This year, the data shows that employers of all sizes are continuing to see reductions in their gender pay gaps, building on the trend we identified in both 2022 and 2023. Whilst all sectors continue to have a gender pay gap, the gaps remain the largest in sport, financial services, construction and tech.

A more drastic reduction has been seen in mean and median bonus gaps this year, likely impacted by employers paying one-off cost of living payments in the relevant period.

This year, we also look ahead to possible reform should Labour succeed in this year's election.

Gender pay gaps in 2023

Once again, the data shows that employers, on average, are seeing reductions in both their mean and median pay gaps. This year, employers have seen greater reductions in their pay gaps compared to 2022.

Mean change in mean and median pay gap

Overall, 86.3% of employers have positive mean pay gaps i.e. in favour of men (down from 87.6% last year). 78.4% have positive median pay gaps (down from 79.5% last year). Some employers have negative pay gaps i.e. in favour of women: 13.1% have negative mean pay gaps (up from 11.9% last year) and 13.6% have negative median pay gaps (up from 12.7% last year).

Similar to last year, there are 39 employers who have reported suspiciously “perfect” gaps with both 0% mean and median pay gaps. Only 1 of these 39 employers had no women in the workforce, making the “perfect” gaps inevitable under the methodology required by the Regulations. For the remaining employers, as we explained last year, a 0% mean pay gap is a statistical improbability, suggesting issues with the calculations.

Gender pay gaps by industry

We have again looked at the Standard Industrial Classification codes (based on the 2 digit division level) to consider the gender pay gaps by industry. The findings from this year closely echo last years’ analysis. For example: As in 2022, sports activities had the biggest mean pay gaps on average (which could be influenced by very highly-paid footballers on the men’s teams). Financial services, construction and tech (included below in “computer programming”) still have the largest gender pay gaps. Restaurants still have the lowest gender pay gaps.

Mean and median gender pay gap by sector

We have also analysed how the mean and median gender pay gap has changed across sectors in comparison to last year. As shown below, almost all sectors have seen a reduction although a handful have seen increases, particularly to the median pay gaps in different manufacturing industries.

Change in mean and median gender pay gap by sector

Gender pay gaps by company size

Mean change in mean gender pay gap by employer size

(positive values indicate increase, negative indicate decrease)

Mean change in median gender pay gap by employer size

(positive values indicate increase, negative indicate decrease)

Employers of all sizes saw roughly equal changes on average to gender pay gaps this year: mean pay gaps fell by 0.6-1%, while median pay gaps fell by around 0.6%. In previous years, larger companies have been able to make greater progress than smaller companies. Gaps in smaller companies were falling by around 0.2-0.4% each year, whereas gaps in larger companies were falling by 0.8% or more.

The data shows that companies of all sizes are therefore making reductions to their pay gaps, but the size of reductions may be increasing for smaller companies but decreasing for larger companies. The reasons for this may be related to the pressures that employers of different sizes face. 

Smaller companies may have greater room for improvement and flexibility in implementing new initiatives. There is now more evidence and research available around what diversity measures work and are effective. Smaller employers can be more flexible and implement these more easily. This might be why they are seeing greater reductions in gaps than previously and their progress accelerating. 

Larger employers, on the other hand, may be reaching a “saturation point”. Larger employers, having had the resources to develop robust diversity and inclusion strategies in previous years, may have already made substantial progress in narrowing their gender pay gaps. Consequently, any further efforts to address pay disparities might yield diminishing returns over time. This may be why reductions in larger companies may be slowing (although the average reduction is still greater than with smaller companies). 

This underscores the importance of continually evolving strategies tailored to the specific needs and challenges of each organisation, regardless of its size. What worked in the past may not be so effective in the present. Many gender pay gap reports contain statements by employers that they are “committed to taking the long-term action that is required”. Employers of all sizes should ensure that these are more than just words and that this is an approach they follow if they want to drive down their gaps.  

Sector breakdown of employers by size

Bonus gaps in 2023

Bonus gaps are calculated using all bonuses paid over the period 6 April 2022 to 5 April 2023. During this period inflation skyrocketed and there was a continuing cost of living crisis. Many employers responded to this with a combination of pay rises and one-off cost of living payments. These one-off payments fall squarely within the definition of bonus for gender pay gap reporting and so have affected this year’s bonus gaps.

The degree to which this is a factor is clear from the data: in 2023, around 7,900 employers paid any bonus to men or women. Contrast this with previous years: from 2018 to 2021, around 6,000 employers paid any bonus in each year. This is a significant difference.

Mean and median bonus gaps have fallen significantly this year. Bonus gaps are calculated only from those that received a bonus. In 2023, lots of people will likely have been brought into the bonus gap calculations because of receiving relatively low value cost of living payments, and this is likely to be the reason why gaps have fallen so much compared to 2022.

Mean change in mean and median bonus gap

Quartiles: proportion of men and women in highest and lowest paid roles

Employers continue to, on average, increase the proportion of women in the highest paid (upper) quartile. Upper quartiles have a 0.5% higher proportion of women. Over 54% of employers saw an increase in the proportion of women in the highest paid (upper) quartile.

Boosting female representation in top-paying positions is crucial for narrowing the gender pay gap and fostering diversity at the highest levels. While many employers rightly prioritise this, they often overlook a crucial aspect: the lowest-paid quartile. Shifting the balance by increasing male representation in these roles not only helps bridge the gender pay divide but also offers a swift solution. These positions are often low skilled, with high turnover and minimal barriers to entry. They present a prime opportunity to drive greater gender pay gap change. The data suggests that more employers are realising that solving the gender pay gap requires a more holistic approach. More employers are seeing increases in the proportion of men in their lowest paid roles: from 45.7% in 2019 to 48.6% in 2023. Continuing a trend starting in 2021, this year’s data again shows a very small increase in the proportion of men in the lower quartile.

Mean change in proportion of men and women in upper and lower quartiles

Proportion of employers that increased women in upper quartile

 Proportion of employers that increased men in lower quartile

Do we have the full picture?

Last year, 10,192 employers published their gender pay gaps within the deadline, but the total number of reports subsequently rose to 10,885.

This year, 10,379 employers have reported within the deadline. This means that there are probably around 400-500 still to publish.

What are the consequences of late reporting?

The Equality and Human Rights Commission has said that it will take enforcement action against those employers that have failed to report their gaps on time for 2 consecutive years, so some employers may face letters from the EHRC in the coming weeks and months. There are 262 employers who published late last year and did not publish on time this year. Some of these employers that are yet to publish might not have reporting obligations this year. For example, if they have merged with other entities, or their headcount has fallen below the 250 threshold.

For the past two years, the EHRC has published its list of those employers who were late to report. Their list is much shorter: just 8 last year and 28 the year before. The EHRC states that it can impose fines on employers that do not comply with their reporting obligations, but as we’ve written before, there’s uncertainty as to whether the EHRC has the legislative authority to do this.

What does the future hold for gender pay gap reporting?

The next UK general election is anticipated to take place later this year, with Labour consistently showing ahead in the polls. The Labour Party has spoken about its plans to develop gender pay gap reporting. Although its plans are still vague, it is clear that the Labour Party will require much more from employers, including a requirement to develop and publish “action plans” and to include outsourced workers in their reporting. We may also see a tougher new approach to enforcement.

The Pay Transparency Directive – which leans much more heavily into equal pay issues – is also likely to be influential, with future legislative change being drawn from this.

We help dozens of employers each year with gender pay gap reporting in the UK and Ireland. Find out more about our services or contact us.