Gender pay gap in financial services twice the UK average

A report published in April 2009 by the UK’s Equality and Human Rights Commission revealed that there is a significant gender pay gap in the country’s financial services sector and that this gap increases in the case of the highest paid positions. Moreover, the Trades Union Congress has expressed concerns that an ‘impenetrable glass ceiling’ remains in place in this sector.

In April 2009, the UK’s Equality and Human Rights Commission (EHRC) published a report – entitled Employment and earnings in the finance sector: A gender analysis (1.7Mb PDF). The report contains background information on the financial services sector and aims to help the EHRC investigate gender discrimination in this sector. Its main findings are outlined below.

Employment

Although a similar number of men and women are employed in the financial services sector, the report notes that occupational concentration by gender is significant – women are highly concentrated in administrative and secretarial jobs and ‘substantially underrepresented’ in managerial jobs, including those at the most senior level. Almost twice as many men than women in the sector have a third-level qualification. Moreover, unpaid overtime, which may contribute to career and pay progression, is primarily undertaken by men and therefore ‘may be a cause for concern’.

Pay

Although average annual gross earnings in the finance sector are estimated by the report to be around double the average levels across the UK economy, a significant gender pay gap is evident in the sector. Across the entire finance sector, female full-time employees receive 55% less in annual gross pay and 39% less in hourly gross pay than men, which is approximately double the gender pay gap figure for the whole UK economy. The report states that the smaller gender pay gap in the case of hourly earnings suggests that gender differences in elements such as working hours and pay supplements ‘contribute substantially’ to gender differences in annual gross earnings.

One notable finding of the report is that the gender pay gap in the financial services sector tends to rise across the pay distribution – in other words, the better-paid the position is, the higher the pay gap will be. For example, the gender pay gap in gross annual pay for full-time workers is 21% in the lowest remuneration decile, rising to 51% by the eighth remuneration decile.

Recruitment and progression

The report also noted that about half of newly recruited personnel in the financial services sector are women, although it states that recruitment in finance is high in lower-skilled jobs. This means that, without changes, ‘relying on gender changes in recruitment would be particularly slow at improving female representation in higher-level occupations’.

Analysis of supervisory and management roles in the sector showed that while women with supervisory responsibilities are more likely to be promoted to supervisory posts, men in such positions are more likely to be promoted to managerial posts, indicating that men are more likely than women to progress in their career.

Reactions to report

The issue of equality at the workplace and the gender pay gap remains high on the employment relations agenda in the UK. Official statistics published in November 2008 showed a widening of the gender pay gap across the UK (UK0812029I). The Chair of the EHRC, Trevor Phillips, stated that the figures contained in the finance sector report were ‘shocking and indicate just how serious the pay gap has become in the financial sector, with women concentrated in lower paid, lower skilled roles and few able to make it to the top.’ Mr Phillips added that the EHRC had been asking the UK government to take steps to address gender pay gaps in the forthcoming Equality Bill, which was due to be published at the end of April 2009, and in particular to ask larger companies to take a more transparent approach to the pay gap.

Commenting on the financial services sector report, the General Secretary of the Trades Union Congress (TUC), Brendan Barber, remarked:

This report shows that the city is failing miserably to shed its macho reputation and impenetrable glass ceiling. The secrecy that surrounds bankers’ pay and bonuses often results in female staff being short-changed. This culture can be tackled by forcing companies to be transparent about how they pay their employees and opening up family-friendly career paths.

Meanwhile, the employer organisation, the Confederation of British Industry (CBI), stated that:

real progress can be made in reducing the gender pay gap by targeting the deeply-rooted educational and cultural causes of average pay inequality. Providing better careers advice to help young girls choose more financially rewarding careers, whilst improving advice on parental rights and better state-funded childcare, is essential to promoting equal pay.

Andrea Broughton, Institute for Employment Studies

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment