“Company alarm at order to publish gap in male and female pay”, said the headline in the Financial Times.
The 2015 article focused on consternation among executives following the government’s decision to require employers with over 250 staff to disclose their internal pay gap. It quoted Mark Mansell, an employment partner at Allen & Overy, who said companies were “throwing up their hands in horror” at the decision.
What must they be making, then, of suggestions that everyone should have their tax returns made public?
Publishing everyone’s tax details would make the new measures superfluous. In fact, if PAYE details were made publicly available, it would be technically possible to work out the relative incomes of employees in all companies – even ones too small to be affected under the government’s proposed regulations.
What would that mean in practice? One potential answer lies in the example of Norway, where tax returns have been public since the 19th century. In fact, until fairly recently, it was possible to read Norwegians’ tax details online – leading, perhaps predictably, to a rather voyeuristic interest in tax affairs, with tabloid newspapers often using the records to find easy stories.
Before Norway switched from an open system to one requiring registration, there were even concerns that burglars might use the nation’s records to find potential victims.
Yet despite these drawbacks, a 2012 study found that the majority of Norwegians still supported the law. (Incidentally, a YouGov survey the same year suggested the majority of Brits do, too.) But does it make a difference to Norway’s gender pay gap?
The Organisation for Economic Co-operation and Development (OECD) – an international organisation of 34 states set up to stimulate economic progress and world trade, which includes 21 of the 28 EU member states – has written that “at median incomes the gender pay gap in Norway is among the lowest in the OECD”.
That’s not the full picture, however: the same report points out that at higher incomes, “top female earners” in Norway “make on average 17 per cent less than their male counterparts”.
That’s significant – and not only because it points towards the existence of a “glass ceiling” on pay.
Herwig Immervoll is a senior economist at the OECD. In principle, he says, you would expect that the availability of more information would lead to a lower level income inequality. “Discriminatory practices”, for instance – such as people of different genders being paid different amounts for the same role, within the same company – can be easily undermined by increased transparency.
This is why a recent law in Germany, which demands that companies over a certain size release details of their pay breakdown, has been useful: once worker representation groups know what people are being paid, they can advocate for change.
But although this information is helpful in combating unfair pay, Immervoll stresses it’s “not a silver bullet” – because change depends mostly on what the public does with it. The question, then, is not only what information is available in each country – but how much of an aversion there is to pay inequality.
“A lot of the discussion around pay has been about people with very high pay. That information is already out there.”
Equally, the publication of tax returns has done little to close the gap at the top end of Norwegian incomes.
This is also where the biggest pay gap is in the UK. According to the Office of National Statistics, there is almost a 20 per cent difference in pay according to gender at the top decile (meaning the top 10 per cent of earners). The gap also fluctuates by profession, with the difference in pay between men and women in sales and customer service at around 4.3 per cent, but 24.6 per cent in skilled trades as of April last year.
So what does this mean for public tax returns as a potential means of combating unequal pay? Firstly, it suggests the picture is more complicated than simply more transparency equals less disparity. More significantly, it shows that the pattern of gender-related pay difference in the UK and Norway is broadly similar – indicating that there are bigger, more nebulous factors at work when it comes to inequality in the labour market.
While being aware of everyone’s income could help fight pay discrimination particularly within companies – especially those with under 250 employees, who would not be covered by coming regulations – effecting broader change requires a different kind of action. After all, while we don’t know each individual employees’ salary, we do already have a fair idea of the most discriminatory industries, and change is notoriously slow.
With this in mind, the potential effect of greater transparency is likely less to do with exactly how much information we get, and more what we do with it. “The question is: do we need more transparency, or do we need to think about how we’re affecting change, and how we pressure politicians?” Immervoll asks. “If we published everyone’s income, would people be out on the streets?”