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Gender Pay Gap amongst Managers Higher Than Previously Thought

A new piece of analysis has revealed the worrying news that the gender pay gap amongst the UK’s 3.3 million managers is around £3,000 more than previously thought.

New Reporting Requirements

The analysis, by the Chartered Management Institute (CMI) and XpertHR, was carried out in line with calculations set out in regulations introduced as part of the Government’s new gender pay gap reporting requirements.
 
It found evidence of a pay gap of 26.8%, with male managers on average out-earning female peers by £11,606 a year. This includes salary and bonuses, as well as perks such as car allowance and commission.
 
Previous analyses of the pay gap based on managers’ basic salaries had put the gap at 23.1% last year, or £8,964. Even without applying the new calculations, this year’s data apparently shows that this basic salary gap is, if anything, slightly worse at 23.6%, or £9,326.
 
The Government’s reporting regulations came into effect in April 2017, and require large employers (250+ employees) to publicly disclose the size of their gender pay gap. According to CMI, just 72 out of the 7,850 UK companies covered by the new regulations have so far fulfilled their obligations.
 

Women Excluded from Senior Roles

The analysis also found that junior management positions are predominantly filled by women (66% vs 34% men) and senior positions are much more likely to be filled by men (74% of director-level roles were occupied by men vs 26% by women).
 
To make matters worse, even when women do manage to progress to these more senior roles, the gender pay gap appears to widen even more. Men in director-level positions earn an average of £175,673 while the average figure for women is £141,529 – an average gap of £34,144.
 
The problem is further compounded by inequalities in bonus payments, with the gender bonus gap across all managers standing at 46.9%. This increases considerably at the most senior level, where the average bonus for a male CEO is £89,230 compared to £14,945 for a woman – an 83% bonus pay gap.
 
“Too many businesses are like ‘glass pyramids’ with women holding the majority of lower-paid junior roles and far fewer reaching the top,” commented CMI’s chief executive Ann Francke. “We now see those extra perks of senior management roles are creating a gender pay gap wider than previously understood. The picture is worst at the top, with male CEOs cashing-in bonuses six times larger than female counterparts.”
 
“Our data show we need the Government’s gender pay gap reporting regulations more than ever before,” she added. “Yet, less than one per cent of companies have reported so far. Time for more companies to step up and put plans in place to fix this issue. It’s essential if UK companies are to survive and thrive in the post-Brexit world.”
 

Pay Inequality amongst MBA Graduates

Of course, pay inequality amongst managers is by no means a problem unique to the UK. A recent study by Forbes of MBA graduates in the US found that women earn less than men as soon as they leave business school, and after five years in employment this gap has further widened.
 
On average, male MBA graduates earned 22% more than women. There was significant variation in the pay gap between sectors however. The biggest gap was to be found amongst those working in management (36%), whilst those working in healthcare apparently experienced the lowest gender pay gap (3%).
 

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For expert legal advice on pay inequality, and other types of work-place discrimination, then contact our specialist employment lawyers today.

 

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