THE CO-OP'S LANDMARK SOCIOECONOMIC PAY GAP REPORT

Following the introduction of the Gender Pay Gap Report requirements, and expectations that the new Labour Government will introduce similar requirements for disability and ethnicity, the Co-operative Group (Co-op) has made history by publishing the first-ever Socioeconomic Pay Gap Report in the UK.

Aligned with the Co-op’s history as a social justice inspired organisation, the report is a ground breaking initiative that highlights pay disparities between employees from different socioeconomic backgrounds. As the first of its kind, the report sets a significant precedent for transparency and equity in the workplace.

Key Findings
The report's key findings reveal critical insights into socioeconomic disparities within the Co-op:

1. Pay Gap Based on Socioeconomic Backgrounds: Employees from lower socioeconomic backgrounds (SEBs) earn less than their peers from higher SEBs. The mean pay gap stands at 5.2%, while the median pay gap is 0.2%. This disparity indicates a significant earnings difference based on socioeconomic status, but not as bad as many gender pay gap reports suggest.
   

2. Intersection of Gender and Socioeconomic Background: The report highlights that women from lower SEBs face the most pronounced pay gaps, reflecting compounded barriers to progression and earning potential.
   

3. Representation in Senior Roles: Employees from lower SEBs are underrepresented in senior leadership positions, despite consistent representation at other levels of the organisation.

Significance for HR and Employment Law
The Co-op's decision to publish this report is highly significant:

1. Pioneering Transparency: By leading the way in reporting socioeconomic pay gaps, Co-op sets a benchmark for transparency and accountability. This pioneering move is likely to encourage other organisations to disclose similar data, fostering a culture of openness about pay disparities and prompting necessary actions to address them.
   

2. Broadening Diversity and Inclusion Initiatives: The report emphasises the often-overlooked dimension of socioeconomic background in diversity and inclusion efforts. It calls for a broader understanding of workplace equality, extending beyond gender and ethnicity to include socioeconomic status.
   

3. Call for Policy Changes: The Co-op advocates for mandatory socioeconomic background data collection and reporting for all large employers. This policy change would provide a comprehensive view of pay disparities across sectors, driving systemic changes to promote workplace equality. But, with the other requirements likely to hit HR departments soon, is it likely the Government will place these more complex requirements at the same time?

Challenges in Data Collection
Collecting socioeconomic data presents several challenges:

1. Defining Socioeconomic Backgrounds: Establishing clear definitions and categories for socioeconomic backgrounds is complex. The Co-op used the highest earning parent’s occupation as a measure, asking employees about the occupation of their main household earner when they were around 14 years old. Other techniques include education level, or having access to free school meals as a child.
   

2. Encouraging Disclosure: Encouraging employees to disclose their socioeconomic backgrounds can be difficult. The Co-op has focused on improving diversity data completion rates, emphasising the importance of ongoing communication and reassurance to ensure employees feel comfortable sharing this information.
   

3. Analysing Intersectionality: Understanding how socioeconomic background intersects with other characteristics, such as gender and ethnicity, adds complexity to data analysis. The compounded disadvantages faced by women from lower SEBs highlight the need for a nuanced approach to analysing pay gaps.

Implications for HR
The Co-op’s initiative provides valuable insights and sets a model for other organisations:

1. Benchmarking and Best Practices: HR professionals can use the Co-op’s report as a benchmark to start their own socioeconomic pay gap analyses. Adopting similar methodologies can help identify disparities within their organisations and develop targeted strategies to address them.
   

2. Promoting Social Mobility: Addressing the socioeconomic pay gap is not just about fairness; it also makes good business sense. Enhancing social mobility can lead to a more motivated and diverse workforce, improving overall productivity and workplace culture.
   

3. Advocating for Policy Change: The Co-op’s call for mandatory socioeconomic data reporting highlights the role of policy in driving systemic change. HR can play a crucial role in advocating for such policies, helping to create a level playing field across industries.

The Co-op’s Socioeconomic Pay Gap Report 2023 is an interesting step outside the box, an effort that brings much-needed transparency to the issue of pay disparities based on socioeconomic background. It broadens the scope of diversity and inclusion initiatives and sets a powerful example for other organisations. It underscores the importance of addressing socioeconomic factors in the workplace to foster a more equitable and productive environment. But, it introduces further “labels” within the workplace, creates complex disclosure requirements and possible dilutes wider efforts to tackle other areas of significant gaps. With the Government focussing on this type of transparency, it will be interesting to see if making socioeconomic gap reporting mandatory in the near future.

Do you already report socioeconomic pay gaps in your business? If so, it would be interesting to hear the pros and cons you have experienced.