Are British employers making progress in reducing the gender pay gap?

This finding is based on pay information collected by workplaces on the snapshot dates of 31 March 2023 (public sector employers) and 5 April 2023 (private and voluntary sector), which they had to submit 12 months later.

Another way of analysing the gender pay difference is by looking at the mean pay. Using the same data source, we find that the mean pay gap was 11.8%. Or the average female employee earns 88 pence for every pound received by the average male worker.

Of course, the gap in earnings does not necessarily mean that women are being treated differently than men because of their sex. The law gives a woman the right to the same pay as a man (and vice versa) when carrying out 'like' work, work rated as equivalent by analytical job evaluation study, or work of equal value.

However, gender pay gap reporting does not compare men and women doing the same, eqivalent or work of equal value. Instead, it looks at the pay of the typical (mean or median) female employee with that of the typical male employee at the same workplace. Often the pay gap is driven by several factors, such as the gender imbalance at senior level, or occupational segregation. This can reflect such people management practices as recruitment and promotion polices, flexible work arrangements, and training and development opportunities. It can also reflect what is going on outside the organisation, such as assumptions as the jobs that men and women should do.

The median is the midpoint of the range and is more representative of what people get paid. By contrast, the mean is useful for giving an indication about how the whole wage bill is divided, accounting for both the impact of high earners (often men) as well as low earners (often women). As shown in Table 1, the mean is higher than the median because it has been pushed up by some very highly paid men.

Are we nearly there yet?

Table 1 shows that, in 2024, both the median and mean gender pay gap reported are the lowest since records began, but progress over this period has been slow.

Table 1: How the gender pay gap has varied between 2017 and 2024

As well as over time, the gender pay disparity varies by sector, region and employer size. Table 2 shows how the gender pay gap varies across the British economy.

The largest pay gaps are in construction, finance and insurance, and education. By contrast, the smallest are in accommodation and food services; human health and social work; and arts, entertainment and recreation services.

Table 2: The gender pay gap, by industry

As well as how people are recruited, promoted, developed or employed, how people are rewarded can also play a part in the gap. For example, in the finance sector, whether women are in roles eligible for bonuses – and the size of these bonuses – both contribute to the size of the gap. When most people are paid at or near the minimum wage, the gender pay gaps tend to be low, such as for those working in recreation, hotels and entertainment.

How does the gender pay gap vary across Britain?

The size of the gender pay gap also varies across Britain. Table 3 shows that the highest gender pay gaps are in London and southeast England, while the lowest are in Scotland and Wales. The pay gap in London and the southeast will be influenced by the number of big financial and professional services firms based there, which tend to have large pay gaps.

Currently, the Northern Ireland Assembly has not introduced gender pay gap reporting to Northern Ireland. However, given that it is probable that the EU Pay Transparency Directive will apply to Northern Ireland via Article 2 of the Windsor Framework, it will only be a couple of years before employers based there will have to comply, and report gender pay gap data.

Table 3: The gender pay gap, by region

Finally, our analysis shows that the gender pay gap varies depending on how many people an organisation employs (see Table 4). For example, the gender pay gap is widest among those employing between 500 and 999 workers and narrowest among those with 20,000 or more people. This might be because larger workplaces are more likely to employ people in a wider range of roles, and so there is less likelihood of occupational segregation than in smaller employers.

While it is not a legal requirement for small and medium-sized employers to report gender pay gap data, 412 organisations with fewer than 250 employees still did so this year. Among these, the median pay gap is 6.44%. Because there is no legal compunction for these employers to report, it might be that only those that are at the forefront of tackling gender workplace disparities have done this and so the gender pay gap is smaller than it would otherwise be if more small and medium-sized employers had submitted their data.

Table 4: The link between employer size and the gender pay gap

Currently, the law does not require employers to justify the size of their gender pay gaps. Nonetheless, the government encourages organisations to publish a narrative explaining their figures and any actions they are taking. When submitting their gender pay data to the government reporting website, organisations can give a weblink to their narrative that people can access.

Table 5 shows that, in the first year of reporting, almost three-quarters of employers submitted a URL link to their narrative but, since then, the percentage has dropped to around a half.

Table 5: Number of employers providing a narrative explaining their pay gaps

One explanation for this decline is that fewer employers see reporting and tackling the gender pay gap as a workplace priority. For example, the CIPD’s recent Pay, performance and transparency survey report, supported by ADP, found that 17% of large organisations admitted they had not submitted a gender pay gap report in the past 12 months, despite the legal consequences. This could also explain why the drop in the gender pay gap has so far been small.

What can employers do?

Pay gap reporting is an important part of ensuring a fair workplace, as well as having clear business benefits, such as attracting and retaining talent by showing a commitment to good practice.

So, by creating a narrative, HR teams help their employers better understand the barriers their people may face, not only relating to pay, but also in terms of recruitment, promotion, development and flexible working opportunities. Having an effective narrative and action plan can help identify and tackle the causes of gender inequality.

For employers wishing to improve their gender balance, practices found to help include:

• widening flexible working opportunities
• reviewing the criteria and assumptions around recruitment and promotion
• analysing the outcomes of people policies and practices. 

However, there are drivers of the pay gap that exist outside of the workplace, such as stereotypes about the jobs that women and men should do. So, for effective progress in reducing the gender pay gap, government and society must also play their roles.

Find out more about gender pay gap reporting, how to calculate it for your organisation and how to report it in our guide.