Rachel Reeves wants to end the UK’s gender pay gap for good – here’s how she could do it

Shadow chancellor Rachel Reeves has declared she wants to end the gender pay gap once and for all. If Labour is elected, she said^[1], firms would be required to publish action plans, increase the number of female executives and improve flexibility in the workplace.

These initiatives would be both necessary and welcome. Reeves may become the UK’s first female chancellor and finally closing the gender pay gap would be a historic achievement – boosting women’s earnings by as much as £55 billion a year^[2]. But is her plan bold enough to deliver on its promise? My research^[3] on the huge gender pay gap in the finance sector and exploring measures being taken in other countries suggests she may need to go further.

UK employers have been required to publish information about their gender pay gaps since 2017. The gender pay reporting regulations^[4] oblige firms with 250 employees or more to make public^[5] six calculations of their gender pay gaps on an annual basis.

The intention was to sharpen an organisation’s focus on equality, diversity and inclusion, and bring some much-needed transparency to the problem. In that sense, there has been some success. Observers can now monitor developments over time, by firm and sector.

However, in seven years the overall pay gap has reduced by only 1.2 percentage points from 12.8% (2017) to 11.6% (2024)^[6]. In some sectors, such as finance, gaps are significantly larger.

In 2024, the UK’s big four banks (Lloyds, HSBC, Barclays and NatWest) reported^[7] pay gaps as high as 48% and bonus gaps up to 74%. Goldman Sachs’^[8] current gap is bigger than at any point in the last six years. The lack of movement in areas like corporate and investment banking has been described in evidence to parliament as “appalling”^[9].

After the initial shock and media frenzy^[10] surrounding pay reports died down, it seems companies have become inured to the embarrassment of a bad report. It’s clear that naming and shaming organisations into action has failed.

Want more election coverage from The Conversation’s academic experts? Over the coming weeks, we’ll bring you informed analysis of developments in the campaign and we’ll fact check the claims being made.Sign up for our new, weekly election newsletter^[11], delivered every Friday throughout the campaign and beyond. So how can we stop diversity-fatigue setting in and reinvigorate this agenda? Reeves is right – simply publishing data about pay gaps is insufficient. She proposes, therefore, to demand that firms publish action plans that set out how they will close the gap. The idea is that compelling firms to have strategies in place will lead to reductions. However, many firms already voluntarily publish action plans alongside the mandatory pay gap information. So why hasn’t this led to more progress? In my new book, Architectures of Inequality^[12], I examine both progress and resistance in tackling the UK’s gender pay gap. My analysis of the plans published by firms in the finance sector shows that best practice initiatives, such as women’s networking groups and flexible working, have increased. However, my research also shows that while firms are keen to trumpet flexible working policies, they often don’t “walk the talk”. Firms including JPMorgan^[13] and Nationwide^[14] are even rolling back^[15] on hybrid working policies. At the same time, much less is being done to improve internal transparency over pay, bonus and negotiation systems, which, despite good evidence^[16] that they are effective at reducing pay gaps, are routinely disregarded. We know that no one likes to talk about pay. But practices such as salary secrecy, performance-related pay systems and individual pay negotiation only serve to reinforce and protect inequities. The government made some attempt to address this with a voluntary pay transparency pilot scheme^[17] launched in March 2022. Participating employers committed to publishing salaries on job adverts. However, in line with previous failed voluntary policy efforts^[18], salary transparency remained at an all-time low^[19] and, two years on, the scheme seems all but forgotten. The UK is no longer a leader on this agenda and government and employers could learn from developments abroad. Australia^[20], Canada^[21] and parts of the US^[22] have implemented more extensive transparency requirements, such as banning employers from requesting salary information from job applicants and enhancing the right of women to know what male colleagues earn.

References

1. ^{^} she said (www.theguardian.com)
2. ^{^} £55 billion a year (www.pwc.co.uk)
3. ^{^} research (profiles.sussex.ac.uk)
4. ^{^} gender pay reporting regulations (www.gov.uk)
5. ^{^} make public (gender-pay-gap.service.gov.uk)
6. ^{^} 12.8% (2017) to 11.6% (2024) (www.thetimes.co.uk)
7. ^{^} reported (gender-pay-gap.service.gov.uk)
8. ^{^} Goldman Sachs’ (www.ft.com)
9. ^{^} “appalling” (committees.parliament.uk)
10. ^{^} media frenzy (theconversation.com)
11. ^{^} election newsletter (theconversation.com)
12. ^{^} Architectures of Inequality (bristoluniversitypress.co.uk)
13. ^{^} JPMorgan (www.businessinsider.com)
14. ^{^} Nationwide (www.telegraph.co.uk)
15. ^{^} rolling back (www.personneltoday.com)
16. ^{^} good evidence (www.gov.uk)
17. ^{^} voluntary pay transparency pilot scheme (www.gov.uk)
18. ^{^} voluntary policy efforts (www.theguardian.com)
19. ^{^} all-time low (www.adzuna.co.uk)
20. ^{^} Australia (www.wgea.gov.au)
21. ^{^} Canada (www.canada.ca)
22. ^{^} parts of the US (www.shrm.org)
23. ^{^} Mark D Bailey/Shutterstock (www.shutterstock.com)
24. ^{^} pay transparency (www.consilium.europa.eu)
25. ^{^} beyond the UK requirement (ravio.com)
26. ^{^} board level (www.europarl.europa.eu)
27. ^{^} catch up (www.pwc.co.uk)