Nudging employers to do better on equality doesn’t work – they need a shove instead

One reason why Britain has a skills and productivity gap is that it’s failing to make the best use of its workforce’s potential.

Take female workers. Vicky Pryce, the former head of the government’s economic service, argues that the UK is sacrificing productivity, prosperity and growth through women not working up to their skill levels or acquiring more.

So far, so familiar. But, writing for the Forecasting Eye briefing for the Centre for Economics and Business Research, Pryce says that will change only through regulation and/or legislation to remove the formidable barriers in their way.

The market won’t do it on its own because companies are too focused on short-term profits, even though change would be in the interests of corporate Britain (because it would be able to get its hands on the skilled workers it says it’s short of). So the government needs to force employers’ hands.

The trouble is, ministers are still obsessed with achieving change through the “nudge” - the application of pressure and persuasion.

Gender pay gap reporting followed a rare progressive piece of legislation by the Conservative administration, requiring all employers with more than 250 staff to publish their numbers.

Some of the results have proved highly embarrassing for companies, particularly those with largely female workforces and/or customer bases.

And some have responded. Boots is an example. Nearly four out of five of the chemist’s employees are female. Yet in 2017 it had a gender pay gap of 21 per cent.

The company said it would work to improve, and pointed to an enhanced maternity and flexible working offer among other things. Progress has still been slow – the most recent report had the figure at 19.5 per cent – but things are at least moving in the right direction.

While the nudge could be said to have worked there, a lot of employers just publish and shrug. As Pryce recognises, the nudge is no good if the intended recipient doesn’t notice it or isn’t bothered by it.

The pay gap itself provides a marvellous example of that. It was at first voluntary, and the government sought to encourage employers to take part. But only a few did.

Pryce, whose book Women vs Capitalism: Why You Can’t Have It all In the Free Market Economy is just out, wants to see hands forced in many more areas, such as the aforementioned maternity leave, where Britain’s base offer is one of the worst in the OECD. You can add flexible working to the list, too. Employees have the right to request it (the nudge), but employers are free to say no.

Female workers are not alone in being underutilised and facing barriers to achieving their potential. Black and minority ethnic workers and disabled workers (a personal interest given that I’m in that group) are in the same boat.

The ludicrous “Disability Confident” scheme for employers is another example of a government attempt to “nudge” them into doing what’s good for them. The contempt in which it is held by disability activists tells you all you need to know.

Productivity would improve if the potential of all these groups were unlocked. They all contain vast pools of talent going wasted, people with skills they are unable to use. As a result, the skills and productivity gaps yawn, and the economy is smaller than it ought to be – and we are all the poorer for that.

Trouble is, legislation requires a government that is prepared to ignore the powerful lobbies that will inevitably raise objections (too expensive, not needed, best achieved by a voluntary approach, you know the drill).

With the current one so clearly lacking the courage to unlock Britain’s potential, a change is in order.