Gender pay gap reporting comes into force in the UK

Thousands of UK companies are now required to publish their gender pay gap figures, as the country becomes one of the first to introduce mandatory gender pay gap reporting. Under new rules that take effect from Thursday, public, private and voluntary sector employers with 250 or more employees must publish data about their pay gap within the next year.

According to the Government Equalities Office, the regulations cover approximately 9,000 employers with over 15 million employees, representing nearly half of the UK’s workforce.

The move is part of efforts to stamp out discrimination in the workplace.

The UK gender pay gap currently stands at a record low of 18.1% for all workers, or 9.4% for full-time staff. It’s hoped that the new requirements will help employers to identify the gaps in their organisations and take action to rectify the issue.

Justine Greening, Minister for Women and Equalities, commented:

“We have more women in work, more women-led businesses than ever before and the highest proportion of women on the boards of our biggest companies. This has helped us to narrow the gender pay gap to a record 18.1% — but we want to eliminate it completely.

“Helping women to reach their full potential isn’t only the right thing to do, it makes good economic sense and is good for British business. I am proud that the UK is championing gender equality and now those employers that are leading the way will clearly stand out with these requirements.”

Under the new rules, employers will be required to publish their median and mean gender pay gap figures and the proportion of men and women in each quartile of the pay structure. They must also publish the gender pay gaps for any bonuses paid out during the year.

Additionally, employers will be encouraged to publish an action plan setting out the steps they will take to close the gender pay gap within their organisation.

The Women’s Equality Party welcomed the new reporting rules but argued that they should go much further, by requiring companies to publish pay data broken down by age, ethnicity and disability, as well as gender. The party also said that the rules should apply to businesses with more than 50 employees within three years.

UK house prices fall for first time in nearly two years

Average house prices across the UK fell by 0.3% from February to March, according to the latest monthly report from Nationwide, published on Friday.

This is the first fall since June 2015, and the largest such decrease for nearly five years. It pushed the annual rate of house price growth down to a 19-month low of 3.5%, which was weaker than expected.

Robert Gardner, Nationwide’s chief economist, noted that there was a mixed picture across the UK during the first quarter, with six regions seeing the pace of house price growth accelerate, another six seeing a deceleration and one recording the same rate as the previous quarter.

“Interestingly, the spread in the annual rate of change between the weakest and strongest performing regions was at its narrowest since 1978 at 6.8 percentage points — the second smallest gap on record,” Gardner added.

Nationwide also highlighted figures from the Department for Communities and Local Government’s latest English Housing Survey which showed a further decline in the home ownership rate to 62.9% in 2016 — the lowest recorded since 1985.

“Over the past decade, there has been a particularly marked decline in the home ownership rate amongst young adults (those aged 25-34), traditionally the segment containing most first time buyers,” Gardner pointed out.

A separate report released on Friday illustrated the barriers facing young people and those on low incomes who want to own their own home.

The National Housing Federation analysed where in the country people in different jobs can afford to rent and buy, revealing that house prices in England more than doubled (+120%) between 2002 and 2016, while salaries only increased by 38% during the same period.

According to the report, there is now only one local authority in the whole of England — Burnley in Lancashire — where a low-paid worker, such as a nursery nurse, could afford an average mortgage without spending more than five times their annual income.

At the same time, there is no area of the country where low-paid workers pay less than 30% of their monthly income on rent. Private rents are particularly high in London and the South East, where rent typically takes up more than 50% of low-income workers’ pay.

Five million low-paid workers across the country have been completely priced out of either renting or buying a home, the report concluded.

“This analysis makes for truly depressing reading,” said David Orr, chief executive of the National Housing Federation. “Low-income workers are left with fewer affordable options than ever even though their jobs are absolutely critical to local economies.”

UK inflation reaches highest rate for more than three years

The fall in the value of the pound is increasing the cost of food and fuel, pushing inflation to the highest rate since September 2013.

The Office for National Statistics (ONS) reported on Tuesday that the UK’s consumer prices index (CPI) reached 2.3% in February, following a 1.8% rise in January.

This takes the rate above the Bank of England’s 2% target for the first time since 2013.

Inflation has been steadily increasing since late 2015. Higher transport costs, particularly fuel prices, contributed most to the overall increase in the rate last month. At the same time, food prices recorded their first annual increase for more than two and a half years — up 0.3% compared to February 2016.

Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said the latest CPI report confirms that UK prices are “on an upward trajectory”.

“The decline in the value of sterling, together with rising oil and other commodity prices, is likely to maintain the upward pressure on consumer prices in the coming months,” Thiru added.

