Creating a fairer Britain
07 September 2009
Women in some of the UK’s leading finance companies receive around 80 per cent less in performance related pay than male colleagues, an inquiry by the Commission has found. The disparity is a major factor behind the massive gender pay gap in the finance sector.
The Commission’s Finance Sector Inquiry, published today, includes data from a questionnaire sent to 50 companies employing 22.6 per cent of workers in the sector. It reveals nearly all women taking up new jobs in these companies still start on lower average salaries than men, suggesting the gender gap is being further entrenched by recruitment patterns.
The Inquiry also suggests that the sector’s age profile may be a key factor blocking women’s success. An unusually high proportion of workers in the sector fall into the 25-39 age group - the age at which women tend to have childcare responsibilities.
The Inquiry is the first time this type of data on gender pay gaps in the sector has been collected, with the Commission using its statutory powers to require companies to provide evidence of their working practices and policies including pay, job evaluations and audits.
Findings from the data supplied to the Commission include:
As a whole, the finance sector has one of the highest overall gender pay gaps in the UK economy - with women working full-time earning 55 per cent less annual gross salary than men. This compares to a pay gap of 28 per cent for the economy generally.
There were examples of good practice in some of the organisations questioned, with one employer reporting that they made data on average bonus payments by gender available to employees. Another offered a maternity buddy system to support pregnant women and those on maternity leave.
Trevor Phillips, Chair of the Commission said:
'The Financial sector has the potential to play a central role in Britain’s recovery. But it has to address this shocking disparity of rewards. For business to thrive in the new economy it simply can’t afford to recruit and reward in the way it has done in the past.
'By bringing down arbitrary barriers, and changing practices that, intentionally or not, inhibit women’s success, financial firms have the chance to boost morale, bring on new talent, and maximise the potential of their existing employees.
'I’m encouraged by the firms which are developing transparent pay policies and flexible approaches to work. But there aren’t enough of them. The many need to learn from the few. At a time when shareholders have become alert to the dangers of 'groupthink' and potential employees and customers value transparency and fair treatment it’s clear the enlightened few have a competitive advantage.'
Recommendations in the report include:
The Commission has now begun the third phase of its Inquiry which will involve collaboration with finance companies, employees, industry associations, leaders, regulators and trade unions to develop more targeted solutions to the gender inequalities identified in its report.
For more information contact the Equality and Human Rights Commission Media Office on 02031170255, out of hours 07767272818.
These statistics are from research commissioned at the start of the Inquiry and published by the Commission in Metcalf and Rolfe, Employment and earnings in the finance sector: a gender analysis, 2009.
A questionnaire was sent to 50 finance organisations around Britain, most of whom employed more than 250 employees. In all 44 companies provided useable data, including 12 holding companies, and these companies made a total of 72 returns, referred to as ‘cases’. The questionnaire results were analysed for the Commission by a team at the University of Strathclyde Business School. However, they cannot be generalised to the finance sector due to the size and nature of the sample Supplementary evidence was drawn from a call for evidence, seminars with legal advisers, trade unions and staff associations, and interviews with industry representatives, led by the Inquiry evidence panel.
The Commission’s Phase 1 report launched in April included an analysis of Labour Force Survey and the Annual Survey of Hours and Employment and found that:
The Equality and Human Rights Commission is carrying out an Inquiry into sex discrimination in the financial services sector under section 16 of the Equality Act 2006. The terms of reference are to:
The Commission is a statutory body established under the Equality Act 2006, which took over the responsibilities of Commission for Racial Equality, Disability Rights Commission and Equal Opportunities Commission. It is the independent advocate for equality and human rights in Britain. It aims to reduce inequality, eliminate discrimination, strengthen good relations between people, and promote and protect human rights. The Commission enforces equality legislation on age, disability, gender, race, religion or belief, sexual orientation or transgender status, and encourages compliance with the Human Rights Act and international treaties. It also gives advice and guidance to businesses, the voluntary and public sectors, and to individuals.