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The gender pay gap in the banking sector

In the third year of the compulsory publishing of a gender pay gap for all companies with over 250 employees, the finance industry comes in as the second worst sector, after education.

Finance firms are paying the average man almost 25% more than the average woman. And that gap has increased by about 1% on last year’s figures.

Across all sectors, the gap is around 17%. However, this financial year the government suspended the enforcement of gender pay gap reporting due to COVID-19, so only about a quarter of financial companies have actually reported.

We’re sure that the billion-pound businesses involved are delighted to be relieved of what must have been a couple of days of research work each!

The figures are based on the median – the middle-wage of a range when everyone’s wages are lined up from smallest to largest. The median is used rather than the average or mean because the median is a more representative figure which is not skewed by a few highly paid people.

Individual banks

  • HSBC posted an overall pay gap across its 8 divisions (consumer, corporate, investment ...) of 47.8%, almost the same as last year. (The gap at just HSBC's UK consumer banking (retail) arm was 18.7%.) It said it was because of fewer women in high-paid senior roles and more women in junior positions or part-time jobs.
  • Between 2017 and 2019, Lloyds Bank and Santander's UK consumer banking operations have closed their gap by more than 2%, but are still above the sector average at 40.5% and 26.6% respectively.
  • Reporting for the first time, NatWest posted a gender pay gap of 34.1%.
  • Co-op Bank's gap remained at 22.6%. For bonuses, the average gender pay gap is 37.7%, an increase from two years ago. Barclays' commercial arm and NatWest were paying out bonuses that are over 50% higher for men, on average.

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What can be done?

Ann Cairns is executive vice-chair of MasterCard and co-chair of the 30% Club, which aims to boost the number of women in senior leadership.

She says that she sees companies are starting to take their pay gaps seriously, but that there is a need to change the corporate culture which will take a long time.

Dame Helena Morrissey, one of the City's most high-profile women and founder of the Diversity Project, says that some firms are just seeking to comply with the law with "woolly or non-existent" plans to improve. A spokesperson for the Women’s Equality Party adds that the seeds of the gender pay gap are sown from a young age.

“Our education system continues to influence gender norms that lead girls into lower paying jobs that are less valued,” they explained. And Dr Julie Davies of the Manchester Metropolitan University Business School concurs “... women don’t negotiate their salary in their first role due to societal pressures, and so there is a cumulative effect as they move from one job to another. Often women don’t ask for more money and are just grateful to be offered a job.”

Fifty years on from the Equal Pay Act of 1970, campaigning women’s rights charity the Fawcett Society says that one of the many reasons that there is a gender pay gap is because there is still pay discrimination.

Because there is generally not a transparent pay framework, many women don’t know that they are earning less than their male counterparts.To close the gap, employers should:

  • Develop a positive action plan to encourage and support women to apply for more senior roles.
  • Ensure that part-time and flexible work is available at all levels of the organisation.
  • Make paternity leave as generous as maternity leave to encourage men and women to share childcare responsibilities.
  • Improve transparency by extending gender pay gap reporting to companies with 100 or more employees.
  • Introduce gender pay gap reporting by ethnicity – Fawcett found that the gender pay gap between White men and Black African women and Pakistani & Bangladeshi women was higher than for White women.
  • Require employers to publish an action plan to tackle gender pay gaps with meaningful sanctions for non-compliance. 

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