New analysis shows the pay gap for women at the top of FTSE 350 financial services companies is widening due in large part to a fall in women in executive director positions.
Female board directors at FTSE 350 financial services firms are still paid 66% less than men, unchanged on the previous year, according to analysis by law firm Fox & Partners.
It found that the average annual pay for female directors stands at £235,000 compared to £689,000 for their male counterparts.
The firm says this is partly due to 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 – a percentage which has fallen from 14% last year.
Progress has been made in relation to women in non-executive director roles, however, with the percentage up to 91% from 86% the previous year. However, Fox & Partners points out that these roles typically tend to be part time and lower remunerated which likely impacts the pay gap. They are also less involved in the day-to-day running of companies.
Fox & Partners says 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 is also the potential for reputational risk if there is seen to be an apparent systemic issue with gender diversity at the top of their organisations.
It adds that issues such as gender equality are increasingly high on the agenda for investors.
It suggests organisations sign up to the Treasury’s Women in Finance charter as a first step. 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; setting internal targets for gender diversity in senior management; publishing progress annually against these targets in reports on their website; and having an intention to ensure the pay of the senior executive team is linked to delivery against these internal targets on gender diversity.
Catriona Watt, Partner at Fox & Partners, says: “Financial services companies may be achieving their quotas, but the data indicates that they are not making sufficient change to close the gender pay gap.
“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.”
Meanwhile, HR DataHub’s latest analysis shows the number of firms reporting voluntarily on their ethnicity pay gap has fallen significantly in the last year. Its analysis shows just 64 UK employers published their ethnicity pay gap in 2021, compared to 129 in 2020 and 98 in 2019. It says just one in four employers have reported their data every year since it started monitoring this in 2018. The figures come amid calls for reporting the ethnicity pay gap to be mandatory for larger employers.