FINANCIAL WELLBEING

Why is there a gender career gap?

  • 07 October 2020
  • 15 minute read
  • Women are still not progressing as well in their careers as men

  • While much has been done to improve equality at work there’s more to do

  • Because improving women’s career outcomes can improve their financial wellbeing

Although the Equal Pay Act was passed in 1970, there still appears to be a marked gap between the career progression of men and women.

Much has been done to understand the reasons behind this, and there are many initiatives in place aiming to bring greater gender equality to every company. One important area to consider is how we can make it possible for women to take career breaks so they can care for family members, without this affecting their future prospects and earnings.

Women want to work

A global survey carried out by the International Labour Organisation and Gallup in 2017 discovered that across the world, the majority of women want to go to work, even when they have a choice not to So, it’s clear that most women want to be involved in the world of paid work not simply to earn money, but to make a difference and feel purposeful.

Why is it harder for women to progress in their careers?

Women still aren’t getting to the top of the corporate ladder in equal numbers, although the situation is improving. As the BBC reported in November 2019, by the end of 2020 FTSE 100 companies will have boards that are 33% female. Even though the World Bank’s most recent estimate is women made up nearly 47% of the UK working population at the end of 2019.

The missing first rung

In the past, there has been much emphasis on the ‘glass ceiling’, the barrier that prevents women from rising to the highest levels of an organisation. More recently there’s been discussion about the all-important first rung on the career ladder. McKinsey and Co highlighted the importance of making sure women are represented on that very first step of career progression at every company in January of this year. Its article Confronting the early-career gender gap noted that 48% of entry-level people hired by corporations were women, but when the first round of junior management appointments was made, the percentage fell to 38%.

The result of this is fewer women to choose from for the next level of promotion. And the next. And the next. So getting this balance right can create a wider female talent pool, and potentially to more female leaders.

There is another factor aligned with this. In How can we close the Gender pay gap we explore how the highest paying jobs are in financial services, technology and medical sciences. But as women tend not to study science, technology, engineering and maths at university (collectively known as STEM subjects), their opportunities are limited.

The career break

As Age UK reported in March 2019, women are usually the ones to take a break from the workforce, often due to family commitments, and this can damage a woman’s career prospects. In November 2016, PWC published The £1bn potential of women returners in conjunction with the 30% Club and Women Returners. It found three in five professional women who return after a break move into roles that are lower skilled and lower paid. Their earnings generally reduce by a third.

PWC also reported how those who return to work on a part-time basis can feel ‘under-employed’. This can be because they are working three 9-to-5 days a week, rather than the four or five days they would like to work, if a more flexible working day could be arranged.

But the good news is that companies are addressing this by creating ‘returnships’. As Women in tech reports, this is a special period of mentoring and training for those coming back to work. It gives women the time to gain the skills they need for a changing work environment. This seeks to build their skills and their confidence, and bring them up to speed for this new stage of their careers.

The US National Bureau of Economic Research in 2015 and then in 2017 found the perceived “human capital investment” required can mean older women who have had a longer time away from work can face a more difficult path back. Interestingly, men in the same position suffered less discrimination.

The founder of outdoor wear company Patagonia was interviewed in the June issue of INC magazine by iRelaunch, a company that aims to help women back into the workplace. He said: ‘I would search out older women as employees; ones that have already raised families and are looking for something to do. These people have lived with a budget. They are aggressive. They are honest. You can’t find better employees. They are one of the most underused resources in America.

Is it possible for women to plan a career break?

If you’re taking time out of the workforce, perhaps to care for a family member, it’s important to think through the longer-term implications.

Could you keep earning during this time? Perhaps by going freelance or part-time? During the coronavirus lockdown, employers have had to become accustomed to home working, and to parents having to work more flexible hours due to childcare duties. So it might be possible for you to manage your work around your family commitments. But it depends on your industry and your role.

If you have to take a complete break are there ways you can prepare for your return during your time away? To make sure you’re not one of the three in five who comes back from a career break to a lower skilled or lower paid job, look for ways you can maintain, improve or broaden your skills. Look for online or part-time courses. Can you stay up-to-date with what’s going on in your field while you’re away? Many professions now have on-line magazines, blogs and other resources.

Above all, make a plan for your return that will allow your career to progress.

Onwards and upwards

The playing field has never been level for women, but things appear to be slowly changing. Employers are coming round to the idea they have to offer more than just a competitive salary to attract talented people. A growing focus on mental health in the workplace brings with it increased attention on the work-life balance.

Hopefully, this means the world of work will become a more inclusive, and a much fairer and more positive one for everyone in the years ahead.

The gender career disparity is just one factor that leads to women having poorer financial futures than men. The Pension Policy Institute reports from June 2019 that the average woman in the UK has less than a third of the pension savings of the average man. It’s no wonder that Fidelity International found in January this year nearly a quarter of women are anxious about retirement planning.

But the issue needs to be tackled on many fronts. It is to be hoped that as we all become more aware of the root causes and start to break down these barriers, women’s financial wellbeing will improve.

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