Will Any Party Fight Britain’s Absurd ‘Equal Value’ Law?

I have identified a new litmus test for judging whether our political parties are economically serious. It’s nothing to do with their fiscal policies or supply-side agenda. No, a good indicator right now is whether they would overhaul the destructive equal pay law that has driven councils to financial crisis and is now savaging Britain’s biggest retailers.

After Birmingham council and Next comes Tesco. About 62,000 current and former store workers, mostly women, claim they should have been paid the rate for male-dominated warehouse jobs, because their work was of “equal value”.

Tesco says distribution centre workers were paid up to £5.50 an hour more than store workers because that was the market rate required to recruit and retain them. Warehouse jobs are often in colder conditions, more physical and generally less agreeable. In other words, Tesco paid more because it had to.

Yet UK equality law gives the claimants an opening. After a European court ruling, Tesco conceded that store workers could compare themselves with distribution centre workers. The current hearing tasks Tesco with proving the pay gap reflected non-discriminatory factors. Unfortunately for Tesco, pointing to “market rates” is often insufficient if a pay structure disadvantages women. If Tesco loses this and a later “equal value” assessment, it faces providing billions in back pay.

“Hold on,” I hear you say. “These are plainly different jobs. Wasn’t equal pay about avoiding women being paid less simply because they are women?” Not in Britain. Section 65 of the Equality Act 2010 extends “equal work” to include work “rated as equivalent” or of “equal value”. This is not about paying female store staff less than male store staff, or a pay gap by sex for warehouse workers. It is about whether an occupation dominated by men pays better than one with relatively more women, at least if employment bureaucrats deem both roles have equal value.

How is value determined here? Not by observing what workers accept. An independent expert appointed by the Employment Tribunal instead assesses the jobs, scoring them numerically under headings such as knowledge, responsibility, training, mental strain, physical effort and working conditions. Different jobs can score similar totals by summing the numbers despite them being utterly different in practice. It’s an arbitrary exercise divorced from economic decisions, using what The Economist’s Archie Hall describes as “hand-waving pseudo-rigour.”

Truly, it’s awful economics. Wages are market prices that reflect a multitude of factors, including scarcity, location, outside options, unsocial hours, urgency and bargaining power. A warehouse in a tight labour market may need higher pay than a shop floor. A night-shift depot may need premiums a daytime store does not.

The Next case illustrated this perfectly. The company even offered some store workers the chance to transfer to warehouses. Very few wanted to, with one claimant admitting they would need much higher pay to consider it. That is what the wage differential was screaming. Equalise rates by legal fiat and you can expect surplus workers for stores or shortages for warehouses.

If Tesco loses, it’s not just the back pay bill it will face. Its pay ladder risks getting compressed. Supervisors will demand responsibility premiums survive. And given the company operates in a tight-margin sector, raising store pay inevitably means some combination of higher prices, fewer jobs, or squeezing workers harder.

Across the economy, more employers will then expend resources second-guessing possible future claims, commissioning costly job evaluations, or outsourcing functions to avoid liability. Is this really what our slow growth economy needs? Companies building litigation defences instead of better products?

Obviously not. But what party will say so? Labour would extend this framework to other minorities. The Conservatives talk big about meritocracy and Reform says it would scrap the Equality Act. But would either commit to the full abolition of “equal value” provisions and endure the charge of attacking women’s rights? So far, nobody has dared.