Much fanfare accompanied the introduction in 2017 of the mandatory disclosure of gender pay gaps by UK enterprises employing 250 or more people. Many equality campaigners hoped that obliging these firms to report the differences in the median salaries and bonuses awarded to male and female staff would expose them to such scrutiny that they’d have to make big improvements.
“The gender pay gap reporting provisions are likely to do more for pay parity in five years than equal pay legislation has done in 45 years,” an Allen & Overy employment lawyer predicted in The Guardian at the time they came into force.
But government figures published five years after the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 took effect suggest that little progress has been achieved.
Men are paid more than women, on average, in 79.5% of companies, compared with 77.2% in 2017, according to an FT analysis of the data. Over the same period, the average pay gap has also widened slightly: men’s median hourly pay is 12.2% more than that of women, compared with 11.9% in 2017.
Other studies suggest that the “true” gender pay gap could be closer to 40%, says Dr Michelle Tessaro, a researcher specialising in gender equity at Cranfield School of Management.
“Women are often obviously working for lower wages, but they’re also working part-time or taking career breaks,” she explains. “That can influence their retirement with much lower pensions too.”
Gender pay gaps at the UK’s largest employers
The nation’s biggest companies have always tended to have narrower pay gaps than those prevalent among SMEs. But have they been quicker to improve?
Looking at the 50 companies included in the official data with headcounts exceeding 20,000 – including household names such as Greggs and Lloyds Bank – little has changed overall. Of those firms, 39 pay men more on average. Three of them have gender pay gaps that favour women. At the other eight – including McDonald’s, Lidl and Jaguar Land Rover – the difference is negligible.
Since reporting began, 29 of the firms have reduced their median hourly pay gaps. But at 14 the disparities have worsened.
Companies lagging behind
The largest median hourly pay gaps are seen among banks. At 40.9%, Lloyds Bank’s is the widest, down only 1.8 percentage points from 2017. Its parent company, Lloyds Banking Group, has the second-largest gap, with men paid 34.8% more on average. NatWest, Barclays and HBOS all have pay gaps of around a third.
Female bankers have it worst when it comes to bonuses. At NatWest, for instance, male employees received a median bonus that was nearly double that of their female counterparts last year. Only Lloyds has significantly corrected this, bringing the bonus gap down by a fifth since 2017. Nonetheless, it’s still 41.7% in favour of men.
The disparity is down to the fact that more senior banking roles are still occupied by men, the banks explained in separate statements accompanying the statistics.
Another big employer with a wide median pay gap is British Airways, with 32% – up from 10% in 2017. BA has yet to comment on the figures.
On the other hand, some large businesses have performed well. Greggs, for instance, closed its gap by 15 percentage points this year to 2.8%. Lidl and Greene King have never had significant differences in median pay between the genders. Meanwhile, Tesco, Asda and Nando’s reported comparatively small gaps of less than 10%.
The three large businesses that have a pay gap favouring women are Openreach, DHL Services and NHS Professionals. Openreach has been a notable outlier in this respect for years, although its gap has narrowed from -21.3% to -3% since 2017. This bucks the trend set by its parent company, BT Group, which has a median hourly gap of 13.3% overall.
How can companies close the gender pay gap?
What’s becoming clear is that transparency alone is not enough to move the needle.
Tessaro attributes recent advances in women’s average pay mostly to greater female representation at middle management level. We’ve already seen much of the impact of this change, she argues, which means that companies need to try something new.
Tessaro thinks that “the gender pay gap is not really moving now because women are still underrepresented in the most senior management positions. Attention needs to go into how they can move into these big-paying roles.”
PwC acknowledged this factor in the report accompanying its latest disclosures, stating: “All our pay gaps are driven by underrepresentation of the relevant population in senior roles.”
The task of putting more women into the best-paid leadership positions clearly remains a challenge. Across the largest 50 employers, the average number of female employees in the top quartile for pay has decreased by 1.5 percentage points since 2017.
“That really speaks to talent management and executive succession planning in particular,” Tessaro says. “The education gap has been fixed for 20 years. Women are entering the jobs market with equal rights to men, yet they continue to drop out, especially as you get into that top 10% of earners.”
She adds: “We must recognise that women’s and men’s experiences at work, especially when it comes to career advancement, are very different. Women still aren’t getting the same development opportunities – for instance, ‘stretch’ assignments, overseas postings and critical P&L experience. This really restricts their ability to move up to the most senior levels.”