A new study suggests that it could take another 40 years to close the gender pay gap in the UK if the current rate of progress continues.

The Isio research, based on data from over 10,000 organisations, projects that pay equality for hourly wages may not be achieved until 2065.

Analysing publicly available data from more than 10,000 companies, Isio found that women make on average 12.5% less per hour than men. According to Idio this is “the lowest the pay gap has been” since mandatory reporting was introduced. However, reporting is only mandatory for organisations with more than 250 employees – and this poses a challenge in quantifying the actual gender pay gap in the UK.

The Hidden Gap

Government statistics show that in 2023, 61% of the total number of people employed by private sector companies worked for SMEs, which are not required to report on their pay gaps. Recent research from The Global Payroll Association (GPA), which analysed ONS statistics for both average salary and gender pay gap, suggests that UK’s gender pay gap actually widened in 2024 – although with differences at a regional level.

This suggests a wider gender pay gap in companies which have fewer than 250 employees and are thus are under no obligation to report on it. Among those who did, Isio found that nearly 23 percent of organisations reported either no improvement or a worsening of their gender pay gap, with disparities between sectors.

The financial and insurance sectors reported the largest pay gaps, with an average of 23 percent and over 85 percent of employers in the sector showing gaps exceeding 10 percent. Other sectors with notable gaps include construction, information and communication, mining, and science, where more than 70 percent of companies report hourly pay gaps above 10 percent.

In contrast, public administration and defence are leading efforts towards pay equality. Fewer than a quarter of organisations in these sectors report gaps greater than 10 percent, showcasing a more equitable distribution of pay.

New Regulations

New reporting requirements are expected to intensify pressure on employers to address pay disparities. Organisations will now be required to publish detailed action plans to close the gender pay gap, alongside additional reporting obligations on ethnicity and disability.

Employers will need to focus on accurate data collection and transparent reporting to meet these regulations. Isio has identified several key pitfalls in Gender Pay Gap reporting from 2023/24, including errors such as failing to exclude employees who left before the reporting date, inaccuracies in reporting part-time workers’ earnings, and mistakes in calculating bonuses, particularly where bonus sacrifice arrangements are involved.

Mark Jones, Reward and Benefits Partner at Isio said, “The introduction of mandatory reporting has been a positive step and sets a good example for employers determined to take further action. Proactive employers are embedding diversity and inclusion into their core business strategies and taking concrete steps to close the gap by improving transparency, and developing action plans that go beyond the current reporting requirements.”