UK suffers the largest annual fall in ranking on PwC’s Women in Work Index

The UK has slipped four places – the largest annual fall in rankings experienced by any OECD country this year – on PwC’s annual Women in Work Index. The report, which assesses progress made towards achieving gender equality at work across 33 OECD countries, also finds that the UK’s gender pay gap has widened by 0.2 percentage points, making it higher than the OECD average and more than half the other 32 countries assessed on the Index.

• The UK slips from 13th to 17th in the Index ranking – the steepest annual decline amongst OECD countries – with Luxembourg, Iceland and Slovenia the best-performing
• The UK’s gender pay gap increased from 14.3% in 2021 to 14.5% in 2022 and is higher than the OECD average of 13.5%
• At the current rate of progress, it will take 43 years to close the gender pay gap in the UK
• Scotland is the UK’s top-performing region, jumping from third to first place
• Women in the UK are also facing a ‘pay penalty’, earning on average only 90p compared to £1 for an equally qualified man with a similar personal and professional background

Despite an increase in the UK’s Index score by 1.1 points, reflecting small improvements on most indicators, its rank fell from 13th place to 17th place, demonstrating that the UK is being outperformed by other countries in terms of pace of progress made towards achieving gender equality at work.

Tara Shrestha Carney, economist at PwC UK, said:

“While a fall in rank is never good news, it’s important to note that the UK’s declining position on the Index is not necessarily because the UK is doing worse, but because other countries are doing things better and faster when it comes to achieving gender equality at work. Clearly, though, progress is too slow – over the last decade, the UK has consistently lagged behind the OECD on the gender pay gap, and at the current rate of progress it will take nearly half a century to close the gender pay gap in the UK.”

Despite its poor performance, the UK remains the top performing G7 country. However, Canada is closing the gap and is now only one place behind. While the other G7 nations have remained fairly consistent in their ranking, nations such as Australia have seen dramatic improvements. Indeed, Australia recorded the biggest annual improvement in its rank of any OECD country, rising from 17th place in 2021 to 10th place in 2022.

The ‘gender pay penalty’ in the UK

The report finds that, even after accounting for a range of pay-determining factors, the pay disparity between women and men in the UK still persists with women earning almost a tenth less than men on average.

This ‘gender pay penalty’ worsens with age, with women between the ages of 46 and 65 experiencing more than twice the gender pay penalty than that of women between 16 and 30 years. Indeed, while a woman entering the workforce faces a pay penalty of around 5.2% on average, this widens to nearly 13% as her career unfolds. The report highlights the ‘motherhood penalty’, with women taking on an unequal share of childcare responsibilities, as a key driver. This is compounded by men often having more time available to perform so-called ‘greedy jobs’, which demand unpredictable and longer hours and tend to be more highly paid. In addition, women between 46 and 65 are also likely to be impacted by health conditions and the menopause, which may require them to take more time off work, potentially affecting their career progression and compensation.

Strikingly, married women and those in higher income brackets also face a hit to their earnings when compared with men with similar personal and professional backgrounds – for example, people living in the same area and working in the same industry.

Ian Elliott, Chief People Officer at PwC UK, said:

“Our analysis is a timely reminder that employers have to look at all the factors that contribute to pay gaps. Alongside transparent and robust gender pay gap reporting, it’s also vital that health and wellbeing resources are accessible and the workplace is an empowering place for employees experiencing the menopause and other health conditions. Moreover, it’s crucial that working parents are properly supported – championing flexible and hybrid working, alongside progressive parental leave policies, is key.”

Addressing the gender pay penalty could unlock significant economic gains for the UK economy. If women no longer faced a gender pay penalty, the total increase in women’s earnings in the UK could be up to £55bn every year. Moreover, it could also encourage more women to join or rejoin the workforce – a 5% increase in the total number of women in employment could boost UK GDP by up to £125bn every year.

Regional inequalities in the UK

Although the majority of the UK nations and regions improved their Index scores in comparison to last year, progress has not been evenly distributed. Scotland jumped from third place up to first as the top performing UK region, driven by greater female participation in the workforce. Conversely, the West Midlands was the worst performing region, falling two places from 10th. The East Midlands was also a poor performer and experienced the largest annual fall in the rankings, falling six places to 11th place. Yorkshire and the Humber and the North East recorded the largest improvement in the rankings in addition to Scotland, each rising by two places.

Read PwC’s annual Women in Work Index here.