Key findings
Analysis by PwC has found that this year's median of reported mean pay gaps has decreased by 0.6%, from 11.8% last year to 11.2% this year. This also equates to an overall reduction of 2.2% since mandatory gender pay reporting was introduced. Of significance is the finding that the pace of change is accelerating, suggesting steps taken by organisations to reduce the gap are having a sustained impact.
The news relating to bonuses is not so positive. Although the mean bonus gap has decreased by 0.3%, it remains high at 29.3%, and the median bonus gap has increased by 0.6% to 15% since last year.
A number of findings follow a familiar pattern. The largest organisations tend to have the lowest mean hourly pay gaps. This may be because the impact of primarily male leadership is diluted over a larger workforce. The opposite is true in smaller organisations, where one highly paid individual can have a significant impact on the overall average.
Sectors where women form a higher proportion of the workforce, such as hospitality, public administration and health, continue to report the lowest pay gaps, whereas more traditionally male-dominated sectors such as financial services continue to have higher pay gaps. That said, parts of the financial services sector, including real estate, banking and investment, have shown significant reductions in their gender pay gaps.
Where does the problem lie?
Because mandatory gender pay gap reporting is an average across a business, the primary issue is under-representation of women in higher-level, higher-earning roles. The challenge for businesses is retention and promotion of women within the workplace.
We know that the motherhood penalty — where, following having children, women change working hours, wage rates and may transition to new jobs — is a significant issue. According to an article published by the LSE in March 2024, a paper analysing data from 134 countries that represent more than 95% of the world's population found this accounted for more than 80% of the earnings gap in rich countries. It also found that women were affected in this way regardless of education level, career prospects or whether they were adoptive or biological mothers.
We also know that reaching menopause impacts on retention of women in the workplace, at a point where they may be reaching senior-level positions within their organisations.
The future
While these two issues are not the whole story, employers starting to address them could have a significant impact on the gender pay gap in future years. The Employment Rights Bill, once enacted, will require larger employers to develop and publish Equality Action Plans showing the steps they are taking to address both gender pay gaps and support for employees going through the menopause. This is intended to become mandatory in April 2027 and will be voluntary from April 2026.
A significant contributor to the gender pay gap is also the unpaid labour that women do — reportedly nearly three times as much as men do, on top of their careers. While individual employers can take steps to address this, such as supporting flexible working (for all staff), it is a challenge that also needs to be addressed at a policy level.
There is a review of parental leave and pay ongoing. While the UK government has made it clear that a wholesale review of the system will not result in a wholesale revision of it, it is to be hoped that areas such as the low uptake of shared parental leave and the inequitable length of paternity leave will be closely scrutinised. Making it easier for families to share parenting responsibilities at home would be a step towards closing the gender pay gap in the workplace.
