Andrew G Haldane: Understanding pay gaps

Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of England, at the joint Bank of England, Federal Reserve Bank of New York and European Central Bank conference on "Gender and Career Progression", European Central Bank, Frankfurt am Main, 21 October 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Section 1: Introduction

"Pay gaps" measure the difference in pay between people with different demographic characteristics doing identical jobs. They are considered to be a good approximation of inequality in workplace rewards (EHRC (2018)). Under the Equality Act 2010, it is against the law to discriminate on the basis of protected personal characteristics. When it comes to pay, this means people should earn the same wage for the same work, irrespective of their gender, race, religion, disability, or other protected characteristics. In other words, no "pay gap" should exist across any of these characteristics.

Since 2017, it has been compulsory for companies in Great Britain with over 250 employees to report gender pay gaps each financial year. Data for 2018 published earlier this year shows a gender pay gap of around 10% across reporting UK organisations. The UK government has also begun a consultation on requiring companies to publish ethnicity pay gaps on an annual basis. While 63% of employers monitor ethnicity pay gaps, only 31% of employers currently publish them. The Bank of England has published data on its gender pay gap since 2017 and on its ethnicity pay gap since 2018.