pay claims. That is certainly not what women with equal pay claims need. Therefore, it is helpful that the Government intend to simplify equal pay legislation in the equality Bill. The amendment might also give the impression that a weaker standard of justification was required than was actually the case under EU law.
The TUC and others, such as the Fawcett Society, have campaigned for many years for mandatory equal pay audits, and the Equality and Human Rights Commission, in its briefing on the equality Bill, states that equal pay audits can be a useful mechanism in
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It is clear, however, that we cannot tackle inequality if it is hidden. If you cannot see the problem, you cannot solve it. I appreciate that, if equal pay audits are to be taken forward in the equality Bill, they will only resolve part of the problem, but it is an important part. They will have to be combined with sensible transitional arrangements, taking into account the cost of the process. If pay audits are not pursued, other measures will need to be put in place to increase transparency of pay and remove this long-term discrimination against women. For instance, procurement offers significant potential as a way of promoting equality and good equal pay practice. It is therefore encouraging that the Government have signalled that they intend to use procurement positively to promote equality. This follows the positive approach to procurement in Northern Ireland under the Northern Ireland equality of opportunity contract condition, and by the GLA in respect of the Olympics.
Other measures might include strengthening the role of equality representatives and allowing hypothetical comparators, rather than the current requirement for actual comparators. Equal pay is the only area of discrimination law where claimants have to identify an actual comparator in the same employment who is treated differently from them. These and other preventive, positive and pragmatic reforms will make a much-needed shift in approach to gender pay.
Recent polling by UNISON and the Fawcett Society showed that 83 per cent of women and 74 per cent of men maintained that pay difference must be closed regardless of the credit crunch. I support the noble Baroness: even in difficult economic times equality should not be put on the back burner. We need a positive pay policy, and we need radical measures that will eradicate pay discrimination and illegal pay practices and, ultimately, prevent pay discrimination in the first place. I am afraid—I regret to say this to the noble Baroness—that I do not believe that this Bill will achieve that aim.
12.22 pm
Baroness Prosser: My Lords, I declare an interest as the deputy chair of the Equality and Human Rights Commission, a body which is closely involved with the Government Equalities Office in discussions on the forthcoming equality Bill. I thank the noble Baroness, Lady Morris of Bolton, for introducing this Second Reading debate. It is a good opportunity for those of us in the Chamber to raise issues about which we are concerned. Sometimes, those of us who are involved in this day-to-day begin to wonder if anybody else is particularly interested. It is a fine opportunity, which I particularly welcome.
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The proposed Bill is like a curate’s egg; it is good in parts, but some parts may be either unnecessary or lead to what we might describe as unintended consequences. The first of those is the reasonableness test. I dread to think how many hours have been spent over many years by many lawyers discussing the meaning of “reasonable”. Many fine houses have probably been built and bought on the income from such discussions. If we introduce another test into this part of the legislation, it will not make life easier and may well make life more difficult. We would not, I think, want to widen the circumstances under which an employer would be able to find a material-factor defence. In any case, this all has to comply with European legislation. All in all, we may find ourselves in more difficulty, rather than a better place, by agreeing to that part of Bill.
On flexible working, it is interesting that the British Chambers of Commerce is anxious about this proposal. It conducted a survey in 2007, in which 89 per cent of those companies surveyed said that they provide some kind of flexibility. I spent yesterday evening in the lovely area of Tunbridge Wells, addressing a range of employers about the likely impact on women’s employment of the current recession. It was interesting that these employers, mostly small and medium-sized enterprises, were very much in favour of flexibility. We have all discovered that flexibility suits many people. We could not possibly go back to the previous situation, before these various terms and opportunities for employment were available.
The Government’s proposals for 16 year-olds are probably sensible and appropriate. I left school aged 15. At 15 I was taking the bus and Underground from Surrey into central London to work and home again in the evening. For parents to be able to organise their work around their young people, up to the age of 16, is a move far enough.
