The gender pay gap: state of UK business in 2024

Employee payroll data can tell us a lot about how certain workers are viewed in the modern workplace. One of the most concerning findings is the persistent gender pay gap that continues to haunt the UK business landscape – even the startups ecosystem – in 2024.

Payroll reporting has proven that male workers in the UK outearned female colleagues by a median pay gap of 9.1% in 2023. The issue is well-recognised by business leaders, yet progress to resolve it remains frustratingly slow.

This guide will explore the facts behind the figures, to explain why the gender pay gap occurs, what progress has been made in attempts to bridge it, and what employers can do to combat the specific challenges faced by today’s female workforce.

What is the gender pay gap in 2024?

The gender pay gap is the difference in earnings between men and women. Analysis of the latest Office for National Statistics (ONS) figures show that, in FY 2023-24, women were paid 91p for every £1 earned by a man, meaning an effective gender pay gap of 9.1%.

Almost four-in-five UK companies (78.4%) paid women less than they paid men last year. The issue is at its most pronounced in specific professions. Industries with the biggest gulf in pay include:

• Functional managers – 29.5%
• Barristers and judges – 29.1%
• Financial managers – 28.8%
• Web designers – 27.7%
• Construction – 22.8%

The disparity is decreasing. Today’s rate is the smallest since reporting was first enforced in 1997. Back then, the median gender pay gap was 17.4%. Compared to this, the latest figure of 9.1% looks like a steady improvement.

That said, the difference remains high for certain groups – most notably among earners in senior and director roles. Among men and women aged over 40, the pay gap surges to 12% (versus 2.5% among those aged under 40).

So what’s causing the gap?

Causes of the UK gender pay gap

The Equal Pay Act 1970 outlawed unequal pay for men and women who are in identical roles. Yet, despite this legislation, the pay gap persists across the UK. Here are three key reasons why:

1. The Motherhood Penalty

It’s no secret that childcare responsibilities tend to fall more heavily on women. Even with both parents working, mothers are more likely to adjust their work schedules for childcare.

In some ways, this cannot be avoided. Maternity leave is an important employee right, which is why new mums are legally required to wait at least two weeks before returning to work. Poor paternity pay for dads has also skewed favour towards women taking the bulk of the time off during a child’s first year.

However, the repercussions of putting a career on hold for familial reasons are cause for concern. In a 2022 study, 58% of working women said having children had stopped them applying for a promotion or a new job.

Improved early years care is often touted as the solution. But spiralling provider costs have resulted in a childcare crisis that has left many parents forced to use annual leave or cut their hours to raise the sprogs.

This is also why 38% of women in the UK work part-time, compared to 14% of men – a working pattern that leads to a large pay cut.

As a result of this career stop-start effect, ONS data shows just 36.3% of women over 40 are managers, directors, or senior officials, at an age when pay for these occupations tends to increase.

2. Women avoid male-dominated occupations

Skilled sectors where salaries are above average – like engineering, technology, and construction – have often been seen as “men’s work” due to the low number of women employed in these industries. According to a 2023 survey by campaign group Women in Tech, just 26% of UK tech workers are female.

This is a self-perpetuating cycle for girls. Lack of role models for women working in STEM means that girls are often put off from studying scientific or technical subjects at school.

In 2019, University College London surveyed 40,000 students about their attitudes to science. It found that girls were four times less likely than boys to aspire to engineering careers. Young women were also the least likely to express high self-confidence in maths.

3. ‘Feminine’ skills are undervalued

Conversely to the above, occupations that are dominated by women, such as HR or social care, are often referred to as ‘feminised’. In these roles, sought-after skills are harder to quantify, compared to listing examples of your technical prowess (eg. the ability to use a certain software). This makes the impact of women’s skills within a workplace less visible and undervalued.

To illustrate how this personal bias can influence pay for women, below are two jobs that require a similar level of training (a four-year university degree) for application. Here’s how their average salary, based on ONS data, differs:

The same inequality is evident even in ‘low-skilled’ work. Here are two job roles that don’t typically require any degrees or higher education qualifications for entry:

The implications of this bias go beyond pay disparity. If bosses don’t understand the value of women’s labour, they are more likely to be deemed unnecessary for the workplace, putting them at greater risk of redundancy.

