Gap widens for top earners in finance since Covid

The gap between the most senior women and men in financial and professional services has widened since Covid, finds a new LSE report.

 

The gap between the top-earning women and men in financial and professional services has widened in terms of income since the pandemic, according to a new study.

Despite the increased visibility of diversity, equity and inclusion (DEI) efforts within the sector, the research by the LSE’s The Women in Banking and Finance’s (WIBF) Accelerating Change Together (ACT) programme, suggests “a standstill in achieving tangible progress”.

It found:

  • Men continued to be significantly overrepresented in both the top 1% and top 10% of earners. This over-representation becomes more extreme towards the top of the income distribution. Women make up only 28.3% of people in the top 10%, and only 19.4% of the top 1% of earners – meaning men are more than four times as likely as women to be among those with very high incomes. Compared to pre-pandemic levels, the presence of women in the top 10% of earners increased by 2.5 percentage points. However, the gender composition of the top 1% fell slightly.
  • There is an overrepresentation of women in administrative roles, with women making up 66% of those roles, and underrepresentation in senior and highest-paid occupations, with women making up only 37% of corporate managers and directors and only 25% of science, research, engineering and technology professionals. Compared to pre-pandemic representation levels, there is a movement towards more equal representation across all occupations, but women are still facing difficulties to achieve higher-ranking, better paid positions within the sector.
  • The pandemic has not meaningfully changed the employment distribution of men and women. However, it shows a more balanced representation of men and women among full-time and part-time workers, suggesting a potential shift in the working patterns of men towards part-time roles.
  • Women are 5.8 percentage points less likely to be employed full time, 0.7 percentage points less likely to be in the top 1% and 9.3 percentage points less likely to be in the top 10% of earners. Moreover, women’s wages are 12% lower when compared to their male counterparts, even after controlling for a variety of factors including education, age and number of children and hours worked. Women are also 6.1 percentage points more likely to work part time, which can limit career advancement and income
    potential.
  • The analysis also looked at different roles in detail and showed a noticeable shift for women in information technology roles within financial services, where there was a 5.5 percentage point increase in the likelihood of full-time employment and an 11.6 percentage point increase in the probability of being in the top decile of earners after the pandemic. In contrast, women occupying high-ranking positions, such as functional managers and directors, are 3.9 percentage points less likely to be employed full-time. Meanwhile, at the very top of leadership jobs, the report finds the gender gap has remained largely unchanged, with no significant changes for women in chief executives and
    senior officials’ roles.

The report says economic downturn tends to mean a turning away from DEI and that it is crucial to understand why the pace of change has been so slow and what works with a big focus on evaluation.



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