‘Shecession’: what can be done to prevent the decline of women’s economic empowerment?

19 March 2021

Last week we reflected on this year’s International Women’s Day theme #ChooseToChallenge and felt the impact of COVID-19 on women in the workplace cannot go without a mention.

For the first time in nearly ten years, women’s economic empowerment in the workplace is set to decline according to PwC’s latest Women in Work Index, creating what has been coined a “shecession”, caused largely by the COVID-19 pandemic.

Last week, the Guardian reported that female directors at the UK’s largest financial services firms earn on average two-thirds less than their male counterparts, with average pay for female directors standing at £247,100 (66% lower than the £722,300 average pay for male directors).  This is a clear—and depressing—indication of the fact that there is (still) much work to be done to promote equality between the sexes in the financial services sector, a topic which has been highlighted time and again (and on which we have previously commented).

Also last week, signatories including Caroline Nokes (Chair of the House of Commons Women and Equalities Committee), Ann Cairns (Global Chair of the 30% Club), and Ann Francke (CEO of the Chartered Management Institute) penned a letter to The Telegraph expressing concern over the impact of lockdown measures on women in business. Arguing that the issue is being overlooked by the Government, the letter stated that women in business are being severely affected by the pandemic, and that the damage “could take decades to repair”. The letter called on Ministers to “show the Government’s commitment to backing businesswomen in Britain, and that the female workforce is considered a vital part of the UK’s recovery plan”.

Gender pay gap reporting – another extension

Gender pay gap reporting (explored in more detail in our previous blogs here and here), which has been compulsory for UK companies with 250 or more employees since 2017, requires that such companies report the difference between the average (mean and median) pay of male and female workers.  The aim of the legislation introducing this requirement was to increase transparency and encourage companies to identify and address disparities in pay.

However, due to the impact of the pandemic, it was announced in February 2021 that employers will have an additional six months after the current deadline (4 April 2021) to report their gender pay gap information for the 2020/2021 reporting year (i.e. until  5 October 2021). The reporting requirement for the 2019/2020 year was previously suspended at the outbreak of COVID-19 meaning that, with this most recent extension of time, organisations will have been afforded a two and a half year grace period for reporting.

Although this latest extension to enforcement action is an attempt to balance the need to continue addressing the gender pay gap with the challenges faced by organisations due to the pandemic, there is widespread concern that it may undermine efforts to tackle the gender pay gap, sending the wrong signal to employers by allowing them “to take their foot off the pedal when it comes to their commitment to closing the gender pay gap”. This, at a time when it appears the pandemic is having a more adverse impact on women in the workplace, is significantly less than ideal.  Employers are still being encouraged to report their gender pay gap ahead of the usual deadlines wherever possible, but the reality is that this is unlikely to happen, especially when one considers the fact that very few organisations have published their gender pay gap statistics for last year (there being no danger of any adverse consequences or enforcement action at the current time).  

Why is this important?

PwC’s report shows that women’s progress in work is expected to fall by more than 2% between 2019 and 2021, and warns that in order to undo the damage caused to women in the workplace by the pandemic within the next decade, progress needs to be made twice as quickly. Existing gender inequalities, for example those relating to childcare, combined with the impact of COVID-19 on sectors with a high number of female employees, mean that women’s jobs are being disproportionately impacted by the pandemic. The unequal weight of unpaid domestic work and caring responsibilities carried out by women has already led to more women than men leaving the UK workforce. 

Prioritising gender pay gap reporting together with preparing targeted action plans will be crucial in helping to mitigate the problems faced by women in the workplace and preventing further loss of female talent from the workforce.

Alongside gender pay gap reporting, another way for companies in the financial services sector to encourage and actively promote and support change is to sign up to the Government’s Women in Finance Charter. The Charter was launched by HM Treasury in 2016, following a 2015 review into the representation of women in senior roles in financial services. Under the Charter, signatory companies pledge to promote gender balance across financial services by: having one member of their senior executive team responsible and accountable for gender diversity and inclusion; setting internal targets for gender diversity in senior management and publishing progress annually against these targets; and ensuring the pay of the senior executive team is linked to delivery against these internal targets on gender diversity.

If steps are not taken to address the disproportionate impact of COVID-19 on the female workforce, the reality is that we will lose a significant portion of our talent-pool as more women leave their jobs; damage which could set the UK workforce and wider economy back decades. It seems only right that policies created to address economic recovery should also address the impact of COVID-19 on women in work. The Government and businesses together must address the underlying gender inequalities that have been exacerbated by the pandemic, actively work to close the gender pay gap, and #ChooseToChallenge the status quo.

FURTHER INFORMATION

If you have any questions or concerns about the content covered in this blog, please contact a member of the Regulatory team.

 

ABOUT THE AUTHORs

Özlem Mehmet is a Professional Support Lawyer in our Employment Team. Before joining Kingsley Napley, Özlem was a Tutor and Team Leader at BPP University’s Law School, teaching on the Legal Practice Course.  She taught the Employment Law, Business Law & Practice, Corporate Finance and Equity Finance modules of the course, as well as the skills modules of Interviewing & Advising and Professional Conduct & Regulation.  She also supervised a number of Masters level projects on employment law related topics.

Francesca Lopez joined the firm in December 2012 and specialises in all aspects of employment law, having completed her training contract at Herbert Smith Freehills LLP. She advises a wide variety of individual and corporate clients on contentious and non-contentious matters .

Lucy Bluck is a trainee solicitor at Kingsley Napley. She is currently in her fourth seat in the employment team. Her first seat was in the private client team, where she was working on matters relating to wills, tax and trusts, probate and Court of Protection proceedings and her second seat was with the family and divorce team where she assisted with cases involving finance and children proceedings. Her third seat was with the dispute resolution team.

 

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