UK Gender Pay Gap Persists Despite Falling at Fastest Rate Since 2017 

The overall UK gender pay gap persists despite falling at the fastest year on year pace in six years, according to new research from PwC.

According to the report, the overall gender pay gap has only reduced by 1.2% since 2017, and more work is still needed to close the gap. If the UK continues at this rate, it will take a significant amount of time to reach gender pay parity. Among UK companies that disclose their mean gender pay gap, the national median has seen the most notable annual decline of 0.7%, dropping from 12.9% in 2021/22 to 12.2% in 2022/23. The analysis also highlights a decrease in the median hourly pay gap; a reduction from 9.8% in 2021/22 to 9.2% in 2022/23.

However, since reporting first became mandatory in 2017/18 for UK companies with over 250 employees, the mean gender pay gap has only fallen by 1.2%, from 13.4% in 2017 to 12.2% in 2023. If the UK continues at the current rate of change, it will take over 50 years for pay parity to be achieved.

SLOW PROGRESS

PwC’s analysis shows that of the companies that have disclosed their pay gaps for both 2022/23 and 2021/22, just over half (53.7%) have reported a decrease in their mean pay gaps. Whilst nearly half (46%) of UK companies who disclosed their gender pay gaps in both 2021/22 and 2022/23 reported an increase or no change at all to their mean gender pay gap. Most organisations reported only a small change, with nearly 60% of companies reporting increases or decreases of up to 4% from last year.

Since last year, over 35% of companies reported pay gap changes between 0 and 2%, with, disappointingly, an equal split between those reporting increases and those reporting decreases. This highlights that most organisations continue to struggle with making impactful changes to close the gap, and that significant change may take a long time.

ADDRESSING PAY GAP DRIVERS

“While on the surface it is encouraging to see the most significant annual decrease in the UK’s mean gender pay gap this year, the data highlights that it is difficult for organisations to make meaningful reductions to their reporting figures,” stated Katy Bennett, Diversity, Inclusion and Equity Consulting Director at PwC. “In order to do this businesses, need to understand the underlying drivers of their pay gaps and address the root causes, such as recruitment and attrition rates, external market pay expectations and organisational structures.”

Diversity, Equity and Inclusion reporting and broader pay transparency requirements, such as the EU Pay Transparency Directive, “are only getting more complex and high profile”, added Bennett. “Organisations need to demonstrate they will address the drivers of their pay gaps, moving the focus from reportable numbers to taking credible action to improve equality, inclusion and social impact.”

SECTOR OVERVIEW

Over the last year, there has been an increase in the mean average gender pay gap in seven sectors. The building societies sector has the largest gender pay gap of 30.1%, while the public administration sector has the lowest (4.5%). 

Compared with last year, the travel sector has seen the largest increase in the average gender pay gap of +2%, whilst the technology sector has seen the largest decrease, by -1.9% from 2021/22.

FAIRNESS DATA

The lack of fluctuation in the national average pay gap figures does not highlight the full extent of fairness within an organisation. Looking solely at the gender pay gap and ignoring other diversity, equity and inclusion (DE&I) and fairness data, can fail to capture the full extent of fairness within an organisation. 

PwC’s analysis highlights many companies are struggling to make meaningful progress on the gender pay gap and as DE&I regulations are continuing to gain momentum, organisations need to consider aligning multiple metrics to tell an accurate representation of DE&I.

Click here to read the full report.

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