The EHRC Inquiry into sex discrimination and unequal pay in the Financial Services industry is a shocking reminder of the prevalence of discriminatory practices.  They persist despite being illegal for the last 35 years.  Financial institutions must sort out their pay systems and abolish discriminatory practices.  The EHRC must get their teeth into those that refuse or fail to do so.

Key findings of the Inquiry are:

• The pay gap: women working full-time in the finance sector earn 55% less per year than men working full-time.  The gap between male and female full-time earnings is twice as large as the average gap across the economy.

• Pay transparency in the sector is poor.  Performance pay criteria are particularly opaque. This may account for the fact that in 42 cases there was a gender gap of 80% for performance-related pay.

• The pay gap is not historical: 86% of new female recruits earn less than their male colleagues.

• Occupational segregation is more marked in financial services than in the economy as a whole. Men occupy two-third of managerial and senior jobs.

• The pregnancy penalty is significant. Women returning from maternity leave often find a permanent reallocation of their clients, loss of bonuses and adverse performance assessments. Pregnant women and those on maternity leave are more likely to be made redundant.

• The long hours culture and resistance to flexible working, particularly for senior employees, disadvantages women with children. Those seeking flexibility often have to opt for demotion to obtain it.

• Promotion is often at the discretion of middle managers, who are predominantly male. Women are more likely than men to have experience a peer being promoted above them.

• Informal networking and recruitment exacerbates the problem as it is often male-oriented.

Some women sue their employers for such discrimination and are paid large sums to keep quiet about the discrimination they have suffered. As discrimination lawyers we hear the same story being repeatedly told and sometimes about the same financial institution; but the stories are never told publicly. The EHRC’s Inquiry has shone a powerful light into this darkness.

Transparency and accountability in pay and bonuses is key. They are essential anyway to satisfy the public that we will not continue to pay the penalty of high bankers’ bonuses for the failure of the financial system. They are also needed to satisfy female employees that they are being paid and treated fairly.

The next stage of the Inquiry is the most critical. It is about targeted solutions to remove the inequalities identified.   There are three obvious recommendations to start with:

• Transparency in the workplace in pay and bonuses, the gender breakdown of employees by grade and the monitoring of redundancies of employees who are pregnant or on maternity leave;

• Pay audits with assistance given by the EHRC where requested;

• Enforcement action by the EHRC to take legal action against the discriminators.

We look forward to working with the EHRC on this. If it has teeth there is a real possibility of making a difference to women’s lives and to the health of the financial institutions themselves.

For more information please contact Chris Benson or Joanna Wade on 020 7650 1200