Gender Pay Gap, Voluntary Interventions and Recession: The Case of the British Financial Services Sector
| Date | 01 June 2019 |
| Author | Geraldine Healy,M. Mostak Ahamed |
| DOI | http://doi.org/10.1111/bjir.12448 |
| Published date | 01 June 2019 |
British Journal of Industrial Relations doi: 10.1111/bjir.12448
57:2 June 2019 0007–1080 pp. 302–327
Gender Pay Gap, Voluntary
Interventions and Recession: The Case
of the British Financial Services Sector
Geraldine Healy and M. Mostak Ahamed
Abstract
State institutions and trade unions put pressure on the British financial services
sector to reform its gendered practices and reduce its gender pay gap following
both the recession and the Equality and Human Rights Commission (EHRC)
Inquiry (2009). This article considersthe eect of these pressures by comparing
the gender pay gap pre-,during- and post-recession periods. Using Labour Force
Survey data, the articlefinds a marginal pay gap reduction in the post-recession
period, a reduction that was greater in financial services than in the rest of
the economy. However, the financial services pay gap remained resilient and
substantially higher at the top of the earnings distribution. Union membership
and collective bargaining were shown to reduce the pay gap including for women
members with children. In contrast, countervailing factors, including ethnicity
and post-recession longer working hours, contributed to the pay gap. The study
reveals the limitations of voluntary interventions against a resilient gendered
culture.
1. Introduction
It is ten years since the 2008/2009 recession and when financial services was
required by the Equality and Human Rights Commission (EHRC) (2009) to
voluntarily reform its gendered practices including its gender pay gap, bonus
and gendered culture. It is particularly timely to revisit financial services’
gender pay gap in the light of the UK Government’s aim to ‘eliminate the
gender pay gap within a generation’ (Government Equalities Oce 2016) with
pay transparency as a means towards this aim. Government’s business-case
rationale for focusing on the pay gap is:
Geraldine Healyis at Queen Mary University of London. M. Mostak Ahamed is at the University
of Sussex.
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2019 John Wiley & Sons Ltd.
Gender Pay Gap, Interventions and Recession 303
Employers are losing out by not eectively utilising women’s academic
achievements, experience and talents. Equalising women’s productivity and
participation rates would makea significant positive impact on our economy.
(Government Equalities Oce 2016: 4)
The state viewed pay transparency as one solution to the gender pay gap.
Initially, voluntary pay gap reporting was required following the Think Act,
Report (Government Equalities Oce 2015), but did not garner employer
support. Secondary legislation followed (section 78 of the Equality Act
2010 (Gender Pay Gap Information) Regulation 2017) requiring private and
voluntary sector employers with 250+employees to report their gender pay
gap to Government and publicly on organizations’ websites by 5 April 2018.
While compliance is compulsory,sanctions for non-compliance were unclear.
Moreover, the lead-up to April 2018 was the first time that the majority of
organizations examined their pay gaps. This was not the case in financial
services where a light was shone on its pay gap and equality practices by the
EHRC Inquiry (2009) and subsequently by the Treasury (2010a, 2016, 2018)
and by unions (see Section 2 below). This study shows the change in pre-,
during- and post-recession pay gap,in t hecontext of voluntary interventions,
and adds to the literature on paysystems post-recession (Stokes et al. 2017). It
augments our understanding of sector-specific pay gap studies as opposed to
national or regional studies (Blau and Kahn 2017; Dex et al. 2008; Drolet
and Mumford 2012; Tomaskovic-Devey 1993). Moreover, it reveals state
and union initiatives to change financial services’ culture and pay gap. Our
rationale for focusing on financial services’ pay gap is four-fold. Financial
services: has one of the highest pay gaps in the UK; became the subject of
public scrutiny and concern following the 2008/2009 economic crisis; was the
subject of an EHRC Inquiry in 2008; and has long been recognized for its
male-gendered culture (McDowell 2008; ¨
Ozbilgin and Woodward 2004).
We begin the article by considering explanations for the pay gap oered in
the literature and consider what the implications these separate but related
explanations may mean for the financial services’ pay gap. We then outline
our research questions. Taking a multi-pronged approach (Dickens 1999), we
consider financial services’ context, particularly voluntary state (drawing on
the EHRC Inquiry and subsequent Treasury reports) and union initiatives,
and financial services’ organizational culture. We then turn to our empirical
analysis of the pay gap overtime drawing on Labour ForceSurvey (LFS) data
followed by discussion and conclusions.
2. Explanations for the gender pay gap
Our investigation is shaped by the various interlinked and overlapping
explanations of the pay gap. Firstly, gendered dierences in human capital
(Becker 1985) stress dierential investment in skill acquisition and paid work
between men and women. Notwithstanding women’s increased investment
in education and careers, often exceeding that of men, the human capital
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2019 John Wiley& Sons Ltd.
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