Hiring women made easier but equal pay facts to be voluntary

The proposals were welcomed last night by businesswomen in Yorkshire but criticised by Labour for not going far enough.

The move is aimed at addressing under-representation in the workforce as the number of women on the boards of Britain's biggest companies has barely increased in the past three years.

But the Government is not planning to enact Labour legislation which would force employers to disclose whether they pay women as much as men, preferring a voluntary approach instead.

Ms Featherstone denied the plans were about "political correctness, or red tape, or quotas" and insisted the measures would help make the workplace fairer.

Under the plans, from April next year employers will be allowed, "on a permissive basis, to apply voluntary positive action in recruitment and promotion processes when faced with two or more candidates of equal merit, to address under-representation in the workforce".

The Government's equality strategy went on: "This does not mean 'quotas' or giving someone a job just because they are a woman, disabled or from an ethnic minority – positive discrimination is not acceptable and is unlawful."

It also said businesses would be encouraged to develop a voluntary scheme to identify whether they pay women as much as men,.

Heather Jackson, founder of the Yorkshire-based Two Percent Club, a forum for senior businesswomen in the region, said: "We need more women on boards – not because of the diversity issue but because it's been proven that more women and more balance in senior positions makes a difference to the bottom line. Businesses perform better."

Emily Moncuit, founder of Icon Women, another Yorkshire networking organisation, added: "Although this is a step in the right direction, equality for women in the workplace is not just about getting equal pay right. Equal pay is important, but let's not forget that it does not reflect engrained work ethic attitudes that need to change in this country in order to empower and enable professional women with regards to where they want to be."

An annual review will consider whether the voluntary approach to equal pay is working, or whether alternatives, including section 78 of the Equality Act 2010 that would force firms to act, should be brought in.

Ms Featherstone said: "We want to move away from the arrogant notion that Government knows best to one where Government empowers individuals, businesses and communities to make change happen."

But Shadow Women and Equality Minister Yvette Cooper said: "Whatever happened to the Theresa May for Equal Pay campaign and the Lib Dem pledge to introduce mandatory pay audits? Scrapping Labour's plan to increase transparency in pay is a backwards step for women's equality."

The Government will also set an "aspiration" that half of all new appointments to public boards will be women by 2015.

Other plans include extending rights to flexible working and scrapping a law designed to force public authorities to take into account disadvantage and inequalities when making decisions.

Miles Templeman of the Institute of Directors, said: "There are signs that this Government is not inclined to force firms to carry out gender pay audits, and that is welcome."