The UK’s gender pay gap has fallen to its lowest recorded level but it will take decades before the earnings disparity between women and men is eliminated at the current rate of decrease.
The median pay gap narrowed to 9 per cent in 2023-24 from 9.2 per cent a year earlier, according to an analysis by the Financial Times of official data submitted by employers last month.
But employees at large companies including British Airways and Next Retail saw their median pay gap widen over the past year, while income inequality in sectors including mining, finance and construction remains stubbornly high.
It would take at least 29 years to close the gender pay gap in the UK based on the rate of progress between 2011 and 2023, according to new analysis by PwC of data from the Office for National Statistics.
“The pace of change is too slow,” said Pavita Cooper, UK chair of the 30% Club, a campaign to boost gender diversity in senior corporate roles. “Organisations need to accelerate efforts to address the systemic barriers that face women at all stages of their career.”
The pay gap figure — which reflects the difference between the median hourly pay for men and women, expressed as a percentage of men’s median pay — has declined only marginally from 9.3 per cent since pay-gap reporting was made mandatory in 2017-18 for organisations with more than 250 employees.
A total of 78 per cent of employers paid men more than women on average in 2023-24, a slight reduction on the previous year.
The UK’s gender pay gap has been consistently wider than the OECD average between 2011 and 2022, the last year for which data is available from all countries, according to PwC. A separate PwC analysis of OECD data found that reaching gender pay parity would take 43 years.
The calculations assume that the gap would narrow at a constant rate but progress to date has been uneven. The pay gap actually increased to more than 10 per cent in 2019-20 before beginning to fall again.
In the mining and quarrying sector, 96 per cent of companies had higher median pay for men than women — more than any other sector, according to the FT’s analysis of employers’ latest pay gap submissions. More than nine in 10 businesses paid women less in the finance, construction, and information and communications sectors.
Construction overtook education as the sector with the widest mean pay gap between men and women, with women paid an average of 78p for every £1 paid to men. The finance industry had the next largest average pay gap, paying women an average of 79p for each £1 earned by their male counterparts.
Lawyers and bankers have some of the widest pay gaps, while the City of London continues to have the largest disparity of any region with women being paid 80p for every pound a male gets on average.
Despite narrowing overall across more than 10,800 organisations that submitted data, median pay gaps increased at 185 of the 580 companies employing more than 5,000 people each in the past year.
Median pay gaps are sometimes seen as a better measure than the mean because the latter can be significantly skewed by a small number of employees with very high earnings.
The median pay gap at British Airways widened from 32 per cent a year ago to 37 per cent in 2023-24. Like other airlines, the size of BA’s pay gap is driven by the underrepresentation of women in higher-paying roles such as pilots, skilled engineers and senior leadership, compared with the large numbers of women employed as cabin crew.
The airline’s mean pay gap narrowed by 10 percentage points to 57 per cent. It said it was two years ahead of schedule in meeting a target of ensuring 40 per cent of senior leadership roles being held by women and was striving to boost female representation in traditionally male-dominated roles.
The median pay gap at Next Retail, the company that employs most of the retailer’s UK workforce, including store, call centre and head office staff, widened from 8.1 per cent last year to 17.3 per cent in 2023-24.
The company’s pay gap report said that, like many other retailers, its figures were strongly influenced by the high proportion of women working in its stores, where pay is generally lower than in head office jobs. More than half of male employees work in its head office, compared with 23 per cent of female staff. Its mean pay gap narrowed from 31.2 per cent to 27.8 per cent.
Sports Direct Retail, Superdrug Stores and River Island Clothing were among the other large retailers whose median pay gaps widened, along with health club chain David Lloyd Leisure and parcel delivery company DPDGroup.
Superdrug said its mean pay gap had reduced and that this was the first increase in its median figure since 2020. Sports Direct pointed to the pay gap figure for its parent company Frasers Group, which was lower.
River Island, David Lloyd Leisure and DPDGroup did not respond to requests for comment.
Paying men and women different amounts for doing the same job has been illegal for decades but pay gap figures reflect other factors that result in a disparity in average earnings even where there is no direct discrimination.
“Women are over-represented in low-paid, part-time roles and there simply aren’t enough women in senior roles,” said Cooper. Other factors driving the persistent pay gap include the unequal sharing of caring responsibility between men and women and a “negotiation gap” caused by what Cooper attributed to women being less likely to negotiate as hard for better pay.
“Gender pay gaps are an incomplete proxy for equality and progressiveness [within an organisation],” said Jonathan Boys, senior labour market economist at the Chartered Institute of Personnel and Development, pointing to the fact a company could have a small pay gap but employ very few women, for example.
The value of pay gap figures as an indicator of workplace equality is likely to face further scrutiny if the Labour party, which has a strong lead in the polls, wins the general election due to take place by January. The party has pledged to require organisations with more than 250 staff to report their ethnic pay gap, mirroring the current gender pay reporting requirements.
While there are roughly equal numbers of men and women in the population, ethnic minorities account for only 18.3 per cent of the population of England and Wales, according to 2021 census data.
“What that means is that the ethnicity pay gap will be more volatile in a given firm,” said Boys. “I think it works quite well at an industry level. Perhaps it’s going to be trickier at firm level, particularly when the firm size is smaller.”
Data as at May 2 2024, 4.14pm