In June 2024, PwC published its insights into the most recent data on mandatory pay gap reporting. In this article, we explore the latest findings and discuss what they tell us about the gender pay gap in 2023/24. The report acknowledges that pay parity (the practice of paying people of all genders equitably) may never be experienced for young adults aged just 21 entering the workforce. PwC’s year-on-year data and reporting figures suggest it will take more than 45 years to close the UK gender pay gap due to the slow pace of change across the UK’s employment market. This is despite the promising but possibly slightly misleading decreases in pay gaps reported across organisations this year. The PwC report is followed by the recent King’s Speech which revealed plans for the new Equality (Race and Disability) Bill. The Bill plans to mandate large employers to report on pay disparities affecting ethnic minorities and disabled individuals, and introduce a statutory right to equal pay for these groups.
The UK government introduced mandatory gender pay gap reporting in 2017 to increase transparency and accountability among employers. Requiring companies to publish their gender pay gap data aims to encourage organisations to take action to address and reduce pay disparities. There is a legal duty for employers with more than 250 employees to publish specific data annually, including:
- the mean and median gender pay gaps;
- the proportion of men and women in each quartile of the organisation’s pay distribution;
- the mean and median gender bonus gaps; and
- the proportion of men and women receiving bonuses.
Further, the data must be published on the employer’s website in a publicly accessible manner and remain available for at least three years. However, currently there is no legal requirement for employers to take follow-up steps to address or remedy any gender pay gaps identified by the data. Although the Equality and Human Rights Commission (EHRC) possesses enforcement powers regarding the reporting of pay gaps, its capacity to ensure compliance and drive change is limited. Despite the median pay gap marginally decreasing from 9.2% to 9.1% and the mean hourly pay gap seeing a slightly larger reduction from 12.2% to 11.8% in the 2023-2024 period, these repetitive annual statistics risk normalising the pay gap within industries. If an employer’s pay gap aligns with industry norms, there is a concern that the issue may lose its urgency and impact, leading to complacency rather than proactive efforts to address the underlying causes of pay inequality.
This report also coincides with data published by the World Economic Forum’s 2024 Global Gender Gap Report which reveals that the number of female hires into senior roles dropped in 2024 from 37.5% in 2023 to 37.1% this year. Despite the efforts of businesses, female representation at the highest ranks overall across the UK has only increased by 2.6% to 31.3% since 2016. In practice, this means less than a third of senior roles are filled by women in the UK.
The data, collected and published annually as part of gender pay gap reporting requirements, consistently shows that financial services have the largest discrepancy between male and female earnings. This issue has already been subject to scrutiny as part of the Treasury Select Committee’s “Sexism in the City” report published in March 2024. However, despite consistently reporting the highest pay gaps, the financial services sector, along with the travel and technology sectors, has shown the most significant decreases in these gaps compared to the previous year, suggesting efforts are starting to have an effect but the gap will take some time to close.
Occupational segregation is thought to influence the gender pay gap, with distinct industries and roles often gender-dominated. However, when an organisation reports its pay gap, it reflects only its internal salary disparities and not a cross-industry comparison. For instance, an engineering firm with a high percentage of male employees may pay all employees equally, resulting in a 0% gender pay gap internally, just as a care company with predominantly female staff might do the same. Yet, these figures do not account for the broader, sector-wide pay discrepancies that contribute to the overall gender pay gap which are only revealed in larger-scale studies.
How can businesses improve?
The gender pay gap persists due to a combination of structural, societal and organisational factors.
- Explicit and implicit biases in hiring, promotions and pay can disadvantage women.
- Stereotypes about women’s capabilities and roles can limit their advancement and earning potential.
- Women are more likely to have career interruptions or engage in part-time work for family care, impacting their career growth and lifetime income.
- Female-dominated industries, such as care, education and administrative work, typically offer lower pay.
- Male-dominated sectors, like engineering, finance and technology, generally provide higher salaries.
Employers could consider addressing these by ensuring that they are implementing measures that mean women are able to work to fulfil their potential and experience. Reviewing flexible working policies to ensure they are fit for purpose and consulting with staff groups to ensure that they are actually meeting employee demands should be a first step.
There is scope for employers to improve reporting to hold themselves accountable which, in turn, can enact change. This could involve reviewing current recruitment processes and promotion requirements to ensure that they are suitable for the current landscape and the aims of the business. This landscape of reporting on workplace equality and pay equity is fast-moving. It is important for employers to take a holistic view when considering the policies they want to implement and the individuals they promote. It is important to review any barriers that exist which are reinforcing existing pay gaps and barriers to career development. Explicitly addressing the rates of pay for different roles, ensuring that the pay ranges set by businesses are equitable and justifiable, will be one exercise required for achieving true pay parity.
To make meaningful progress in closing the gender pay gap, companies must engage in a thorough investigation and understanding of the specific factors driving pay disparities within their organisation. The emphasis should be on the idea that there is no one-size-fits-all solution – each company must tailor its approach to its unique context. Steps could include conducting comprehensive data analysis, understanding underlying causes, analysing workplace culture, reviewing recruitment and promotion practices, investigating whether certain roles or departments are predominantly occupied by one gender and why that might be the case, and gathering employee feedback. By thoroughly investigating the specific drivers of pay disparities and implementing targeted strategies, organisations can make significant strides toward achieving pay equity and fostering a more inclusive workplace.
