The average UK gender pay gap has seen the second largest decrease since the introduction of pay gap reporting in 2017.
Employers in financial services and property have typically seen the largest reductions in their gender pay gaps, with real estate narrowing by 14.9 percentage points and banking by 8.6pp, although these organisations have often had some of the widest pay gaps to begin with.
Unlike gender pay gap data from the Office for National Statistics, which looks at the amounts paid to women and men across the whole economy, the analysis by PwC uses data from the information provided by employers to the government’s gender pay gap service.
PwC said that the data shows sustained efforts by organisations driving change, although even with this year’s large decrease, its analysis shows the longer-term overall pace of change remains slow, and it will take at least another 40 years for the pay gap to close completely.
Pay gap reporting
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The 2025 Gender Pay Gap Report, published by PwC, shows a decrease of 0.6pp in the mean hourly pay gap, narrowing from 11.8% to 11.2%, and a decrease of 0.5pp for the median hourly pay gap, from 9.1% to 8.6%.
This compares to a decrease of 0.4pp in 2024, and is one of the most significant year-on-year improvements to date – the largest being a 0.7pp drop in 2022-23.
This year saw over 10,700 organisations submit their gender pay gap data, the highest number since reporting became mandatory for companies with 250 employees or more.
Policy changes, such as the introduction of the Equality (Race and Disability) Bill, which proposes to extend gender pay gap reporting to include mandatory ethnicity and disability reporting in the UK, along with additional pay gap reporting and pay transparency obligations introduced across the EU, are continuing to help shine a spotlight on pay fairness, according to PwC.
Andrew Curcio, global co-leader for reward and benefits at PwC, said: “The dial is finally shifting. Whilst we’re seeing incremental change – this year’s data shows that when employers take deliberate action over the long term, progress follows, although it will still take a long time for the pay gap to close.
“From reviewing pay structures, improving gender balance of senior roles, and transparent and inclusive promotion and recruitment processes, the organisations making the biggest strides are those embedding equity and consistency into their day-to-day decisions, not just their annual reports.”
“Employers are operating in a new world with increasing levels of compliance and regulation so it is more important than ever to sustain momentum – and shift the conversation from compliance to commitment. Employers are increasingly recognising that pay gap reporting is not just a regulatory requirement – it’s a strategic imperative tied to talent, reputation, engagement, productivity and performance.”
Sectors typically with a higher proportion of women working in them, such as hospitality, public administration and health, report the lowest pay gaps. These sectors also tend to rely on hourly wage structures rather than salaried roles, resulting in less variation in pay and smaller gaps.
In contrast, despite seeing the largest decreases in mean pay gaps compared to last year across the financial services sectors, they continue to report the biggest gender pay gaps. Whilst continually showing progress in reducing their pay gaps, the large pay gaps are reflective of ongoing issues with gender equality within the sector.
PwC’s analysis also shows that the average mean hourly pay gap decreased for organisations of all sizes – with the largest decrease of 1.1% for organisations with between 5,000 to 19,999 employees.
Each year, the largest employers (with 20,000 employees and more) have the lowest mean hourly pay gaps in contrast to the smallest organisations, which typically have higher levels of volatility in their pay gaps.
Sam Greenhalgh, partner in the employment team at Birketts law firm, said: “The latest data showing a narrowing gender pay gap is undoubtedly encouraging – especially where like-for-like comparisons can be made. It reflects a broader movement in the right direction, with many employers making genuine strides toward pay equity.
“However, it’s important to recognise that true like-for-like comparisons across all employers and sectors remain rare. Sectoral differences, societal norms, and domestic choices often shape the roles men and women occupy, as well as the time they spend in the workforce. These factors can significantly influence pay gap statistics.”
Greenhalgh added that gender pay gaps are frequently misunderstood as equal pay issues. A pay gap does not necessarily mean that men are paid more than women for the same work. Instead, it often reflects structural and cultural dynamics that require deeper analysis.
“Employers must focus on the narrative behind their data – explaining the context and causes of any gap – to provide a more accurate picture of their pay policies,” he said.
This morning, Personnel Today and Employee Benefits Live held a webinar looking at ethnicity and disability pay gap reporting, anticipating what the Equality (Race and Disability) Bill might require of employers, and sharing the experiences of Birmingham City Council, which reports its ethnicity pay gap voluntarily. Watch the webinar on-demand here.
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