UK gender pay gap costs £6,300 per woman

17 May 2018 5 min. read

Large organisations across the UK were recently called upon to report their gender pay gap, with those failing to do so facing a summary conviction. While the majority of firms complied, the findings were far from encouraging, with eight in ten companies paying men more than women, and discrepancies in finance and education above 20%.

The gender pay gap is on the agenda at firms above 250 people, with recently introduced legislation now requiring the disclosure of pay conditions for both male and female employees. While most companies which fall under the legislation have complied, the Equality and Human Rights Commission is still investigating 500 firms, which should they continue to dodge the statutory requirement, could face a summary conviction or an unlimited fine, on top of being forced to publish the data under a court order.

The results of those firms which have already done their legal duty have revealed a substantial difference, with firms that recently disclosed the information voluntarily showing disproportionate differences in pay between people of same rank, along the lines of gender. Firms face difficult choices going forward to reduce the gap, but new analysis has shown that doing so will pay economic dividends in the long-run. The ‘2018 Women in Work Index’ from PwC looks at the specifics of pay differences faced by UK workers in various regions, based on data from the OECD and Eurostat, among others.

UK performance on the Women in Work Index

The UK has a relatively strong standing internationally, with regards to female pay discrepancies, however Britain’s status on the matter is in decline. The situation for the UK’s female workforce has, unfortunately, deteriorated one place on PwC’s international ranking since 2015. While partially this is due to the improved performance of other countries, with evidence suggesting there is still a great deal of room for improvement in the UK, stagnation and regression are hard to differentiate between.

Overall the difference in pay between women and men stands at 17%, with a combined total effect of £180 billion available to the UK if pay negotiations would favour women to the degree held in Sweden. While divisions still stand in the Nordic nation, Sweden is the top performing country and the ‘best-in-class’ against which comparisons are made, having overtaken Iceland from last year’s results.

Gender pay differences by industry

The gender pay gap is still the most explicit in the financial services. The industry has seen the gap decrease, slightly, from last year’s levels, falling 2% to 32% in the latest edition of the report. The electricity and gas supply industry followed, with a score of 26%. While manufacturing and professional and scientific activities ranked third (25%) and fourth (22%) respectively.

Better performing areas include mining and quarrying (4%) – as despite female workers being fewer numerically in these sectors, their pay was still more in line with their male equivalents – water supply and sewerage (9%) and real estate (13%). The average of all UK industries fell by 1% on 2016.

Gender pay trends by region

The research also sought to identify the areas most impacted by differences in pay between women and men. The Midlands fared the worst, with 22% and 20% respectively. The South East came in third place on 19% with London a tad behind on around 18.5%. Interestingly England was in general a poor performer, with Scotland, Wales and Northern Ireland all at the bottom end of the scale of pay difference, at 14%, 13% and 6% respectively.

The longer-term trend has been relatively positive, particularly in Northern Ireland, Wales and Scotland. In NI, for instance, the gap fell from 22% in 2000 to 6% in 2017, while in Wales the drop was 11 percentage points to 13%. London saw a marginal 3% decline, from 22% to 19%, while the East Midlands is the region with the highest recorded gap, at 21%. Much of England saw an 11 point improvement in the headline figure.

Gender pay gap across the UK

Yong Jing Teow, PwC economist and co-author of the report, said, “There is much more that businesses and governments could do to address the causes of the gender pay gap, which are deep rooted. Policy levers that improve access to affordable childcare and shared parental leave have been shown to get more women in quality work. Businesses can also make flexible opportunities more widely available, enabling their employees to manage their family commitments around work."