UK: Clyde & Co Research Finds Proportion Of Female High Earners Unchanged In Six Years

The proportion of UK female high earners* has remained static for the past six years, despite the widespread drive to increase the number of women in senior positions, according to research from global law firm Clyde & Co.

Data obtained directly from HMRC reveals that women accounted for just over one quarter (27%) of all higher rate tax payers (tax payers declaring an income between £43,001 and £150,000) in each of the last six financial years. Last tax-year just 1.19m of the 4.41m higher rate tax payers were women.

Clyde & Co points out that the percentage of female high earners in the UK has not changed for six years, even though the total number of higher-rate tax payers in the UK has grown by almost one million in that period. In addition, the total number of higher rate tax payers has decreased for the first time in seven years.

Heidi Watson, Employment Partner at Clyde & Co, comments: "The stubborn refusal of the percentage of female high earners to shift upwards will disappoint those who hoped a recent focus on the gender gap would make a significant difference to the number of women in senior positions."

In recent years there have been numerous industry and Government initiatives launched to increase the representation of women in senior roles, in an effort to tackle the gender pay gap, including:

  • Lord Davies' target for FTSE 100 firms to have 33% female board members by 2020
  • A voluntary charter, launched last year, aimed at getting more women into senior roles in the financial services industry, which several major UK banks have signed up to
  • Many individual businesses are also setting their own targets: BHP Billiton announced last year that it is aiming to have 50% female workforce by 2025; since 2015, Johnson & Johnson's most senior managers have a portion of their bonuses tied to meeting certain diversity metrics, including how many women they hired in the previous year

The most recent and significant Government initiative aimed at reducing gender pay differences is gender pay gap reporting. Under the new regulations, which came into force on April 6 2017, organisations with 250 or more employees and workers must now disclose gender pay and bonus pay gaps.

Watson continues: "The expectation is that gender pay reporting will start to make an impact in the next few years. However, there have been concerns that the new legislation lacks teeth as businesses that fail to report their gender pay figures will not face any sanctions and those that report particularly bad gender pay figures will simply be 'named and shamed'."

Clyde & Co explains that businesses' gender pay figures are due to be listed on a government website where the public and prospective employees will be able to look at the data in comparison with other employers.

Gina Wilson, Employment Partner at Clyde & Co, comments: "On the face of it 'naming & shaming' can appear to be a fairly impotent punishment. But the reputational risk is huge. Companies who report better figures, or show that they are improving, stand to gain a competitive advantage when looking to hire top female talent."

"It's important to remember that as well as reputational damage, the Equality and Human Rights Commission can take its usual enforcement action against employers who are proven to be in breach of the Equality Act, which can in theory ultimately lead to criminal proceedings."

Clyde & Co explains that the current timeline for mandatory gender pay gap reporting requires employers to capture data on 5 April 2017 and then publish findings no later than 4 April 2018, with this cycle continuing on an annual basis.

Wilson adds: "Businesses should be taking steps now to analyse their April 2017 data so that they can take remedial steps ahead of the reporting deadline in April 2018. If they can make a difference over the next 12 months then they could consider releasing their April 2017 data, followed closely by their April 2018 data which could show a marked improvement."

"For those yet to report, it is advisable to look at how other businesses that have already released their data have presented it. In most cases, the best way will be to provide as much information as possible with any gaps explained and efforts to close it outlined."

Clyde & Co points out that the Government has now set up a 'beta' version of the website on which employers' gender pay gap information should be published. It allows employers and employees alike to compare gender pay gap information with their competitors.

Racial diversity reporting

Clyde & Co says that in March 2017, the business minister Margot James told FTSE-350 companies that they should take up key recommendations from a recent government-backed review into race in the workplace. She recommended that they publish data to reveal the diversity of their workforce by pay band and also said they should set targets on black and minority ethnic diversity and nominate a board member to deliver these.

Heidi Watson says: "While racial diversity reporting is currently just a recommendation, the direction of travel is clear. The Government is looking to level the playing field for minorities in the workplace who may be suffering from conscious and unconscious bias."

"Businesses may be considering looking at other factors like race while they carry out their gender pay audits in order to get ahead of the game. However, this will not be easy. While gender is an easy thing to determine, the vast majority of cases do not require specific data gathering from employees, race is not so simple and most organisations will not currently hold this data and may face data protection obstacles in gathering it on anything but a voluntary basis."

Examples of businesses that have reported their gender pay gap so far:

  • Schroders: 31% mean pay difference between male and female employees
  • SSE: 23.4% mean pay difference between male and female employees
  • Virgin Money: 36% mean pay difference between male and female employees
  • TFL: 21.1% pay difference between male and female employees

Clyde & Co Research Finds Proportion Of Female High Earners Unchanged In Six Years

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