(7 September 2009)

Women in some of the UK’s leading finance companies receive around 80 per cent less in performance related pay than male colleagues, an inquiry by the Commission of Equality and Human Rights has found. The disparity is a major factor behind the massive gender pay gap in the finance sector. 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.

The Commission’s Finance Sector Inquiry, published today, includes data from a questionnaire sent to 50 companies employing 22.6 per cent of workers in the sector. It reveals nearly all women taking up new jobs in these companies still start on lower average salaries than men, suggesting the gender gap is being further entrenched by recruitment patterns.

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. 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.

Findings from the data supplied to the Commission include:

• 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.
• 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.
• Among the organisations who responded, women received significantly lower performance related pay on average than men in 94 per cent of cases.
• In 86 per cent of responses to the Commission, women who had started their jobs in the last two-and-a-half years had lower starting salaries on average than men starting in the same period
• Significant 'in-grade' gender pay gaps in at least half of all job grades/categories, where men and women are assumed to be doing the same or equivalent work, were found in 63 per cent of cases.
• Less than half of cases report making some effort to address the pay gap
• Only 23 per cent of cases report that they have undertaken an equal pay audit.

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.

'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.

'I’m encouraged by the firms which are developing transparent pay policies and flexible approaches to work. But there aren’t enough of them. The many need to learn from the few. 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.'

Recommendations in the report include:

* Appointing a board member to set the tone, champion the issues and drive change

* Incorporating equality and diversity into organisational and individual objectives

* Undertaking annual equal pay audits and publishing the data

* Ensuring maternity, paternity and parental support schemes are in place and effective

* Monitoring the implementation and impact of policy on gender equality

Click for a copy of the EHRC Financial Services Industry Report ()

About The Equality and Human Rights Commission

The Commission is a statutory body established under the Equality Act 2006, which took over the responsibilities of Commission for Racial Equality, Disability Rights Commission and Equal Opportunities Commission. It is the independent advocate for equality and human rights in Britain. It aims to reduce inequality, eliminate discrimination, strengthen good relations between people, and promote and protect human rights. The Commission enforces equality legislation on age, disability, gender, race, religion or belief, sexual orientation or transgender status, and encourages compliance with the Human Rights Act and international treaties. It also gives advice and guidance to businesses, the voluntary and public sectors, and to individuals.