3 Gender pay gaps|
28. Women will not progress if companies do not value
them as much as men. The Equality and Human Rights Commission
(EHRC) conducted an inquiry into the financial services sector.
Its report, published in October 2009 found:
] women working full-time in the finance
sector earn 55% less per year than men working full-time. This
gap is twice as large as the average gap across the economy. The
gender gap identified in bonus payments is a shocking 80%.
A 2008 survey of Unite members also found evidence
that "women are markedly lower paid than their male counterparts".
The ICAEW told us that male chartered accountants earn 50% more
than females in terms of basic salary
and this difference increases when performance related pay is
taken into account, where women earn 64% less than men.
OCCUPATIONAL SEGREGATION VS IN-GRADE
GENDER PAY GAP
29. There are two distinct aspects to the average
gender pay gap. The first relates to occupational segregation,
the fact women tend to do lower paid jobs in the City such as
clerical and secretarial work. This makes the average salary of
women lower than men, who tend to be well represented in management
positions. It is
clear that the gender pay gap figures are hugely affected by the
occupational segregation in the finance sector.
30. The other significant issue is whether there
is an in-grade gender pay gap, that is, a pay gap that between
men and women doing the same job. The EHRC report contains disappointingly
little research into the in-grade gender pay gapless than
one page in a report of over 100 pages. Although the report states
that within equivalent grades women were paid significantly less
than men, it gives no figures. In oral evidence Mr Phillips told
us that the EHRC found evidence of an in-grade gender pay gap:
We also discovered that there were pay gaps within
band, that is to say, people doing the same work, the same level,
roughly the same level of experience. Women were still earning
less compared to men doing that same work.
Mr Phillips told us that in the next phase of their
inquiry the EHRC hoped to do more work on the in-grade gender
31. Most evidence about the gender pay gap did not
split out in-grade gender pay gaps. However, the Chartered Management
Institute provided figures which suggested there was an in grade
gender pay gap. Even so, these figures are very highly aggregated
and though they indicate that the gap exists they do not show
Table 1: Comparison of average salaries by grade
from the Chartered Management Institute
|Average salary (financial sector) £
||Gender pay gap *|
|Junior professional staff
* The gender pay gap is shown as the additional average
pay received by men expressed as a percentage of the comparable
Source: Table 1: Basic salaries for men and women
at different management levelNational Management Salary
Survey 2009, see Ev 53
32. The EHRC found that the gender pay gap was not
just a historic phenomenon. The Commission learned that in 86%
of cases, female new staff earned less than their male counterparts.
Such a marked pay gap on entry suggested that the pay gap is widespread,
and likely to persist. Regrettably, it also suggests that there
may not always be objective justification for difference between
male and female salaries.
33. The EHRC found that large gender pay gaps
exist in the financial services sector. Women working full time
earn 55% less than male full time staff. The pay gap for bonuses
and performance related pay is even higher at 80%. However, these
figures are largely driven by occupational segregation. The evidence
may suggest that even when controlling for seniority, a significant
gender pay gap exists in the City, but policy makers need a firmer
evidence base than that currently provided by the EHRC. We trust
the next stage of the EHRC's financial services inquiry will provide
more rigorous analysis. We recommend our successor Committee continues
to monitor levels and structures of remuneration in the City.
MONITORING THE PAY GAP
34. Since a lack of transparency will contribute
to gender pay gaps, publishing information about pay disaggregated
by gender may help to prevent them. In Australia and the US there
are regulatory obligations about regular reporting to Government
on women's workplace issues.
The ACCA told us:
The regulatory obligation to report to government
in Australia has driven monitoring and internal reporting on gender
equality in all companies where this was not already a management
focus. These developments have facilitated progress and external
35. The EHRC report Financial Services Inquiry:
Sex discrimination and the gender pay gap, found that companies
with more transparent pay information had lower pay gaps. It recommended
that firms carry out and publish equal pay audits annually after
having discovered that organisations with more transparent pay
information had lower gender pay gaps.
36. Kat Banyard outlined what equal pay audits involve:
What an equal pay audit does is simply assess
jobs by grade. It compares the rates between women and men. If
there is a gap, it looks at what is the cause of that gap. If
there is no other reason apart from gender that is having an effect,
an equal pay audit will lead to a plan of action. That is where
we have seen the most change.
