Why It Doesn’t Pay To Be A Woman In Finance
From cupcakes on International Women’s Day to marketing campaigns that shine a light on female employees making their mark, many organisations are paying lip service when it comes to addressing the gender pay gap in the UK, yet doing very little to offer real equality in the workplace.
It’s even more pronounced for women working in the financial services sector.
According to a recent study by Spendesk, women in the UK finance industry earn 30% less than their male counterparts, and this chasm is even more striking when it comes to younger staff members.
Mind the gap
The data shows that women at the start of their careers, aged between 25 and 30, can expect to be paid 24% less.
This gap gets narrower as women progress in their careers and those aged 30 to 40 are paid approximately 10% less, while women aged between 40 and 50 see the pendulum swing in the opposite direction once again as the pay gap widens to 20.5%.
Conversely, positions that hold more seniority are more aligned—the average salary of a female chief finance officer (CFO) is £112,000 compared to €136,000 for a man, which equates to a gap of 3.5%. Larger organisations and more established companies, especially those with 250 employees or more, tend to pay higher salaries.
The most glaring disparity? Women for the most part are willing to put up with it—67% of women feel they are fairly compensated compared to 55% of men—and external factors are more likely to push them out of the workforce.
Addressing the issue
A separate report conducted by the Centre of Economic & Business Research (CEBR) on behalf of the London Stock Exchange (LSE) found that the amount of women working in UK finance in 2022 has dropped by 200,000 compared to figures from 1997, a decline of more than 30%.
One reason for this has been attributed to the digitisation of administrative roles, which have traditionally been held by women.
However, spiralling childcare costs are also to blame, as per PwC’s 2023 Women In Work Index which found that the “motherhood penalty”—aka the loss of lifetime earnings experienced by women raising children—is pricing many women out of the workplace.
It’s estimated that mothers experience a 60% drop in earnings compared to fathers in the 10 years following the birth of a first child. This also has a knock-on effect on pensions at retirement age.
Speaking about the issue, Rodolphe Ardant, Founder and CEO at Spendesk said, “The persistent gender pay gap should be a concern for all businesses, who clearly need to do more to create a fairer salary scale. It’s a particularly pressing issue now, with a tight labour market and employees in a position to demand better treatment from their employers.
“Employers who don’t offer fair pay and flexibility to their staff risk alienating the best and brightest talent they desperately need to ensure continued growth.”
While there is still a lot of work to be done to close the gender pay gap, several financial institutions in the UK are actively addressing the problem.
A brighter and more equal future?
Barclays set itself a target of achieving 28% women in leadership positions by the end of 2021 and managed to get this number to 29%. At the end of 2022 this number had increased to 33% and the organisation has pledged to achieve a target of 33% by the end of 2025.
Speaking about the issue in its UK Pay Gaps 2022 report, group chief executive C.S. Venkatakrishnan commented: “Building on this momentum, we are maintaining focus on internal promotion of female colleagues and actively identifying female talent externally during recruitment processes.”
He added: “Yet we know this progress is not enough and there is a lot more to do to achieve our goals – I am fully committed to making sure we get there.”
And while Lloyds Banking Group didn’t hit its ambitious target of 40% by 2020, it reported that 38% of its leadership positions were held by women at the end of 2021, a figure much higher than most of its competitors in the market.
It has set a target of 50% women in senior roles by 2025 and at the end of April 2022, reported a figure of 38.4%.
“A key part of this goal is our continued mission to reduce the pay gap between men and women at Lloyds Banking Group, and we’ve made some good progress over the past 12 months,” shared Fiona Cannon OBE, group sustainable business director, in Lloyds’ most recent gender pay gap report.
“It’s not been as fast as we’d like, but we’re heading in the right direction and the overall gender pay gap is closing.”
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