The BCC forecasts that inflation will remain above 2% for some time, peaking at close to 3% in the second half of 2018.

Thiru warned that rising inflation is a threat to the UK’s growth prospects.

“Businesses continue to report that the rising cost of raw materials are squeezing margins, forcing many firms to raise their prices. Higher inflation is also likely to materially squeeze consumer spending in the coming months as price growth increasingly outpaces earnings growth,” he said.

“While government has little direct influence on currency movements or global commodity prices, it must do more to ease the burden of up-front costs and taxes faced by businesses, which is weighing heavily on investment decisions and growth.”

Another business group, the CBI, noted that although inflation has overtaken the Bank of England’s 2% target, “it is still relatively low by historical comparison”.

Anna Leach, head of economic intelligence at the CBI, also cited data pointing to rising costs for businesses, with input prices up 19% year-on-year.

Still, there was good news in the latest CBI Industrial Trends Survey, also released on Tuesday, which showed that export order books have risen to the highest level in over three years.

What’s more, expectations for growth have climbed to the highest level for more than 20 years.

In all, 45% of the 423 manufacturers surveyed expect output to grow over the next three months, while 10% expect a fall. This leaves a rounded balance of +36% — the highest since February 1995.

Asda offers higher pay rate for flexible contract

Asda is offering its staff a new flexible contract paying £1 per hour over the Government’s National Living Wage increase which takes effect next month.

The UK’s third-biggest supermarket chain said on Monday that moving to the new contract, with a base rate of £8.50 per hour, is voluntary, and stressed that it is not a zero hours contract — staff will retain guaranteed minimum hours.

The new deal aims to increase staffing flexibility in stores. Staff who choose to move to the new contract will have greater levels of flexibility in their work patterns to make sure more colleagues are in the right place, at the right times of day to meet customers’ needs.

This means that they could be asked to work in different parts of their store, or work different days or hours depending on when customers shop in the store most, Asda explained.

As well as an increased rate of pay and agreement to flexible working, the contract offer includes:

– Agreement to work bank holidays if required, or take the time as annual leave.

– 28 days annual leave, including bank holidays.

– An increase in the night shift pay premium for working unsociable hours, but a decrease in the hours it will apply — from the current 10.00pm to 6.00am, to between midnight and 5.00am.

– A move to all breaks being unpaid.

Asda claims that 95% of its current workforce will be better off if they choose to move to the new contract — some by over £1,000 a year.

Asda’s senior vice-president of people, Hayley Tatum, said: “Our current employment contracts have evolved over decades. They mean we have different colleagues on different terms and they don’t give our colleagues the level of flexibility our customers need to meet their changing needs. Our customers shop in different ways at different times and they expect us to deliver them the same great level of service whenever they visit us.

“This new contract will also mean that colleagues can gain a broader level of experience across their store, which will in turn give them better opportunities to progress and develop their career in retail.”

The contract has been welcomed by the GMB union, whose general secretary, Tim Roache, commented: “These new flexible contracts will help to ensure job security, ensure those accepting them are on the same terms and — best of all — ensure that people will earn more money as a result. The new contract offer involves quite a few changes, but as it’s voluntary, this allows colleagues to choose whatever suits their circumstances best.”

UK Chancellor raises NI rate for self-employed

 

A rise in Class 4 national insurance contributions (NICs) paid by self-employed people was amongst the measures announced by Chancellor Philip Hammond in the Budget on Wednesday.

Hammond said that the rate for Class 4 NICS would rise from 9% to 10% in April 2018. It will go up again, to 11%, in 2019. Employees currently pay national insurance at a rate of 12%.

In his Budget speech, Hammond pointed out that an employee who earns £32,000 a year will pay £6,170 in NICs, while a self-employed worker on the same salary pays just £2,300.

He claimed that “such dramatically different treatment of two people earning essentially the same undermines the fairness of our tax system”.

Self-employed people have traditionally paid lower NICS than employees because they received fewer state benefits.

But the Chancellor said that the difference in NICs was “no longer justified”, arguing that the self-employed now had equal access to the new state pension.

Commentators noted that the decision goes against the Conservatives’ election manifesto promise, which committed the Government to “no increases in VAT, Income Tax or National Insurance”.

The increase will cost those affected an average of 60p a week.

However, those earning less than £16,250 will be better off because of a planned abolition of of a different class of NICs, Class 2, in April 2018.

Think tank the Resolution Foundation said this week that “the real debate about tax and the self-employed lies not in the National Insurance individuals directly pay but with the fact that firms pay 13.8% employer National Insurance for everyone they employ, but nothing if they use self-employed labour”.

