- Improved gender equality in Europe could potentially create an additional 10.5m jobs by 2050, 70% of which would be taken by women.
- The average salary gap in the financial services industry is twice the national average (14%), at 28%.
- The gender bonus pay gap has grown: the median went up by 4% and the mean by 8.4%, compared to 0.8% in March 2021.
Gender inequality affects the workplace – not only with different treatment and career prospects for women but also with the existence of the gender pay gap (GPG). There are still barriers that prevent women from rising to positions of leadership such as hostile work environments and subtle biases.
According to the FTSE350, just 1-in-25 of the CEOs of publicly listed companies in Britain are women.
But greater scrutiny reveals even more subtleties in gender inequality in the workplace. Even though the overall pay distance between the two genders has gone down, there are still many issues to address.
The gendered salary disparity between employees aged 22 to 29 and 30 to 39 actually improved in 2022. However, the most senior employees (60 or older) suffered an increase of 1.9% in the pay gap compared to 2020, which is one of the reasons the GPG has only marginally improved.
In the UK, gender inequality is a recurring topic, especially in the corporate field. But what does it entail exactly? And why is it important?
What does gender inequality mean?
According to the European Institute of Gender Inequality EIGE, gender inequality is the “legal, social and cultural situation in which sex and/or gender determine different rights and dignity for women and men, which are reflected in their unequal access to or enjoyment of rights, as well as the assumption of stereotyped social and cultural roles.”
Even though greater awareness has led to action in some areas, such as the number of women in higher-paid roles, there is still a lot of progress to be made. Many other women around the world are not experiencing the same positive changes, especially those who live in impoverished regions.
What effect does gender equality have on society?
Both individuals and whole economies may be harmed by gender inequality. A long list of statistics shows a disparity in power between men and women which impacts society at local, national and international levels, hinders development and slows down economic progress.
Especially in less developed countries, women’s education is less prioritised than men’s, which creates a domino effect in job attainment. Women are usually influenced to work part-time, in the informal sector, or in occupations that have lower pay, which creates big gaps in earnings between the two genders and further decreases women’s power in society.
The World Bank describes this cycle by stating that: “Achieving gender equality would have dramatic benefits for women and girls’ welfare and agency. This, in turn, would greatly benefit their households and communities, and help countries reach their full developmental potential.”
Conversely, fostering gender equality would not only affect the lives of women around the world, but it would also benefit the economy. In Europe, for example, there could potentially be an increase in the gross domestic product (GDP) per person from 6.1% to 9.6% by 2050 thanks to better management and control over gender equality policies. This is because greater equality in Europe could potentially create an additional 10.5m jobs by 2050, 70% of which would be taken by women. This would consequently aid in reducing poverty, which disproportionately impacts women because of their lower employment rate.
As real-world evidence, the UN states that a key factor responsible for half of the economic growth in the Organisation for Economic Co-Operation (OECD) member countries over the past half-century is easier access to education for women.
The UN has identified gender equality as the fifth Sustainable Development Goal precisely because it benefits everyone. Increased gender equality, according to the UN, is essential to a healthy society in all respects, including poverty reduction and improvements to both genders’ health, education, protection and well-being.
For instance, WEF Gender Gap Index 2022 reports that when more women take up a leadership role, a domino effect is activated. If this is able to influence more women in society, it will overall have a beneficial effect over larger segments of the population.
How far has the finance sector progressed on gender?
The average salary gap in the financial services industry is twice the national average (14%) at 28%. Furthermore, the whole sector of financial services is still very far from the national average.
On the other hand, if the financial services industry keeps developing at the current rate, the earliest the GPG will reach the national average will be 2034. Less than a quarter (24%) of the top-paid employees in asset management are women, while just 17% of the highest-paid employees in investment banks are female.
The banking and insurance sectors in the UK were characterised in 2021 as carrying the biggest differences in pay between men and women, as its GPGs were beyond 35% in 2021.
On a more positive note, the presence of women in the top levels of every field has increased to 63% of all financial firms, and the GPG has shrunk since as two-thirds (65%) of all businesses decreased their pay differences.
It is all a cycle: if there are more women at the top the GPG reduces; if more women keep working at the bottom end of the pay scale, however, it increases or stays the same.
How far has the UK come on gender equality?
In 2022, the United Kingdom placed 22nd on the World Economic Forum Global Data’s Global Gender Gap Index. The Global Gender Gap Index is founded on four main pillars: economic participation and opportunity, educational attainment, health and survival, and political empowerment.
Even though the UK finds itself in the top 30 on the WEF’s Gender Gap Index, only 23% of British people believe gender inequality to be at an alarming level in the country. In continental Europe, a higher number – 33% – consider it an issue for their society.
The low percentages of women in higher positions contribute to the GPG in the UK, which registered a score of 0.78 in 2022 out of 1. Iceland, on the other hand, is the country with the most gender-equal workforce, with a score of 0.91.
A report by Statista showed that only 8% of FTSE100 businesses had female CEOs, and an even smaller percentage (3.6%) were CEOs at FTSE250 companies.
On a more positive note, in March 2022, there was a 1.14% decline in the GPG, and all departments have made some progress in areas like hiring and talent development. However, the gender bonus pay gap (GBPG) has grown: the median went up by 4% and the mean by 8.4%, compared to 0.8% in March 2021.
Even though there has been a decline in GPG, the most noticeable difference in pay has been among older age groups, usually over 39-years old. Compared to 2019, director groups in the UK have had the largest decline in the GPG, especially for individuals aged 50 and above.
This further proves that improving the representation of women at the top is an effective approach to closing the GPG. There is still a lot of progress to be made, but we might just be on the right track.