Closing pay gap would boost earnings of UK women by £92 billion

26 April 2019 6 min. read

The UK has improved its ranking on PwC’s latest Women in Work Index, with Scotland remaining the region with the most positive outlook for women in the UK, while Wales has seen the most improvement since 2010. Though participation and employment rates remain strong in the UK, the gender pay gap holds the UK back from stronger international gains and around £92 billion in the pockets of women.

Despite generations of slow progress on the matter, the conditions and opportunities open to women in the workplace and wider society still differ considerably from those of men across the globe. While recent decades have seen increased focus on ending a long history of discriminatory practices in the workplace, barriers still remain, as women continue to face a host of implicit and explicit conditions on opportunities.

According to the latest incarnation of PwC’s annual ‘Women in Work Index’, the Nordic countries boast strong performance across all measured metrics, with the region’s leading entities of Iceland and Sweden scoring well in female employment and participation rates, even compared to last year’s results. The picture is considerably less rosy elsewhere, however, and concern around female representation across the UK economy persists.

Comparison against G7

The UK had a relatively strong performance in PwC’s index, even rising two places to 13th best country for gender equality in the workplace, and improving its score in all five indices. However, it is important to note that this comes after a fall in the previous year’s report, meaning half of this advance was actually regaining lost ground on the UK’s previous performance. And though improvements have been booked in recent years, with board level representation – particularly in FTSE 100 companies – increasing, progress around improving representation in key senior business roles continues to be slow.

At the same time, a high gender pay gap continues to hold back gains in Britain. The UK is the 20th best when it comes to addressing this – behind the OECD average – and while it is true there are worse performers, it would be inaccurate to claim this means there is less room for manoeuvre on the matter. In fact, PwC’s study also notes that Luxembourg, which already had the lowest gender pay gap, still managed to find ways to further reduce it by 1.7%.

The tiny country drove the improved showing with the introduction of an Equality Delegate within each staff delegation – mandatory for organisations with 15 or more staff. The role oversight role focuses on “equal treatment of male and female employees on access to employment, training and promotion and pay and working conditions.” It is the sort of compulsory regulatory stance which the UK has broadly shunned thus far, instead preferring the free market to deliver more gradual progress.

Long-term improvement against OECD average

This tactic has improved the UK’s gender equality in the workplace since 2000, during which time the UK has improved by five spots, reducing the pay gap by 5% in that time. However, a more drastic and determined approach could deliver a huge economic boost to the UK. Closing the gap entirely could still boost UK female earnings by £92 billion, a boost which in turn would help embolden more than 50% of the UK’s consumer population, buoying the performance of a glut of businesses as a result.

Scotland and Wales lead

Elsewhere, the UK still trails the OECD average on the labour force participation rate gap, as well as the female unemployment rate and the female full-time rate. This is by no means a uniform result for the country, however. Taking a more in-depth approach shows that Scotland, the South West and Wales are performing far better when it comes to addressing the gender divide.

These regions boast large hospitality and public services sectors – which tend to have better gender balances and lower pay gaps than the wider economy. Female unemployment in these regions fell to a miniscule 4%, the lowest in the UK. Wales increased its rank by four spots, reflecting strong increase in female participation and a reduced pay gap. The West Midlands, East Midlands and Yorkshire and the Humber, scored the least well. These regions have historically had heavy manufacturing focuses, which in turn have often been male-dominated, and have higher pay gaps between men and women.

Biggest regional improvements over past decade

In terms of major improvement on 2010, aside from Wales, London booked a three-place increase. The region, which has also enjoyed strong economic growth, may have benefitted from more women joining the workforce. The pay gap hasn’t budged since the 2010 survey, however, holding the region back.

This is perhaps linked to a persistent ‘boys club’ culture that continues to pervade the city’s huge financial sector. This further illustrates one of the study’s other key findings: that economic growth is not enough to improve female participation rates, and that additional policy moves are needed to create sustained change.

Yong Jing Teow, a Senior Economist at PwC, said, “As the UK economy evolves in the digital age, we need to ensure negative gender imbalances aren't exacerbated… Governments and businesses both have a role to play. Many firms are investing in developing diversity policies and embedding these practices, but their efforts are not always matched by their results. Ensuring companies have clear outcomes, targets and accountability will help their pursuit for tangible change.”