UK faces worst income squeeze for 60 years

With the UK continuing to make slow progress in recovering from the financial crisis, household incomes will not grow at all for the next two years, according to a report published on Thursday.

The Institute for Fiscal Studies (IFS) said that the recession and “tepid” recovery have resulted in a sustained slowdown in income growth which is unprecedented in at least the last 60 years.

The report, funded by the Joseph Rowntree Foundation, predicts that in five years’ time, median household income will be just 4% higher than it is now.

Some households will see a bigger squeeze on their income than others, and inequality is set to rise. For instance, low-income households with children are likely to fare worst, while pensioner incomes will continue to grow faster than those of the rest of the population.

Focusing on incomes after housing costs, the report found that if planned benefit cuts go ahead the poorest 15% of the population are likely to have lower incomes in five years’ time, on average.

Absolute child poverty on the official measure is projected to rise from 27.5% in 2014-15 to its pre-recession level of around 30% in 2021-22, an increase which is said to be “entirely explained by the direct impact of tax and benefit reforms — particularly the cuts to working-age benefits — planned for this parliament”.

Tom Waters, an author of the report and a research economist at the IFS, commented:

“If the Office for Budget Responsibility (OBR)’s forecast for earnings growth is correct, average incomes will not increase at all over the next two years. Even if earnings do much better than expected over the next few years, the long shadow cast by the financial crisis will not have receded — average incomes in 2021-22 are still projected to be £5,000 a year lower than we might have reasonably expected back in 2007-08.”

Campbell Robb, chief executive of the Joseph Rowntree Foundation, added:

“These troubling forecasts show millions of families across the country are teetering on a precipice, with 400,000 pensioners and over one million more children likely to fall into poverty and suffer the very real and awful consequences that brings if things do not change.

“One of the biggest drivers of the rise in child poverty is policy choices, which is why it is essential that the Prime Minister and Chancellor use the upcoming Budget to put in place measures to stop this happening. An excellent start would be to ensure families can keep more of their earnings under the Universal Credit.”

CBI survey shows rebound in UK retail sales

UK retail sales rebounded slightly in the year to February and are expected to continue growing, according to survey results released last week.

The CBI’s latest quarterly Distributive Trades Survey involved 128 firms, of which 64 were retailers. It found that two in five retailers (40%) reported increased sales volumes in February, giving a positive balance of 9%, up from a fall of 8% in the previous survey.

Sales volumes are expected to rise again in the year to March, albeit at a slightly slower pace.

Ben Jones, principal economist at the CBI, commented:

“The rebound in retail sales suggests that some of the recent gloom about a slump in consumer demand at the start of 2017 may be overdone.

“However, retailers remain cautious about their prospects, expecting fairly tepid growth in sales volumes next month against a backdrop of rising inflation that is likely to erode households’ purchasing power through the course of the year.

“As the impact of the weaker pound feeds through supply chains, retailers are trying to absorb some of the increase in their import costs through savings.”

Investment intentions for the year ahead fell for the first time since May 2016, and — for the first time in four-and-a-half years — retailers expect their business situation to deteriorate over the next three months. The biggest factor driving this more pessimistic outlook was rising cost pressures.

In a supplementary question asked this month, 42% of retailers cited rising cost pressures as a factor driving the deterioration in the business situation, while 35% cited uncertainty over Brexit/EU negotiations, 23% pointed to expected weakening in sales volumes and 18% cited an expected weakening in profitability.

UK economic growth in Q4 higher than previously thought but business investment falls

The UK economy grew by more by more than previously reported in the final quarter of 2016, but figures also reveal a decline in business investment.

New estimates released on Wednesday by the Office for National Statistics (ONS) show that the UK’s gross domestic product (GDP) grew by 0.7% in the October to December quarter, revised up from the preliminary estimate of 0.6%.

The upward revision was mainly due to a stronger performance by the manufacturing industry.

However, for the whole of 2016 economic growth was weaker than previously thought. The UK economy is now thought to have grown by 1.8% — revised down from the 2% forecast last month. This means that the UK can no longer be considered the fastest-growing major advanced economy last year, as Germany’s economy grew by 1.9% in 2016.

Moreover, separate figures released on Wednesday reveal a slowdown in UK business investment in the fourth quarter, down 1.0% compared with the three months to the end of September.

Across the whole of 2016, investment declined by £2.7bn or 1.5% compared with the previous year — the first annual decrease in business investment since 2009. The ONS attributed the drop to weakness in investment in buildings and structures as well as information and communication technology (ICT) equipment and other machinery and equipment.

