The gender pay gap is proving a difficult nut to crack – closing it will depend on understanding the barriers behind it

A 21-year-old woman who has just entered the workforce will not see pay parity in her working life.

That’s the bleak forecast in new research from PwC which suggests that it is likely to take up to 45 years to close the gender pay gap.

As Women and Equalities Minister, Purpose Coalition Chair, Rt Hon Justine Greening, introduced mandatory reporting of gender pay for companies with over 250 employees in 2017. Not only did the policy help to demonstrate the gaps that existed between men and women’s pay, it also highlighted the importance of regular and transparent measurement in any meaningful assessment of equality of opportunity. Many organisations now use the metric as a way of monitoring their progress on gender diversity.

But the overall pace of change is slowing, with PwC’s analysis showing that the mean gender pay gap decreased by 0.4% in 2023-24, from 12.2% in 2022-23 to 11.8%. The median hourly pay gap also decreased slightly from 9.2% in 2022-23 to 9.1% in 2023-24.This is despite almost six in ten organisations reporting decreases in their pay gaps, although many of these were modest reductions of less than 2%. Overall, 20.1% of organisations reported no change or an increase between 0% and 2% to their pay gap, compared with 17.6% in 2022/23. Since pay gap reporting was first introduced, the mean gender pay gap has only fallen by 1.6% from 13.4% in 2017.

The financial services sector has consistently reported the highest pay gaps but has also reported the biggest decreases compared to the previous year, alongside the travel and technology sectors. As in 2022/23, the public administration, health, hospitality and leisure sectors continue to be those with the lowest mean hourly pay gaps. 

The pay gap figures reflect factors that can result in a disparity in average earnings even where there is no direct discrimination against women. They still tend to be over-represented in low-paid, part-time roles, with less representation in senior roles. Just this week, new data shows that since 2016 overall female representation at the top in business has increased by just 2.6% to 31.3%. They are also viewed as less likely to negotiate as hard for better pay, and often take on a greater share of caring responsibilities in the family.

It is acknowledged that it can take years for the positive actions that many employers are taking to have an impact on these figures. However, amid challenging economic and social circumstances, it is more important than ever to understand the nature of the systemic barriers that exist and to take targeted action to tackle them.

The best organisations can lead the way in understanding and addressing the barriers to pay parity, for gender and beyond. The Purpose Coalition has already been working closely in partnership with businesses to highlight the good practice that will facilitate progress, whether that is development, management and leadership strategies for female colleagues, flexible working practices that allow women to combine family and caring responsibilities or the more effective measurement and increased transparency that will attract potential employees and help to retain existing ones. It can also mean shining a light on the opportunities that women can aspire to so that they can see people like them in roles where they have traditionally been poorly represented, whether that is as a CEO or a train driver!

Labour’s manifesto, published this week, committed to retaining gender pay gap reporting, strengthened with an obligation to develop, publish and implement action plans to close the gaps. It also announced that ethnicity and disability pay gap reporting will also become mandatory for all employers with more than 250 employees, mirroring current gender pay gap reporting requirements.

Collaboration and sharing best practice will be crucial to understanding all the barriers that exist to making equal pay a reality. With an increased focus on measurement and transparency, we can move a step closer to the equality of opportunity that this country needs for a fairer and more prosperous future.

The report mentioned early in this article can be found here:

Mandatory UK Diversity and Gender Pay Reporting - Beyond the gender pay gap - PwC UK