Gender pay gap reporting in Northern Ireland: Transparency without progress?

Senior economist at the Nevin Economic Research Institute (NERI), Lisa Wilson, assesses whether mandating gender pay gap reporting in an SME economy can lead to meaningful change, and offers recommendations to close the gap.

The Employment Act (Northern Ireland) 2016 brought a promise of addressing pay inequality by mandating gender pay gap (GPG) reporting. Section 19 of the Employment Act 2016 was aimed to develop regulations to mandate this reporting, with an accompanying strategy and action plan to follow by October 2017. However, these deadlines were not met, with statutory responsibility for Section 19 not formally transferring to the Department for Communities until June 2021, and a period of hiatus in the Executive.

Now, as the Department for Communities consults on the details of implementing these regulations, the question remains: will this legislation lead to meaningful change, or is it destined to fall short of its ambitious goals?

At its core, GPG reporting is intended to encourage transparency, requiring employers to disclose disparities in pay between male and female employees. However, international evidence suggests that this approach – while well-intentioned – has rarely delivered significant results in closing the pay gap. At face value, GPG reporting offers a simple, compelling promise: transparency. By requiring employers to disclose differences in pay between men and women, the policy seeks to expose disparities and encourage action.

The consultation is seeking views on regulations which will require employers with 250 or more relevant employees across public, private, and voluntary sectors to publish their gender pay information. At June 2024, this threshold covers approximately 345 employers in Northern Ireland.

While this threshold is intended to strike a balance between ensuring meaningful data collection and avoiding excessive administrative burdens on smaller businesses, the reality is that it excludes the vast majority of employers in Northern Ireland, which is characterised by a high concentration of small and medium-sized enterprises (SMEs). While there are legitimate concerns about the potential burden on smaller employers, particularly regarding data protection and confidentiality, it is essential that a mechanism is developed to allow smaller employers to contribute to the effort. Many other countries have reporting requirements from 50 or more employees.

The necessity for comparability with the gender pay gap data reported in Britain is another key consideration. To ensure consistency and provide a clear picture of gender pay disparities across the UK, the regulations must establish clear criteria for the publication of pay data.

While this transparency is valuable, it has often fallen short of driving meaningful change in practice.

While the introduction of gender pay gap reporting is undoubtedly a positive step toward transparency, there are substantial limitations which have been identified from other countries who have implemented similar legislation, in driving meaningful change. As Coron (2020) argues, there is a real risk that the act of producing these reports may function as a “performative” exercise, in which simply “saying something” is mistaken for “doing something”.

In other words, while employers may fulfill the letter of the law by publishing their gender pay reports, but this does not necessarily translate into substantive action to close the gender pay gap.

Some countries with mandatory GPG reporting, such as the UK, have not seen significant reductions in gender pay gaps. Instead, reporting has frequently amounted to little more than a compliance exercise. Employers identify their pay gaps but fail to take the steps necessary to address them. This raises a critical question: can Northern Ireland achieve better outcomes by learning from these shortcomings?

While the proposed framework has potential, its success depends on overcoming key challenges:

Firstly, the real power of gender pay gap reporting lies not in the data itself, but in how that data is used to drive action. Employers must be required to go beyond merely publishing gender pay data and must produce action plans and targets to tackle the root causes of gender pay disparities within their organisations. These action plans must identify barriers to gender equality and outline concrete steps to overcome them and targets for their action. Importantly, these plans should be developed in consultation with workers’ representatives – such as trade unions – who can ensure that the plans are realistic and address the real challenges faced by employees.

Secondly, while employers play a vital role in addressing the gender pay gap, it is insufficient to place the entire burden of responsibility on them. The Government must play a proactive role by implementing policies that support gender equality in the workplace. These policies must tackle structural barriers, including unequal access to childcare, insufficient support for flexible working, and the overrepresentation of women in lower-paid sectors. Additionally, the Government must ensure that resources are available to support women’s education and skills development, particularly in male-dominated industries where higher-paying jobs are concentrated.

Equally, the Government itself must set clear, measurable targets for reducing the gender pay gap. Without such targets, the initiative risks lacking the ambition needed to effect real change. Gender pay gap reporting is a useful tool for identifying disparities, but it must be part of a broader suite of policies aimed at addressing the systemic issues contributing to inequality.

A key aspect of this effort is the need for clear targets and timelines. Employers will need to be held accountable for their gender pay gap reports and the action plans they produce. However, accountability cannot stop with employers. The Government, too, must be held accountable for its role in providing the necessary infrastructure and support to reduce the gender pay gap. Only through a coordinated approach – one in which both employers and the state are responsible – can we hope to make meaningful progress.