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03 April 2010

Andrea Murray, Group Director of Strategy at the Equality and Human Rights Commission, said:

“We welcome the Treasury Committee’s report on Women in the City. Much of its findings mirror what the Commission has found during its own inquiry into the finance sector.

“What is clear is that urgent action is needed to address both the barriers that women face in progressing their careers in the finance industry and the gender pay gap – which is larger than any other sector in the economy. A modern Britain should be shocked at a gender pay gap within this sector that is almost twice as bad as the economy-wide gap experienced by women back in the 1970s.

“Finance organisations need to take action to bring down arbitrary barriers and change practices that, intentionally or not, inhibit women’s success. As the Committee has recognised, these actions include conducting annual equal pay audits and implementing flexible working practices which employees feel they can take advantage of without damaging their prospects. By doing this, finance organisations have the chance to boost morale, bring on new talent, and maximise the potential of their existing employees.

“The Commission will continue to work with companies in the finance industry and the FSA to take forward the recommendations of the Commission’s own inquiry and to support progress in this area.”

For more information contact the Equality and Human Rights Commission Media Office on 02031170255, out of hours 07767272818. 

Notes to editors

Inquiry Terms of Reference

The Equality and Human Rights Commission is carrying out an Inquiry into sex discrimination in the financial services sector under section 16 of the Equality Act 2006. The terms of reference are to:

1. Inquire into the gender pay gap and pay trends across the financial services sector
2. Inquire into the extent and nature of sex discrimination in relation to recruitment, terms and conditions, promotion, career paths, retention and workplace culture across the financial services sector
3. Examine measures used by employers and other organisations to address sex discrimination and inequalities in pay and status and to assess the effectiveness of such measures
4. Assess and analyse the differential impact of job losses in the sector
5. Consider any other matters as appear to the Commission to be relevant to the above
6. Make such recommendations as are appropriate.

The Commission’s Phase 1 report launched in April 2009 included an analysis of Labour Force Survey and the Annual Survey of Hours and Employment and found that:

• The gender pay gap for annual gross earnings (i.e. all earnings, irrespective of hours) was 60 per cent, much higher than the economy-wide gender pay gap of 42 per cent.
• Based on average full-time annual gross earnings the gender pay gap was 55 per cent, compared with 28 per cent overall.
• Based on average full-time hourly pay (excluding overtime), the gap was still comparatively high at 40 per cent versus 17 per cent for Britain generally.

The Commission’s Phase 2 report took a detailed look into the pay, policies and practices of 44 organisations employing the equivalent to 22.6 per cent of the workforce in the sector.

This has revealed that bonuses are a significant factor behind the gender pay gap within the organisations with men receiving five times the performance pay of women,

The inquiry delivered a number of key recommendations. These include to:

• Appoint a board member to set the tone, mainstream the issues and drive change.
• Implement a staff training and communications programme on gender equality and diversity and on equal pay to influence the understanding and behaviours of decision-makers within the organisation.
• Incorporate equality and diversity into organisational and individual objectives.
• Develop and carry out non-discriminatory job descriptions and analytical job evaluations that are flexible enough to meet the business’ needs but that set a clear framework for recruitment, promotion, pay and reward structure.
• Undertake annual equal pay audits and publish the data.
• Make sure maternity, paternity and parental support schemes are in place and are effective.
• Monitor the implementation and effect of policy on gender equality.