New research shows
Only one-third (32.8%) of employers think the introduction of pay ratio reporting will lessen pay inequality between executives and other employees, according to research from HR analysts XpertHR.
By June this year, the Government plans to introduce a requirement for all listed companies to publish the ratio of their CEO’s pay to the average pay of their UK workforce. Just 12.7 per cent of employers currently do this calculation, the survey found.
There is broad support for the Government’s proposals, with 61.4 per cent of respondents supporting the plan. However, just 38.6 per cent want to see this extended to all employers.
Among those in favour, most believe that increased transparency is a good thing, and many hope that it will increase scrutiny of executive pay and raise employee engagement.
But opponents are also vocal in their opinions. Key concerns are the extra burden it would place on small employers; the value of the data, particularly in sectors where there is a significant number of low paid workers; the ability to keep individual salaries anonymous; and the relevance of figures that don’t take into account the different roles that executives and staff undertake.
The proposals also require companies to explain changes to the ratio from one year to the next. Some employers are concerned that this will simply allow them to justify the pay levels, rather than move the debate forward.
XpertHR managing editor for pay and HR practice Sheila Attwood said: “While many employers are in favour of increased transparency around pay levels, there is no widespread support for requiring all companies to publish pay ratios. While some feel the measure is too simplistic, others are concerned that the narrative will be used to justify the figures, rather than lead to action.”