Female FTSE 350 financial services directors are paid 66% less than male counterparts, as research shows little or no improvement in boardroom gender pay gap figures.
Average pay for female directors stands at £235,000 compared with £689,000 for men, a new analysis has shown, with the 66% pay gap unchanged on the previous year. The overall gender pay gap across the UK economy is just 7.9%, according to the Office for National Statistics.
Employment law specialist Fox & Partners said its research was partly partly because of the slow progress in promoting women to the higher paid “executive director” positions on boards of financial services companies. Just 9% of women on the board of directors of FTSE 350 financial services companies hold executive roles, down from 14% last year.
However, there has been progress in relation to women in non-executive director roles, up 91% from 86% the previous year. Although this increase was a positive step, said the analysts, these roles typically tended to be part-time and lower remunerated which likely impacts the pay gap.
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Fox & Partners said that the continued pay disparity and lack of diversity in senior positions could put financial services at risk of discrimination and possibly equal pay claims. There was also the potential for reputational risk if there was seen to be an apparent systemic issue with gender diversity at the top of their organisations.
It warned that environmental, social, and governance (ESG) issues were gaining importance on investors’ agendas, and so companies falling short on gender diversity would be likely to feel the pressure from shareholders and other stakeholders.
Catriona Watt, partner at Fox & Partners, said a first step for organisations wishing to improve matters would be to sign up to the Treasury’s Women in Finance charter. By signing the charter, an organisation pledges to promote gender diversity by having one member of the senior executive team who is responsible and accountable for gender diversity and inclusion.
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Signatories also need to set internal targets for gender diversity in senior management and publish progress annually against these targets in reports on their website. They should ensure the pay of the senior executive team is linked to delivery against these internal targets on gender diversity.
Watt said that financial services companies may be achieving their quotas, but the data indicated they were not making sufficient changes to close the gender pay gap.
She added: “Senior leaders in financial services need to question why it remains that few women are reaching the top-level management positions. Despite greater diversity at a junior level, firms are yet to see that shift in more senior and in particular, executive positions.
“To see real long-term change, firms must be honest about the barriers that may be preventing women from progressing through the ranks. They must also commit as a whole organisation to taking the steps necessary to address the disparity to move towards closing the gender pay gap.”
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Jemima Olchawski, chief executive of campaigners the Fawcett Society, said that it was in firm’s own interests to narrow or eliminate the pay gap. She said: “The gender pay gap is pernicious and shows no sign of closing without concerted effort from employers. Fawcett’s recent Sex and Power Index clearly shows there aren’t enough women in senior roles and it’s shocking to see that those women who do make it to the top are being paid less than their male counterparts. There is plenty of evidence that shows diversity and inclusion are good for business – employers need to put in place action plans which show how they plan to close their gender pay gap.”
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