Pay Compare - helping make pay ratio reporting common practice
Pay Compare is an independent, not-for-profit organisation that wants to create a fairer economy that achieves improved wellbeing for all. They help consumers and investors favour fairer employers by providing a free website of UK employer pay ratios and they campaign to make pay ratio reporting common practice in the UK.
When asked, the majority of us think the pay gap between the highest paid in our society and the rest of us is too large, with more than 80% of us saying so in the British Social Attitudes survey of 2013. Indeed, in a survey commissioned by the High Pay Centre in 2015, 66% of us said there should be a maximum pay gap so bosses cannot earn more than a fixed amount above the average employee of their company.
See also my blog on this subject in summer 2016.
Countries of the United Nations, including the United Kingdom, signed up to the Global Sustainable Development Goals in September 2015. These include a specific goal to reduce excessive wage inequality at Goal 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.
Evidence also shows that societies with smaller income inequality – the income difference between those people with high incomes and low incomes – are generally happier, healthier and a better place to live for almost everyone in them. Pay is the biggest part of our income for most of us so plays a critical role in income inequality.
Further research is showing that as the pay gap increases in our workplaces so too does the likelihood of workplace conflict, increased staff turnover and work-related illness, with all the associated economic consequences. And emergent research is showing that consumers prefer to buy from employers who they consider pay fair – where employers can use their pay ratios to help show how fair they pay.
In addition, in 2015, the Securities and Exchange Commission in the USA adopted a rule that requires a public company to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees. The new rule helps inform shareholders when voting on “say on pay.”
A pay ratio is typically calculated as the ratio of the pay of the highest paid employee of an organisation to the pay of the average or lowest paid employee in that organisation. The ratio enables us to see how serious a company or organisation is about fair pay and equality.
The Pay Compare website contains details of about 540 organisations who have submitted their pay ratios.
Is your organisation there? If not, why not ask them to consider publishing their pay ratios.
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