‘Background to the foreground’: How the Co-op kickstarted socio-economic pay gap reporting

Many brands talk a good game about wanting to eliminate inequalities in their workforce, but gathering the necessary data often proves a challenge too far.

While companies have a statutory obligation to report their gender pay gap, ethnicity pay gap reporting is still voluntary and precious few businesses have committed to publish their socio-economic pay gap either. In many cases the data is considered difficult to collect and quantify, with social class still feeling like a taboo subject within UK culture.

However hard it is, capturing this data matters. According to the Social Mobility Foundation, professionals from lower socio-economic backgrounds are paid 12% less – on average £6,291 – than their more privileged peers in the same occupation, meaning they work in effect one in eight days for free a year.

Marketing Week’s exclusive 2024 Career & Salary Survey suggests this could be an even bigger problem within marketing. The data finds working class marketers are being paid less than their peers, generating an average 15.9% socio-economic pay gap for full-time workers.

You’re not going to fix it by one programme, one month in 2024. What you need to do is continually build on your intelligence.

Zahoor Ahmad, Co-op

Some brands are, however, rising to the challenge. In July, the Co-op became the first UK retailer to publish its socio-economic pay gap. The desire to eliminate inequality was a major motivation for head of diversity, inclusion and social mobility, Zahoor Ahmad, under whose watch socio-economic response rates have risen from 5% to 72% in two years.

The goal in collecting socio-economic pay gap data was always to attain a “richer tapestry of understanding” on the issues impacting employees’ lives, Ahmad explains.

“You can’t just use a sheep dip approach and expect results,” he explains. “There are going to be all sorts of nuances in different parts of the business, especially when you’ve got a group like the Co-op, which covers the whole nation. There are all sorts of geographical business-related nuances you need to be mindful of.”

Building trust was key, which meant getting the messaging right from the chief executive down. Ahmad’s team released a variety of briefings and short videos explaining clearly who will see the data and how it will be used.

Anyone uncomfortable with sharing their data was encouraged to click ‘prefer not to say’. The level of employees opting not to say can be a good gauge of how much they trust the organisation or the stigma attached, meaning more conversation is needed.

On a personal level, Ahmad is acutely aware of the emotions tied up with this kind of reporting.

“If out of the blue somebody gets a question about whether they had free school meals, it creates a level of shame and stigmatisation. There’s a stigma attached to being poor, so the first thing we have to do is eliminate that stigma. You have to normalise the conversation,” he explains.

The Co-op wants its employees to bring their “background to the foreground”. Ahmad’s own father worked 35 years on night shift in a local factory, while his mother never went to school and is completely illiterate. He won a scholarship to a local public school at 11 and was the first person in his family to attend university.

“Those sorts of stories normalise, so there’s no stigma around this and if anything those experiences have made me better, stronger. I understand more broadly how society is working and so now I’m in an organisation like the Co-op, I understand what it is to be in that scenario,” explains Ahmad.

The questions the Co-op used to define socio-economic status were informed by criteria set by the Social Mobility Foundation and Office of National Statistics. Asking respondents their parents’ occupations when aged 14 is the most important indicator for the Co-op, over and above the measure of free school meals.

“The people who had free school meals are one segment of a broader group. I would be part of that group of people who come from lower socio-economic backgrounds, but I didn’t have free school meals,” Ahmad notes.

Working class marketers face 15.9% pay gap, survey reveals

The other question that proved particularly useful is the level of education in your household when aged 14. This feeds into the concept of social capital, which relates to how quickly a person can monetise their qualifications.

“I was the first person in my family to go to university. I got a degree, fantastic job’s a good’un. Did I immediately walk into a professional career? No, it took several years to get into a position where I was doing something that was professional and was something I got into based on the qualifications I had,” Ahmad explains.

“I had no social capital. I had no links. I had nobody to mentor or guide. One of the phrases people sometimes use is: ‘If you can see it, you can be it’. I didn’t have any of that. I didn’t grow up in that sort of environment.”

The Co-op team also had to bear in mind class is experienced differently by international employees. Ahmad recalls speaking to people in organisation who grew up in America and considered themselves having come from privileged backgrounds, but according to the Co-op’s measures that might not be the case.

“That raises some questions in my mind that the class structure in the UK is very specific to the UK and for people coming in internationally its slightly different, and probably more nuanced,” he notes. “We probably need some more thought into exactly what that means.”

No silver bullet

As of April 2023, 24,554 Co-op employees shared their socio-economic background data, representing 48% of the workforce. The completion rate by July 2024 stands at 72% across the organisation.

Calculating the pay gap between colleagues from professional and lower socio-economic backgrounds, the analysis found the Co-op has a mean socio-economic pay gap of 5.2% and a median pay gap of 0.2%.

The median compares the hourly rate of the middle professional colleague role to the middle lower socio-economic colleague role, while the mean compares the average hourly rate of pay.

The retailer has more employees from professional backgrounds working in senior leadership roles, while the biggest pay gap identified is for women from lower socio-economic backgrounds.

Indeed, the Co-op has more female colleagues from professional socio-economic backgrounds in senior roles, meaning a mean socio-economic pay gap specifically for female staff of 9.8% and a median of 1.5%.

Furthermore, where the business does have senior leaders from lower socio-economic backgrounds, they tend to have been recruited externally.

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The data begins to expose where the inequalities lie, says Ahmad, in particular a progression issue for women from lower socio-economic backgrounds. For the Co-op, finding a fix starts with addressing the barriers to progression, taking into account wider societal issues around bias, imposter syndrome and social capital.

“I’m loathed to say: ‘Here’s a solution’. Often organisations have an idea of what they want as a solution and then they make a problem fit the solution. I’ve tried my very best not to do that,” says Ahmad.

Arguing there is no silver bullet to addressing social inequalities, he is wary of anyone who claims they have the solution to fix such a complex and nuanced issue, which intersects with gender and ethnicity.

“You’re not going to fix it by one programme, one month in 2024. What you need to do is continually build on your intelligence. If you come back to me next year and say: ‘What have you learnt in the last 12 months?’ I hope to be able to give a much more nuanced view on what’s worked for us,” Ahmad adds.

In response to the pay gap reporting, the Co-op has updated its social mobility commitments, including evolving its social mobility taskforce and working towards an 80% completion rate for socio-economic background by the end of 2025. The intention is to publish results annually at the same time as its gender and ethnicity pay gaps.

Later this year the retailer will launch its first career development programme specifically for staff who identify as coming from lower socio-economic backgrounds, targeting areas of the business where data reveals additional barriers to progression.

The Co-op has also pledged to broaden its internal coaching and mentoring specifically for colleagues from lower socio-economic backgrounds, and intends to open up more apprenticeship opportunities at entry level.

Marketing Week’s Opening Up campaign is pushing for the democratisation of marketing careers. Read all the articles from the series so far here.