Commenting on the figures, Lee Hopley, chief economist at manufacturers’ organisation EEF, said:

“The UK economy is rarely without its weak points and at the end of 2016 it was business investment. Capital expenditure by businesses saw a contraction in the final months of last year contributing the first year-on-year contraction in business investment since 2009. It’s too soon to declare this an worrying omen for 2017, especially as more recent survey indicators have been signalling a more positive trend.”

Nevertheless, businesses are expected to rein in their investment plans as the UK negotiates its departure from the European Union, Reuters reported.

TUC general secretary Frances O’Grady said:

“It’s very worrying to see that business investment is already falling with the challenges of Brexit ahead. If this trend continues, working people will pay the price through weaker wages and fewer jobs.

“Despite a modest boost to public investment last year, UK investment still lags behind the world’s leading industrial nations. With private sector investment in retreat, the Chancellor must focus on closing the gap with our competitors in next month’s budget. This would help protect jobs and wages, and it would give a much needed boost to business confidence.”

UK retail sales fall in January

Rising prices for fuel and food are thought to be behind a fall in UK retail sales in January, the Office for National Statistics (ONS) said on Friday.

Official figures show that the quantity bought in the retail industry in January 2017 declined by an estimated 0.3% compared with the prior month. Both online and in-store sales were lower in January than in December.

Year-on-year, the quantity bought is estimated to have increased by 1.5% — the lowest growth since November 2013.

Meanwhile, the underlying pattern as suggested by the three month on three month movement decreased by 0.4%.

“In the three months to January, retail sales saw the first signs of a fall in the underlying trend since December 2013,” said ONS senior statistician Kate Davies. “We have seen falls in month-on-month seasonally adjusted retail sales, both in conventional stores and online, and the evidence suggests that increased prices in fuel and food are significant factors in this slowdown.”

The drop in retail sales during January followed the sharp fall recorded in December.

“The failure of retail sales in January to rise at all after December’s 2.1% month-to-month drop demonstrates that consumers’ spending has shifted down several gears in response to slowing employment growth and rising inflation,” said Samuel Tombs of Pantheon Macroeconomics, quoted by the Financial Times.

Ruth Gregory from Capital Economics, quoted by the BBC, commented: “January’s surprise fall in the official measure of retail sales volumes has brought the recent run of resilient economic news to an abrupt end. And the rest of the year is shaping up to be tough on the high street, given the expected squeeze on consumers’ real pay growth.”

Earlier this week, figures from the ONS showed that inflation in January climbed to its highest level in two and a half years.

The Consumer Prices Index (CPI) rose by 1.8% in the year to January 2017, compared with a 1.6% rise in the year to December 2016.

More than 350 UK firms ‘named and shamed’ over low pay

Hundreds of companies in the UK have been paying staff below the national minimum wage or the national living wage, the UK Government revealed on Wednesday.

Debenhams, Subway, Lloyds Pharmacy and the Co-op are among 359 businesses “named and shamed” by the Department for Business, Energy & Industrial Strategy for underpaying 15,513 workers a total of £994,685.

HMRC recovered arrears for the workers and fined the employers around £800,000.

Business minister Margot James said:

“Every worker in the UK is entitled to at least the national minimum or living wage and this government will ensure they get it.

“That is why we have named and shamed more than 350 employers who failed to pay the legal minimum, sending the clear message to employers that minimum wage abuses will not go unpunished.”

Employers in the hairdressing, hospitality and retail sectors were said to be the most prolific offenders.

TUC general secretary Frances O’Grady described the list of businesses as “a wake-up call for employers who value their reputation” and called for prosecutions and higher fines for the most serious offenders, especially those that deliberately flout the law.

“Minimum wage dodgers must have nowhere to hide,” she added. “We need to see strong unions in every workplace to stop these abuses from happening.”

The Office for National Statistics has calculated that 362,000 jobs did not pay the national minimum wage or national living wage in April 2016, representing around 1.3% of all UK employee jobs.

Last month, the Government released a list of some of the strangest excuses given by employers for not paying the national minimum wage. They included: “She doesn’t deserve the National Minimum Wage because she only makes the teas and sweeps the floors,” and “My workers are often just on standby when there are no customers in the shop; I only pay them for when they’re actually serving someone.”

However, the business minister said that there is “no excuse” for not paying staff properly.

From 1 April 2017 the national minimum rates of pay in the UK will be increased. The national living wage rate for employees aged 25 years and over will go up to £7.50 per hour. The national minimum wage for 21 to 24 year olds will rise to £7.05 per hour; for 18 to 20 year olds to £5.60 per hour; and for 16 to 17 year olds to £4.05 per hour. The apprentice rate will increase to £3.50 per hour.