A Surprising Stall in Gender-Pay Gap Progress

It was among the first regulations to require firms to disclose their gender pay-gap data—a progressive step aimed at nudging employers to narrow the pay differences between men and women. Now, five years after the passage of that law, the gap, remarkably, is all but unchanged.

According to government records, men in 2022 were earning 8.3% more than women, about the same gap as in 2017-18. Interestingly, the gap actually narrowed before the law was enacted, from 17.4% in 1997 to 8.6% in 2018. Today, a mere 3% of companies pay women 10% or more than they pay their male employees, other analysis shows.

To be sure, the UK can still boast improvement in other areas of gender equality, particularly in the boardroom. In 2010, women held just 12% of the board seats at the UK’s largest 350 public companies. As of last year, that share had grown to 40%.

Part of the pay problem, experts say, may be tied to the wave of resignations that occurred in 2021. As people quit, managers who needed replacements fast began doling out ad hoc retention bonuses and pay raises—typically to men. “In 2021, some executives made some panicked decisions,” says Ben Frost, a senior client partner in Korn Ferry's Products business. “Men are more likely to shout about this stuff,” he says. “And those pay raises increase the gender-pay disparity.”

Another factor may be the fading of attention to the pay gap as an issue. “The cycle of news has rolled on,” says Claire Field, a Korn Ferry senior principal. “The outward pressure was very strong at the beginning.”

But experts say the biggest block may be historical: there have traditionally been more men at the upper levels of companies, where pay is significantly higher. “Executives cannot just turn over the entire workforce and replace it with a new one,” Frost says. 

As a result, experts say, firms seeking to reduce the pay gap need to get more serious about placing women in larger roles. It will take time, says Fields. “It’s a cultural shift that can take 20 years,” she says. “It’s not a lone one-off, one-year intervention.”

Instead of hiring from outside, experts say, savvy companies typically create an internal pipeline of women with the talent and potential to take on top roles in the future. Frost says that will involve exposing women to roles where they can get the requisite experience for C-suite jobs. There also needs to be a bit of faith from senior executives. “Savvy executives support people in their journey, then are willing to give them the job in the end,” he says. 

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