The UK’s overall gender pay gap has fallen by 0.4% in the past year, according to recent research by PwC.

The mean hourly gender pay gap decreased from 12.2% in 2022/23 to 11.8% in 2023/24. Additionally, the median hourly pay gap saw a slight reduction from 9.2% to 9.1% over the same period.

Despite annual reductions, the pace of change remains slow. Since mandatory gender pay gap reporting began in 2017 for companies with over 250 employees, the mean gender pay gap has only decreased by 1.6%, from 13.4% in 2017. This slow progress suggests that a 21-year-old woman entering the workforce today may wait over 45 years for pay parity.

Slow Progress Across Organisations

PwC’s analysis indicates that nearly 60% of companies that disclosed their pay gaps for both 2023/24 and 2022/23 reported a decrease in their gender pay gap. However, most of these reductions were less than 2%. In comparison, 53.7% of organisations reported decreases in their mean pay gap in 2022/23.

Despite some progress, 20.1% of organisations reported no change or an increase of up to 2% in their pay gap, up from 17.6% in the previous year. This trend highlights ongoing struggles among companies to significantly reduce the pay gap, which often reflects long-term barriers to gender equality in the workplace.

Katy Bennett, Diversity, Inclusion, and Equity Consulting Director at PwC, commented on the findings:

“Whilst the gender pay gap continues to move in the right direction, the data once again highlights that organisations are facing difficulties in meaningfully reducing reporting figures. Societal barriers play a strong part, but there are still things businesses can do to drive change, and it is critical for organisations to truly understand gender pay gap drivers and take targeted actions to address them.”

Sector-Specific Insights

The Financial Services sector continues to report the largest gender pay gaps, reflecting ongoing gender equality issues within the sector. Potential regulations on diversity and inclusion may be introduced by the Financial Conduct Authority later this year. Despite consistently reporting the highest pay gaps, the Financial Services sector has also shown the most significant reductions compared to the previous year, alongside the Travel and Technology sectors.

Public Administration, Health, Hospitality, and Leisure sectors continue to have the lowest mean hourly pay gaps. Large organisations with over 20,000 employees generally report the lowest mean hourly pay gaps each year. Smaller organisations exhibit more volatility in pay gaps, where individual employee changes can significantly impact overall averages due to smaller employee populations. In 2023/24, mean pay gaps decreased across organisations of all sizes, except for the largest, which saw a marginal increase of 0.1%.

Challenges and Recommendations

The TUC has criticised government claims of an improving economic outlook, highlighting the significant rise in unemployment and decline in job vacancies across all English regions. The TUC’s analysis shows that the UK suffered the worst rise in unemployment among OECD countries in the first quarter of 2024, with an overall increase of 0.5 percentage points.

The union body stresses the need for a comprehensive economic strategy, including initiatives like the New Deal for Working People and the Green Prosperity Plan, to boost growth, productivity, and fair wages.

Katy Bennett emphasised the importance of understanding and addressing gender pay gap drivers within organisations:

“The global Environmental, Social, and Governance (ESG) reporting landscape is evolving rapidly, and many organisations are increasing their focus on pay fairness and transparency, as well as pay gap and diversity reporting, including beyond gender. It is now more important than ever for organisations to take a step back to fully understand the state of pay fairness and diversity within their workforce. By truly understanding any barriers that exist within the workforce and embracing pay transparency, organisations can navigate the reporting landscape and use it as a way to shape their narrative, as opposed to letting it dictate it.”

As the UK grapples with these economic and social challenges, addressing gender pay disparities remains critical. The findings underscore the need for targeted actions and comprehensive strategies to drive meaningful change and ensure fair pay practices across all sectors.