On flexibility, I would also say that all who have the opportunity should encourage employers and trade union negotiators to try to ensure that flexibility is available to everybody. In many companies that already happens, and in many companies flexibility that is available only to parents is resented by some. The Equal Opportunities Commission, before it closed in October 2007, received its largest percentage of requests for information on the right to flexibility from men who did not want to commute on the most crowded trains. Many people would like to work in different ways for different reasons. We should all try to bear that in mind.
I turn now to the question of pay audits, which is probably the nub of this Bill. I am not against the proposals, and I do not think that the Equality and Human Rights Commission would be against them. We would only say that they are unlikely to make much difference. There are very few equal pay cases which succeed at tribunal. Many are settled before reaching court; many more are lost. I will come to that in a moment, when talking about the Equal Pay Act itself. The much bigger problem that we need to look at is not whether an extension of the legislation or a new piece of legislation will help. We need to look at the real reasons for the gender pay gap and what role is currently played by the Equal Pay Act.
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On the gender pay gap, the Women and Work Commission report has already been mentioned by my noble friend Lady Gould. I chaired that commission between 2004 and 2006. We discovered that there were three major reasons for the gender, pay and opportunities gap. First, there are the educational choices made by girls and a lack of quality guidance for girls on what those educational choices will lead them to in the world of work. Secondly, there is occupational segregation, both in workplaces and across the labour market. Thirdly, there is the poor quality of part-time employment. There is an enormous lack of good-quality part-time employment available. One of the pay gap statistics which is most telling is the gap between women who work part-time and women who work full-time, which is currently around 33 per cent. That tells you something about the nature of available part-time employment.
We need social policy programmes to improve these things and we need flexibility, as has already been mentioned. I am grateful to the Government for agreeing to extend the right to request. I am pleased that in recent years our Government have extended and improved rights to maternity and paternity leave and I appreciate the efforts to make childcare more available. The cost of childcare is still a major problem and one of the big reasons why many women turn to part-time, local employment. The nature of their skills does not allow them to earn sufficient money to be able to work full time and pay childcare costs.
We also need what I call second-chance education. Much more effort needs to be put into programmes to upskill and retrain those women who have gone from doing what we might term decent-quality jobs to working in jobs much below their capabilities. My noble friend Lady Gould mentioned the loss of earning power of the women who go from decent jobs to lower-skilled and lower-paid jobs. The Women and Work Commission has estimated the cost of that to the Exchequer to be between £15 billion and £23 billion a year. We made those arguments when the Women and Work Commission produced its report. In the following Budget, in March 2006, the then Chancellor of the Exchequer, Gordon Brown, allocated £40 million to be spent on specific retraining and upskilling programmes for women. That money has been used effectively and those programmes are being continued.
The Equal Pay Act, to use the vernacular, is a busted flush; it does not work. Anyone involved in negotiations or working within the legal area will say that we need to start again. It is almost 40 years since the Act was introduced and during that time we have had a complete change of pattern within the labour market: local authorities have contracted-out services, most of which are sex segregated; the Act does not allow women to compare themselves with men in a different employment; central government departments have been divided into agencies; and people employed in those separate agencies are not deemed by the courts to have a single source of employer. The way in which labour is organised these days means that the legislation just does not match what is required. We need a root-and-branch change to current legislation.
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I and the Equality and Human Rights Commission welcome the opportunity brought about by the equality Bill. We welcome many of the proposals, particularly the banning of secrecy clauses and the introduction of positive action. I end by thanking the noble Baroness, Lady Morris, for introducing the Bill. It brings the issue onto the agenda in a very necessary, helpful and welcome way.
12.33 pm
Baroness Morgan of Huyton: My Lords, I applaud the personal commitment of the noble Baroness, Lady Morris of Bolton, to the goals of equal pay and flexible working. All of us here share those goals and I welcome the chance to join in the debate.
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