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Proportion of female high earners unchanged

Heidi Watson
gender pay gap

The proportion of UK female high earners* has remained static for the past seven years, despite the widespread drive to increase the number of women in senior positions, according to research. Contributor Heidi Watson, Employment Partner – Clyde & Co.

Data obtained directly from HMRC reveals that women accounted for just over one quarter (27 percent) of all higher rate tax payers (tax payers declaring an income between £43,001 and £150,000) in each of the last seven financial years. Last tax-year just 1.13m of the 4.16m higher rate tax payers were women.

Heidi Watson, employment partner at Clyde & Co, comments: “In recent years there has been a raft of industry and government initiatives launched to help increase the number of women in senior positions, so it’s disappointing and somewhat surprising not to see any progress at all in the proportion of high earners.”

The most recent and significant Government initiative aimed at reducing gender pay differences is gender pay gap reporting. Under the new regulations, which came into force on April 6 2017, organisations with 250 or more employees and workers had to disclose gender pay and bonus pay gaps by April 4 2018. This obligation to report will now continue on an annual basis.

Watson adds: “Gender pay reporting has helped to focus employers’ minds on a business critical issue. From the 2018 reports, we have seen that the lack of women in senior positions is one of the key reasons for the gap. It has raised awareness of the barriers faced by women in progressing into senior positions and as a result more companies are now taking action to change things.”

The sorts of measures employers are taking include: Actively supporting a healthy work-life balance by offering; flexible/home working; enhanced maternity, adoption, and shared parental pay; maternity coaching;

Making an express commitment to diversity and inclusion issues including, in some cases, linking senior executive bonuses to achieving gender diversity targets; Offering management and leadership programmes to help employees develop the skills necessary to progress in seniority; Reviewing recruitment processes to ensure they are free from bias (e.g. ensuring all decision-makers receive training on unconscious bias).

Watson comments: “We are clearly yet to see the impact of these initiatives in the number of female higher earners.  In many companies such diversity measures are not new and yet the picture for the UK as a whole has not shifted on any discernible scale.  The impact of gender pay reporting as an engine for change will likely take several more years to be felt.  But one would certainly hope to start seeing at least some difference shown in these figures by next year.”

The gap widens for the very highest earners
The research also shows that the gap widens for additional rate tax payers (tax payers declaring an income of over £150,000). The proportion of female additional rate tax payers has increased by just 1 percent since 2012/13.  There are only 60,000 women in the highest earning positions in the UK.

Watson comments: “The government will be looking closely at the impact of gender pay reporting on the national pay gap and will be particularly interested in the number of women progressing into senior positions given the disproportionate effect of that issue on the pay gap.

It would not be controversial to say that if the pace of change does not accelerate and if governmental and societal agendas remain focused on reducing the pay gap, then questions will begin to be asked about the efficacy of current legislative measures.   The next couple of years will be crucial in determining the outcome.”
Research carried out by Clyde & Co.

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