UK gender pay-gap costs women £85 billion in lost wages

23 May 2017 4 min. read
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Big Four consulting firm PwC has found that despite progress in other areas, female workers remain disadvantaged, with wage disparity in the UK standing at £85 billion in lost wages. Individual women are deprived an average of £6,100 per year by gendered salaries, the group's research also confirmed.

The world of work remains fraught with unequal employment relationships, with the consulting industry particularly prioritising research on the gender divide in recent years. A number of recent reports have highlighted that women are underrepresented in key strategic decision making functions within boardrooms, and face considerable structural barriers in promotion, with the latest from from PwC finding that pay level parity is continuing cause for concern. 

Measuring the current lot of the female workforce across the OECD, PwC developed the ‘Women in Work Index’, which combines a range of key indicators to create an overall performance score for female economic empowerment by country.

PwC Women in Work Index

The top 5 countries, according to the data gathered from the OECD and Eurostat, have seen no movement up or downward in the 2015 chart. Iceland retains the number one spot, by even further solidifying its lead over second-placed, Sweden. Norway saw a slight deterioration in the role of women in the country meanwhile, as female unemployment increased across the 2015 term, although it remains in third spot. New Zealand meanwhile held fourth, while Slovenia solidified its fifth spot, with a strong boost to its index score.

Ranked sixth, Denmark polled a slight improvement, while Luxemburg climbed one place from the 2014 to take seventh. Poland managed to significantly improve its standing on the 2014 report, largely due to improved female employment, moving from 12th place to 9th, while Canada fell two spots in the annual ratings – even while its overall score increased – to come 11th. The UK still missed out on a coveted top ten position, however it saw its score improve slightly, pushing to 13th spot.

Biggest movers in the PwC Women in Work IndexThe analysis also showed Israel made the biggest improvements in the role women play in society, since the rankings began in 2000, moving from 26th spot to 14th. Meanwhile, concurrent with 2015's improvement, Poland too has managed to up its score significantly, elevating itself ten spots over the 15 year period. Belgium moved up eight, to 12th spot, while New Zealand has seen its already strong 8th spot become number four. The UK improved its ranking by 4 spots in the fifteen year period.

Australia, however, has seen its position deteriorate from 13th to 22nd spot, while Portugal has lost ten places, falling from 5th to 15th. The US has seen the most significant deterioration however, as it lost 11 places to take 20th spot in 2015.

Potential increase in total female earnings from closing the pay gap

In terms of the income gap averaged across all sectors, the research finds that considerable differences exist between countries. The US for instance has a total female earnings gap of 23%, amounting to absolute lost income of a colossal $800 billion annually. In Japan however the gap is proportionally even larger, at 34% on average, with total lost earnings amounting to $250 billion. Korea has the highest proportional gap at 57%, followed by Estonia at 40%. The UK has a gap of 20%, representing around $110 billion (£85 billion) that is not making into the pockets of women, while wage parity would put an average £6,100 more into the hands of women across the country.

United Kingdom

Difference in pay by sector

The UK pay gap differs considerably across various functions. It is by far the most uneven in financial services, with the average pay gap in the industry at 34% - given the usually high-base salary of the sector, the gap in absolute terms is more considerable. In energy and utilities the gap comes in at 26%, followed by manufacturing – traditionally a male dominated industry – where the gap is 24%. The areas with the lowest gaps are in admin and support services, 12%, public administration, 15%, and education, also 15%.

The largest pay gaps are noted to be in the West Midlands and the North East of the country. Scotland and Norther Ireland tend the have relatively low levels of inequality in male/female pay.

Potential increase in annual female earnings per woman from closing pay gap in UK by region

Locally, closing the pay gap in London could see a £8,800 boost to female earnings per person of 20%, while in the West Midlands and the South East the difference amounts to £7,300 per person, a 27% boost in pay. In the East the difference in pay is around 23%, or £6,800 in absolute terms. The North West and Scotland both have partitions of £5,300 in absolute terms, or 19% and 18% respectively. Northern Ireland has a pay gap £1,900 or 6% - the lowest across all regions by far in both absolute and relative terms.