For approximately 381,000 women working in finance, today (Wednesday the 10th of April) is Women’s Pay Day – the day that they stop working for free in comparison to their male counterparts.
This is due to the gender pay gap; a figure which represents the difference in average hourly pay between men and women across the UK workforce, before income tax. This data analysed by the Trades Union Congress (TUC) was recently presented in their 2024 gender pay gap report.
In response, the TUC’s General Secretary Paul Nowak stated: “Everyone should be paid fairly for the job that they do. It’s shameful that working women don’t have pay parity in 2024.”
While the number of days women work for free varies across the UK based on factors like age, location and industry, it’s worth noting that the finance and insurance sector consistently displays the highest level of inequality. Below, we’ll explore the 2024 gender pay gap in more detail and examine the continued prevalence of this issue in the finance industry.
What is the gender pay gap in 2024?
The UK gender pay gap shows the percentage difference between the average salaries of men and women. Entering 2024, the gender pay gap stands at 14.3%.
This average is 0.6% lower than in last year’s report, equivalent to working two fewer days without pay.
According to the TUC, the gender pay gap has closed by an average 0.4% each year since 2011, meaning that this new 0.6% decrease does reflect a slight progress toward pay parity.
However, as highlighted by Secretary Nowak, “at current rates of progress, it will take 20 years – until 2044 – to close the gender pay gap. That’s not right. We can’t consign yet another generation of women to pay inequality.”
Why is there still a gender pay gap?
The TUC pinpointed two main causes, stating:
- Women are less likely to hold a senior position, meaning they earn lower salaries
- Women are more likely than men to work part-time, meaning fewer hours and less pay.
Let’s explore these points further.
Female underrepresentation in senior-level roles
When there are fewer women in senior-level positions, it stands to reason that they will earn less money than men who work in leadership, board-level and c-suite roles.
Evidence shows that this is not because women lack the skills or experience, but rather because they are given less chance to progress to this level. In 2023, it was found that for every 100 men who are promoted into management-level positions, only 87 women are given the same opportunity.
Whether consciously or subconsciously, when the majority of a leadership team is male, a lack of diversity can be perpetuated through affinity bias (also known as similarity bias). When this happens, leaders can be more likely to hire applicants who possess similarities to themselves; from something as seemingly innocuous as shared hobbies, to discriminatory factors such as gender and race.
Though, positively, female representation is improving. As of January 2024, the House of Commons reported that 42.6% of FTSE100 directorships were now occupied by women and around half of all new FSTSE100 board appointments were women (47%).
Women and part-time work
As of March 2024, 38% of women in UK employment worked part-time, equating to a figure of 6.01 million. Meanwhile, this was the case for just 14% of the male workforce.
Among a myriad of reasons, part-time work can be an ideal option for women who have children, other care responsibilities or face personal health issues. This is also cited as a solution for those seeking more flexibility in their schedules, allowing many to continue to progress and continue their careers.
However, it’s crucial to acknowledge that opting for part-time work may not always align with an individual’s personal preferences. Studies show that care responsibilities are disproportionately expected of women in comparison to men, with this pressure most commonly being a result of long-standing gender roles in traditional society.
The opposite issue can be true for fathers; as many as 80% express the desire to spend more time at home to look after their children. Societal pressure to be the main earner of the household, in combination with underpaid (or entirely unpaid) paternity leave, mean that this is often not achievable.
The gender pay gap by age: how many days worked for free?
As highlighted by the TUC, “the gender pay gap widens as women get older, due to women being more likely to take on caring responsibilities. Older women take a bigger financial hit for balancing work alongside caring for children, older relatives and/or grandchildren.”
The current data shows that women between the ages of 50-59 face the highest pay inequality, in comparison to their male co-workers and other women, at 19.7%.
For instance, though the average number of days worked for free stands at 52, women aged 50-59 work around 72 days without pay.
This is followed by women aged 60+, who face a pay gap of 18.1% and 62 days worked for free.
The motherhood penalty
In 2023, the UK gender pay gap was 4.8% for women at ages 22-29 and this more than doubled to 11.5% for women at age 30.
But why does pay inequality increase so rapidly, especially given the age difference between these workers is just one year?
Up to 80% of the gender pay gap is said to be a direct result of this form of societal discrimination, coined ‘the motherhood penalty’ by sociologists, Michelle J. Budig and Dr. Paula England.
Its knock-on effect means that mothers face a 60% drop in earnings compared to fathers – and this can continue for the following decade after giving birth to their first child.
This penalty also negatively impacts women with no plans to start families (albeit to a lesser extent) due to incorrect assumptions by many employers that all working women will eventually have children.
Learn more in our article: Mum or not: How the motherhood penalty impacts your pay.
The gender pension gap
In 2020, Stuart Lewis, Founder of Rest Less (a digital community for over 50s), explored the significant age issue in the gender pay gap. He stated that “women in their 50s and 60s face the double discrimination of age bias, combined with the widest gender pay gap of all ages.”
Rest Less’ analysis showed that men and women alike reached their peak earnings in their 40s.
For women working full-time in their 60s, their salary was a whole 24% lower than the average salary of women in their 40s. In comparison, men working full-time in their 60s received a salary around 19% lower than those in their 40s.
This is a troubling issue which continues into 2024. Recently, Now Pensions and the Pensions Policy Institute (PPI) revealed that by the time women reach age 67, they will have an average of £69,000 saved in their pension. The average man will have amassed £205,000 over the same time period, a disparity of £136,000.
Which industries have the highest gender pay gaps?
As revealed by the TUC’s report, the finance and insurance sector continues to reflect the highest rate of wage inequality, at 27.9%. In layman’s terms, for every £1,000 earned by a male coworker, the average woman working in finance earns around £721.
Across all sectors, women work without pay for an average of 52 days. However, in the finance sector, this figure almost doubles. Today, women in the industry endure the equivalent of 102 days without pay.
While still concerning, there has been some progress in 2023 regarding the need for female representation in C-Suite and board level finance roles. This progress has narrowed the gap by 3.3%, bringing it down to 27.9%, from last year’s 31.2%.
Even in sectors classed as female-dominated; such as health, social work, retail and education, the gender pay gap is a persistent issue. In fact, the education sector has the second-highest pay gap in the UK, at 21.3%.
In response to the TUC’s 2024 report, Paul Nowak stated: “It’s clear that just publishing gender pay gaps isn’t working. Companies must be required to publish and implement action plans to close their pay gaps. And bosses who don’t comply with the law should be fined.”
Work with Distinct
At Distinct, we strive to educate ourselves on equality issues such as the gender pay gap. Whether you work with us as a client or candidate, we’d be happy to discuss the best approach for gender equality in the workplace with you, including how to avoid unconscious bias and encourage transparent salary banding.
As leaders in the field, we take the time to understand organisations and candidates alike to ensure the right fit for all. Contact us today.
