Labour is desperate to come across as business-friendly. Last week, the party said it will no longer reinstate a cap on bankers’ bonuses, and that it will ‘unashamedly champion’ the financial services industry. But how to square that with the party’s new Race Equality Act?
Most people understand equal pay to mean exactly what was intended when it became law in 1970: that remuneration must be the same for two identical jobs within an organisation, regardless of who is in post. But since the EU’s 2006 Equal Pay Directive it has taken on a new meaning: now, it covers ‘like work’ (where the job and skills are the same or similar), ‘work rated as equivalent’ or ‘work of equal value’. Some jobs, therefore, can be classed ‘as equal work’, even if the roles are, in fact, different.
This has created a problem for employers. Take the case of Birmingham City Council. The local authority is on the hook for an equal pay liability estimated at between £650 million and £750 million, following a court ruling that found hundreds of mostly female employees working in roles such as teaching assistants and catering staff ‘missed out’ on bonuses that were given to traditionally male-dominated roles such as refuse collectors. I would rather be a teaching assistant than a street cleaner, and suspect many men would too, but according to the GMB Union, these women were the victims of ‘shocking’ pay discrimination.
Consider the implications were this legislation to be widened to include race. It won’t matter that two jobs are different, or that people exercised their free choice in applying for one over the other; a court can rule they are close enough to require equal pay.
Britain doesn’t need a race equality act
And what happens if Labour presses ahead with ethnic pay gap reporting, when employers already have gender pay gap regulations to contend with? The latter tells us nothing of use, partly because the data are so primitive, but allows the discrimination grifters to paint Britain as institutionally sexist and convince women they are victims of a patriarchy. Expanding the legislation would impose yet more monitoring costs on businesses and possible ill-feeling among staff. It would result in deceptive statistics that would nonetheless lead to some firms being villainised for being racist when they are not.
In fact, ethnic pay gap reporting could be worse than its benighted precursor, given that in all but two regions of the UK, more than 85 per cent of the population identify as white, but there are perhaps close to 100 distinct minority ethnicities in London. What lessons could we possibly learn?
Labour may want to shake up workers’ rights in ways not seen for a generation, but this rather ignores the cascade of employment legislation forced on businesses since 2010, including some of the most expensive pieces of regulation conceived in the post-war era. The array of costs and obligations on businesses – from minimum wages to parental leave – is one of the reasons why HR has expanded at breakneck speed. Complexity requires people to interpret the rules. The more rules there are, the more people to interpret, seizing ever more power within firms, and pushing for ever more regulations. It’s a self-perpetuating cycle that lands businesses with ever more employees whose jobs are ultimately unrelated to the bottom line. The costs are hard to overstate.
And yet, to quote shadow women and equalities secretary Anneliese Dodds, ‘inequality has soared… too many black, Asian and ethnic minority families are working harder and harder for less.’ If recent clampdowns on freedom of contract have failed to address this, why would Labour’s plan be any different? If the party hasn’t established that a lack of regulation is the reason for inequality, can this latest proposal be viewed as anything other than political opportunism?
Britain doesn’t need a race equality act. It’s far from clear we need an equality act, at least not in its current, expansive form, covering nine protected characteristics. Politicians should beware using regulation to socially engineer, however tempting it might be.
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