Gender pay gap will ‘take 45 years to close’ in the UK, research finds

The gender pay gap in the UK will “take 45 years to close”, according to data from PwC, despite organisations reporting a decrease in their pay gaps this year.

According to PwC’s Mandatory UK Gender Pay Gap Reporting, an analysis of the gender pay gap using government data, the mean hourly pay gap has dropped by 0.4 per cent from 12.2 per cent in 2022-23 to 11.8 per cent. Meanwhile, the median pay gap fell from 9.2 per cent to 9.1 per cent.

But the analysis also found that since the implementation of mandatory UK gender pay gap reporting in 2017 for companies with more than 250 employees, the average gender pay gap has only reduced by 1.6 per cent.

“While it is encouraging to see the pay gap reducing each year, the rate of change remains modest,” the report said. “Gender pay parity therefore remains out of sight and it is unlikely that a 21 year old entering the workforce today would see gender pay parity in their working lifetime.”

Jemima Olchawski, chief executive at the Fawcett Society, told People Management: “At the current rate of change, women over 40 will suffer the pay gap until they retire; this isn’t acceptable.

“A thriving economy relies on the full participation of women, and yet too many are locked out of work they are qualified for and capable of doing. For too long, women have put up with less fair and less equal working arrangements in exchange for flexibility.”

Olchawski added that employers must take immediate measures to ensure women were able to work to their full potential and experience. “Making flexibility the norm will make it easier for women to get the flexibility they need, and normalise men taking on their fair share of caring responsibilities. We cannot afford to wait,” she explained.

Katy Bennett, diversity, equity and inclusion consulting director at PwC, said: “While the gender pay gap continues to move in the right direction, the data once again highlights that organisations face difficulties in meaningfully reducing reporting figures.

“Societal barriers play a strong part but there are still things businesses can do to drive change and so it is critical for organisations to truly understand gender pay gap drivers and take targeted actions to address them.”

She added that reporting landscapes were fast changing, with many organisations focusing on pay equity and transparency beyond gender. “It is now more important than ever for organisations to take a step back to fully understand the state of pay fairness and diversity within their workforce,” said Bennett.

“By truly understanding any barriers that exist within the workforce and embracing pay transparency, organisations can navigate the reporting landscape and use it as a way to shape their narrative, as opposed to letting it dictate it.”

According to the PwC report, of the 10,408 companies that disclosed their gender pay gap for both 2023-24 and 2022-23, three in five (58 per cent) reported a decrease in their pay gap compared to the previous year. However, most of these decreases were less than 2 per cent.

This represents a slight increase over 2022-23, when 53.7 per cent of organisations reported a decrease in their mean pay gap, according to PwC. A fifth (20 per cent) of organisations reported no change or an increase of between 0 and 2 per cent in their pay gap, compared to 17.6 per cent in 2022-23.

The report said: “The gender pay gap itself can be a lagging indicator, with positive actions to improve gender representation taking years to significantly impact these figures; acknowledging the external societal influences of systemic barriers, change remains challenging.

“However, to make meaningful and sustainable reductions to pay gaps, it is critical for organisations to truly understand gender pay gap drivers and take targeted actions to address them.”

Charles Cotton, senior reward adviser at the CIPD, told People Management: “Pay gap reporting is crucial for ensuring a fair workplace and offers clear business benefits, such as attracting and retaining talent by demonstrating a commitment to best practices.

“Employers aiming to improve their gender balance can adopt several effective strategies, including expanding flexible working opportunities, reviewing the criteria and assumptions used in recruitment and promotion, and analysing the outcomes of people’s policies and practices.”

But he also noted that some factors contributing to the pay gap exist outside the workplace, such as stereotypes regarding suitable employment for men and women: “Therefore, to make meaningful progress in reducing the gender pay gap, both government and society must also take active roles.”

The analysis also found that the financial services sector continues to report the biggest gender pay gaps, “reflective of the ongoing issues with gender equality within the sector, where potential regulations on diversity and inclusion may be introduced by the Financial Conduct Authority later this year,” the PwC said.

For more information on gender pay gap reporting, visit the CIPD guide page here