Gender pay gap getting wider in financial and professional services

We are going backwards, but I am not surprised.
- Dr Grace Lordan
The_City of London Nigel Stead

Women are less likely to be among top earners in financial and professional services since the pandemic, according to new LSE research.

Researchers from LSE’s The Inclusion Initiative (TII) found that women make up only 19.4% of the top 1% of earners - meaning men are more than four times as likely as women to be among those with very high incomes. This figure has worsened slightly since before the pandemic when it was 19.7%.

Prior to the pandemic, the predicted probability for women to be among the top 1% of earners was 0.021, a figure that declined to 0.013 in the post-pandemic era. In contrast, the likelihood for men to reach this top earning percentile remained unchanged. Additionally, the persistent pre-pandemic gap between men and women in the top 10% of earners remains significant at approximately 20%.

The research also revealed occupational changes post-pandemic were not uniform across the board. Specifically, the analysis shows a noticeable shift for women in information technology roles within financial services, where there was a 5.5 percentage point increase in the likelihood of full-time employment and an 11.6 percentage point increase in the probability of being in the top decile of earners after the pandemic. In contrast, women in high-ranking positions, such as functional managers and directors, are 3.9 percentage points less likely to be employed full-time.

Researchers analysed the Quarterly Labour Force Survey (QLFS) from January 2017 to June 2023. The QLFS is the main survey of individual economic activity in the UK, capturing transitions in labour force participation and providing official measures of employment and unemployment.

Dr Grace Lordan, Founding Director of TII and Associate Professor in LSE’s Department of Psychological and Behavioural Science, said: “The lack of progression of women to the most senior roles in financial and professional services is a major factor contributing to the gender pay gap. We are going backwards, but I am not surprised. For progress to be made there needs to be a bigger shift towards recognising that diversity is good for business. There also needs to be significant investment in upskilling managers to become inclusive leaders recognising that leading diverse teams is a skill. Without it, I will be giving the same quote 10 years from now.”

Teresa Almeida, Research Officer at The Inclusion Initiative, said: "The persistent absence of women among the top earners and in senior roles within financial and professional services is not just a matter of fairness, it's a missed opportunity for innovation, productivity, and the realisation of untapped potential.”

Anna Lane, CEO and President of Women in Banking and Finance, said: “The facts are unequivocal. Without bold and decisive action, the progress women have made is at risk of reversing. Now, we must ask ourselves: isn't it time to establish hard quotas for women in executive, managing director, and director positions? This is our moment to think boldly—to ensure that women are not merely participants but leaders at the forefront, shaping the future of finance. It’s about more than maintaining balance; it’s about catalysing transformation and driving our industry forward with innovative leadership."

Read the report