The UK’s investment community needs to go beyond stating the “obvious” underrepresentation of women in senior roles as a means of explaining its widening gender pay gap, a new report has said. The authors of the report found that the mean pay gap in the £7.7tn asset management sector increased by 0.8 per cent in the first two years of mandatory reporting, to 31 per cent.
The analysis from Big Four accountancy firm PwC and the Diversity Project, a forum for investment leaders to build a more inclusive industry culture, shows asset management is now second only to banking for gender pay inequality. Asset managers have the lowest percentage of high-paid women, with just 23.2 per cent in the upper quartile.
Chair of the Diversity Project and head of personal investing at Legal & General Investment Management, Helena Morrissey, called the situation “depressing”.
According to the report, titled ‘Time to get serious: If diversity is a business imperative, treat it like one’, diversity and inclusion are not prioritised at the board level of investment management firms. PwC and the Diversity Project said diversity has to be aligned with business priorities and that executive teams have to “set the tone” to ensure this happens.
“Diversity and inclusion metrics should be built into individual performance objectives and incentives as part of an organisation-wide accountability frame-work,” they said.
The authors added: “Statements of intent on diversity and inclusion aren’t enough to convince women and other underrepresented groups that an organisation is serious about diversity, especially if their own experiences are discouraging.”
Global financial services HR consulting leader at PwC, Jon Terry, said: “The potential for existing staff and potential recruits to be deterred by the slow and even no progress within many parts of the industry is a major stumbling block seeing diversity and inclusion as peripheral issues or a zero-sum game in a huge missed opportunity.”
Terry called on asset managers to be honest about the reasons pay gaps exist and do more than “just stating the obvious underrepresentation of women in senior roles.”
Morrissey identified a “proverbial chicken-and-egg” problem, in which “young women are discouraged from even considering a career in fund management when they see our gender pay gaps and learn that just four per cent of money managed in the UK is run exclusively by women”.
However, there are of course other areas where the pay gap is different to one found in the asset management sector. Official figures showed that the gender pay gap and the proportion of people in low paid jobs in the UK both fell to record lows last year. Median pay among British workers was still below its pre-financial crisis levels, however, the Office for National Statistics (ONS) said.
To push their cause further, a group of businesswomen launched a campaign recently calling for an end to the gender pay gap. They set up an initiative called ‘MeTooPay’, which will allow women to share examples of good and bad corporate policies and keep track of key court cases.
The proportion of employees in low-paid jobs – those which pay below two-thirds of median hourly earnings – fell to 16.2 per cent in the financial year to April 2019. This was the lowest since ONS figures began in 1997.
The gender pay gap also fell to an all-time low, with women on average earning 17.3 per cent less per hour than men last year. Investment director for Fidelity International, Maike Currie, said that although it had shrunk the gap was “a bitter pill to swallow”.
The drop in low-paid work was mostly due to recent rises in the so-called national living wage, which climbed to £7.83 an hour for those over 25 in April 2018. It now stands at £8.21 an hour. Nye Cominetti, economic analyst at the Resolution Foundation think tank, said that as a result of the wage increase, the earnings of Britain’s worst-paid “grew at least four times as fast as for Britain’s top-earners”. Nonetheless, he said a “disastrous decade” meant average pay stayed stubbornly below the level seen before the financial crisis.
Despite rising over the course of the year, median weekly earnings were 2.9 per cent, £18, lower than the peak in 2008. The gender pay gap for full time employees was largely unchanged at 8.9 per cent. At over 15 per cent, it was biggest among those aged 50 to 59.
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)
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