Baroness Prosser believed that companies would not
find it difficult to carry out such audits:
it should be quite easy to produce the information.
There are numbers of people who have argued, and I think there
is a deal of support for this argument, that there should be such
a report contained in a company's annual report.
37. A significant number of private sector organisations
and individuals supported equal pay audits.
Dr Altmann told us:
I think the lack of transparency is another area
where differences can occur without people actually being sufficiently
aware of it. In that case, obviously improved transparency and
requirements to disclose pay, especially at senior levels, should
be very helpful and in and of itself, I believe, would make a
difference to that.
Clare Dobie, President of the City Women's Network,
also supported the idea of greater disclosure of pay levels.
38. While the idea of equal pay audits was widely
supported, there were conflicting views about whether they should
be mandatory. The Fawcett Society and Dr Altmann shared the view
that mandatory pay audits are "an excellent idea."
Kat Banyard did not believe audits would be widely used without
39. Mr Phillips appeared to agree with the Fawcett
Society that action was needed:
] stop saying either that it is women's
own fault or that things will just change with time because they
will not. There have to be active steps taken to break down the
structures that lead to the continuing and chronic disadvantaging
However, he clearly did not consider making such
audits mandatory as currently an appropriate "active step"
to break down female disadvantage:
We [the EHRC] think that over time more companies
will begin to use them [equal pay audits]. We do not at the moment
see the case for them being mandatory. We think that at the moment
the priority is to ensure greater transparency around pay. 
40. On 19 January 2010 the EHRC announced plans to
encourage companies to conduct audits and publish their results:
Employers can choose from three quantitative
measurement options: an overall single figure, or the starting
salaries of male and female staff, or the differences between
male and female pay by grade and job type. There is no "one
size fits all" approach. The Commission will also offer the
option of a narrative which would enable employers to explain
the context [
The Commission will expect employers employing
500+ employees to use two or more options from this menu, in most
cases a narrative plus one or more of the quantitative measures.
The Commission will also expect employers employing 250 to 500
employees to opt for one of the quantitative indicators.
The Commission has suggested a successful voluntary
regime will avoid the need for regulation to make such audits
compulsory. Companies participating in such a scheme would also
be unlikely to receive further formal requests for information.
41. Clause 78 (Gender pay gap information) of the
Equality Bill allows the Secretary of State to make regulations
requiring private sector firms with more than 250 employees to
publish information about gender pay differences. In oral evidence,
Ms Harman told us that currently companies give their customers
information about matters such as animal welfare but do not release
information about the welfare of the staff employed by that company.
She considered that publication of information about pay differences
would allow consumers to take a provider's record in gender equality
into account in deciding whether to deal with a particular company.
The regulations are affirmative, and so would need to be approved
by both Houses of Parliament before coming into force.
42. There is evidence that equal pay audits can
identify gender pay gaps and inform firms about the possible reasons
behind them. This is especially important at entry level so that
pay gaps do not persist. We urge City firms to follow the EHRC's
recommendation to conduct equal pay audits and publish their results.
We note that Clydesdale Bank has volunteered to carry out such
43. We note Mr Phillips's view that equal pay
audits should not be mandatory. Any regulations requiring companies
to publish information about gender pay differences will require
Parliamentary approval. Government and Parliament will doubtless
take into account the extent to which there is evidence that unjustifiable
pay differences persist when deciding whether such regulations
are appropriate. However, we suggest firms which are found guilty
of discrimination at an employment tribunal should be required
to carry out regular equal pay audits.
60 Ev 67 Back
Ev 46 Back
Ev 64 Back
Ev 64 Back
Ev 45-46 Back
Ev 74-75 Back
Q 158 Back
Q 160 Back
Equality and Human Rights Commission, Financial Services Inquiry
Sex discrimination and the gender pay gap report of the Equality
and Human Rights Commission, October 2009, p 33; see also
Q 158 Back
Ev 38 Back
Ev 38 Back
Equality and Human Rights Commission, Financial Services Inquiry:
Sex discrimination and the gender pay gap report of the Equality
and Human Rights Commission, October 2009, p16 , (hereafter
Financial Services Inquiry) Back
Q 9 Back
Q 167 Back
Ev 36,39,46,54,59 Back
Q 75 Back
Q 76 Back
Qq 52, 82 Back
Q 52 Back
Q 194 Back
Q 164 Back
Q 241 Back