One government report found that 79% of women work in occupations at risk of being replaced by AI – a threat which will widen the gender pay gap should it come into fruition.

Gender pay gap reporting: requirements for employers

Under the Equality Act 2010 (Gender Pay Gap Information) Regulations, all organisations with 250+ employees must publish male and female employee payroll data, known as gender pay gap reporting, every year on 6 April.

The practice is now commonplace among large and medium enterprises. As of April 2024, a record 10,380 private-sector businesses filed statistics (and industry leaders are calling for those who didn’t to face substantial fines).

By definition, SMEs are not obliged to report on gender pay as their workforce will be under 250. However, small employers may choose to voluntarily publish pay gap data in order to demonstrate transparency, and monitor how it relates to their own payroll.

For those who do uncover pay inequality in the workforce, pay gap reporting offers a chance to demonstrate progress made and explain the action plan to address it. For those who don’t, it’s a chance to showcase the fair and equitable work culture that has been created.

What do I need to build a gender pay gap report?

You can find most of the information required for a pay gap report by using the reporting features in your payroll software. Here are a list of recommended data points to include:

1. Average gender pay gap for salaries and hourly wages
2. Average gender pay gap for bonuses or commissions
3. Proportion of men and women employed in each salary band
4. Number of men and women who received a promotion
5. Number of men and women who received a pay rise last year

How can employers address the gender pay gap?

As well as it being a legal requirement, paying staff fairly is the right thing for managers to do. If you need an incentive beyond that, the potential hit to profits should be warning enough.

If women employees feel undervalued, this will damage company reputation, limit productivity and growth, and have major repercussions on retention and recruitment.

However, by eliminating gender bias, and proving the company values its staff, employers can strengthen their existing team and create a more attractive proposition for future talent.

Here are four policies to help bridge the gender pay gap.

1. Embrace flexible working

Flexible working policies like remote or hybrid work can go a long way to addressing the motherhood penalty. Losing the daily commute gives mums more time to balance care and work, helping them to avoid scaling back hours and potentially hindering promotions.

Trending policies, such as adopting a four-day week, can specifically support women who are working part-time, as a method to reduce their work hours without cutting pay.

2. Invest in Diversity, Equity, and Inclusion (DEI) ambassadors

In today’s economy, DEI ambassadors have wrongfully been equated with wasted spending, causing many businesses to pause investment in the area. Indeed, a survey by Startups shows that just 5.1% of firms, on average, see DEI as a key priority in 2024.

But supporting female staff – including those of non-White heritage or LGBTQ+ who are even more impacted – isn’t about putting a pay gap report out once a year. As a long-term investment, a DEI ambassador can advocate for fair and equitable policies related to hiring and promotion, ensuring women have a level playing field for advancement.

3. Offer enhanced parental leave

Enhanced parental leave is about offering more generous maternity (and paternity) packages to allow for a smoother return to work. Mothers can regain confidence, catch up on advancements, and demonstrate their continued value to the company.

Shared Parental Leave is another perk to be aware of. It gives two people the option to share up to 50 weeks of leave in the year after they have a baby. Ensure employees are educated on the policy and how it might make their return to work more feasible, as well as how it can encourage sharing of parental responsibility during the child’s first year.

4. Reassess performance assessments

Traditional performance assessments are subjective and prone to bias. They might not adequately value “soft skills” like communication, collaboration, and emotional intelligence.

Broadening your definitions of a job done well can help evaluators to understand how to interpret employee behaviour against a set of established criteria, not a fixed case study. Consider using a diverse panel of reviewers to reduce the influence of individual biases.

Conclusion

The gender pay gap is not a blame game. Instead, it’s about acknowledging the unique challenges that women face today – and the obligation for businesses to address them.

We’ve given an overview of the state of the UK’s gender pay gap, its roots, and the requirements for employers in large businesses to report on it. But beyond the spreadsheets, a truly impactful approach to resolving the gender pay gap must prioritise staff wellbeing.

It’s high time we learn from those undervalued ‘feminised’ qualities, like empathy and care. When formulating a gender pay strategy and support policies, employers should embrace these very values to demonstrate compassion and concern for their workforce.