The pace of gender equality in the financial services industry is slow, with the representation of women at senior levels of companies one of the major issues, according to a new report.
The financial services industry is making slow progress in improving its gender pay gap, with female representation in senior management the biggest barrier and remaining flat at 33% in 2021 compared with 2020, according to a review.
The review by the New Financial think tank also found that 78% of firms that had signed up to the voluntary Women in Finance Charter are meeting or are on track to meet their targets, up 5% on last year.
The report looks mainly at the period 2017 to 2020 where the mean gender pay gap improved by three percentage points from 31% to 28%.
It says this slow rate of progress is due to the very small increase in representation of women in more senior (and higher paid) roles between 2017 and 2020 and the fact that the distribution of women at different levels across the industry flatlined, with the only difference being a one percentage point increase in female representation in the top pay quartile from 28% to 29%.
The report says that, as a sector, financial services is still far behind the national average. The mean gender pay gap in financial services (28%) is twice the national average (14%). If the financial services industry continues improving the pay gap at its current pace, it will reach the national average in 2034. Moreover, the high gender pay gap within financial services disguises the differences between sectors, with investment banks and wealth managers having gender pay gaps of more than 35% and progress there being much slower – and almost non-existent.
Women represent just 29% of staff in the highest pay quartile (compared with 40% in the wider economy) and 35% in the top half (versus 43%). Women account for less than a quarter (24%) of the highest paid staff in asset management and less than a fifth (17%) at investment banks. This problem is exacerbated by over representation of women at the bottom end of the pay scale. Nearly 60% of staff in the financial services industry in the bottom quartile are women.
The report finds some positives, however. It notes that the gender pay gap and senior female representation (by pay) improved in every sector. Roughly two thirds (65%) of all firms improved their gender pay gap and nearly two thirds (63%) improved representation of women in the top pay quartile. However, of the roughly third of all financial services firms that reported, the gender pay gap stayed the same or widened and the representation of women stayed the same or fell. At one fifth of firms, both metrics deteriorated.
The report says: “The most effective way of tackling the pay gap is to increase representation of women at the top – 75% of the firms that improved their gender pay gap also improved the representation of women in the top pay quartile, and 77% of firms that improved the representation of senior women also improved their gender pay gap.”