Mind the gap: UK executive pay remains far from equal

First, the good news. The Chartered Management Institute’s yearly salary survey published on Wednesday shows that junior female executives in the UK are earning as much as their male counterparts for the first time in the survey’s 38-year history.

Now, the bad news. Looking at the overall picture of 34,158 executives surveyed (including directors), men continue to be paid almost a third more than women doing the same jobs – and the gap is slightly wider than last year.

Critics may argue that a blunt quantitative instrument that compares salaries by job title cannot possibly reflect individual nuances in roles and responsibilities. But the sample is a large one, and the difference in pay is severe enough to cause concern.

The solution, as so often with diversity issues, is greater transparency and more open reporting of pay scales, says the CMI.

Petra Wilton, director of policy and research at the CMI, urges individuals to raise unfair pay with management. “Culturally we are not very good about talking about pay and salary rates, but actually, if asked directly, organisations should be able to explain and justify any pay differences,” she says.

At board level, there are significant differences in salaries between sectors. “In engineering there is, for example, a £45,000 [$73,000] difference in the salaries of men and women [directors], while in charities and the public sector, female directors earn slightly more than male directors,” says Wilton.

Higher representation of women on boards appears to lead to smaller gaps in remuneration between the genders. Therefore, she says, female directors in the retail sector earn slightly more than male directors, whereas in manufacturing the opposite is true.

More women (4.9 per cent) than men (2.7 per cent) at function head level were made redundant in the year to February 2011, and nearly five times more female directors (2.9 per cent) than male directors (0.6 per cent) lost their jobs in the same period.

We can only speculate why more women than men are leaving the workplace, but “if women are earning less, then it will cost organisations less to make them redundant in the short term, although in the longer term you may have to pay higher salaries”, Wilton points out.

“We have anecdotal evidence that shows more women are starting their own businesses and looking to work more flexibly,” she says. “Women are voting with their feet. They will leave a company where they are not rewarded equally for their work and go off and do their own thing.”

Quoting the government’s Commission for Employment and Skills, Wilton warns companies of the battle for talent that lies ahead. An estimated 2.2m managers will need to be recruited by 2017, just as the UK may be heading out of recession.

“We need to transform flexible working and end the pay gap [to remain competitive],” she says. “We can’t wait the 98 years that it will take for women’s salaries to be equal to men’s salaries, if progress continues at the current rates.”

 

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