The financial sector has a huge need for a dose of exceptional HR practice, judging from the results found by an inquiry from the Equality and Human Rights Commission. It revealed there is less of a gap and more of a yawning chasm when it comes to women’s pay in some of the UK’s leading finance companies, who receive around 80 percent less in performance related pay than male colleagues.
The gap begins at the very start, with women starting on far lower salaries. There is then a gap in annual basic pay between women and men of 39 per cent. However, this gender pay gap rises to 47 per cent for annual total earnings when performance related pay, bonuses and overtime are taken into account. Women employees earned an average of £2,875 in annual performance related pay compared to an average of £14,554 for men – a gender pay gap of 80 per cent. The Inquiry also suggests that the sector’s age profile may be a key factor blocking women’s success. An unusually high proportion of workers in the sector fall into the 25-39 age group – the age at which women tend to have childcare responsibilities.
To add to further disappointment, less than half of cases report making some effort to address the pay gap and only 23 percent of cases report that they have undertaken an equal pay audit.
The inquiry is the first time this type of data on gender pay gaps in the sector has been collected, with the Commission using its statutory powers to require companies to provide evidence of their working practices and policies including pay, job evaluations and audits.
As a whole, the finance sector has one of the highest overall gender pay gaps in the UK economy – with women working full-time earning 55 per cent less annual gross salary than men. This compares to a pay gap of 28 per cent for the economy generally.
There were examples of good practice in some of the organisations questioned, with one employer reporting that they made data on average bonus payments by gender available to employees. Another offered a maternity buddy system to support pregnant women and those on maternity leave.
Trevor Phillips, Chair of the Commission said: “The financial sector has the potential to play a central role in Britain’s recovery. But it has to address this shocking disparity of rewards. For business to thrive in the new economy it simply can’t afford to recruit and reward in the way it has done in the past.
He added: “By bringing down arbitrary barriers, and changing practices that, intentionally or not, inhibit women’s success, financial firms have the chance to boost morale, bring on new talent, and maximise the potential of their existing employees.”
The recommendations include appointing a board member to set the tone, champion the issues and drive change, incorporating equality and diversity into organisational and individual objectives, ensuring maternity, paternity and parental support schemes are in place and effective and monitoring the implementation and impact of policy on gender equality – in short, the practices which many HR directors are putting in place all over the UK, across sectors. The examples of good practice should serve as an inspiration to the others, added Trevor, saying: “At a time when shareholders have become alert to the dangers of ‘groupthink’ and potential employees and customers value transparency and fair treatment, it’s clear the enlightened few have a competitive advantage.”
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7 September 2009