Bank of England Chief Economist Andrew Haldane said more reporting is required on gender and ethnicity-related pay inequality, which he said is large and persistent across industries.
The U.K. currently mandates companies with over 250 employees to annually publish gender pay gap reports, but the reporting regime covers only about 40% of employees in the private sector, Haldane said in a speech in Frankfurt, Germany. Reporting income disparity based on ethnicity is not compulsory in the country.
"To tackle the pay gap comprehensively, this suggests there is a strong case for extending the pay reporting regime to smaller companies — say, those with 30 or more staff," Haldane said. He added that there are "strong grounds" for extending compulsory pay reporting to ethnicity.
Only a handful of other nations require companies to publish their gender and ethnicity pay gaps internationally, said Haldane, who suggested that the Organisation for Economic Co-operation and Development could lead efforts to require such reporting on a harmonized basis.
Publishing reports on wage differences may discourage a company from hiring younger or lower-paid workers as it might accentuate the gap, Haldane said. However, having to work on such a topic can serve as a catalyst for "corporate and national accountability and explanation," he added.
To explain his point further, Haldane said the idea was similar to inflation targeting through monetary policy. "The single target does not wholly or perfectly summarize all dimensions of the economy," he said, but acts as "an explanation for misses and an action plan for returning inflation to target."
The BoE started reporting its gender pay gap in 2017 and its ethnicity pay gap, voluntarily, in 2018, Haldane said. The European Central Bank set gender targets in 2013 to double the number of women in management positions. The ECB saw women fill up to 29% of the positions in 2018 and set a target of 35% in 2019.