The UK gender pay gap has narrowed by one of its largest margins since reporting became mandatory, according to new analysis by global accounting firm PwC.
The 2025 Gender Pay Gap Report shows that sustained efforts by employers have contributed to this year’s 0.6 percent reduction in the mean hourly gender pay gap, falling from 11.8 percent to 11.2 percent. The median hourly pay gap also declined, dropping from 9.1 percent to 8.6 percent.
This year’s results reflect the submissions of over 10,700 organisations, the highest number since gender pay gap reporting became mandatory for companies with more than 250 employees. The report noted incremental improvements, though the overall pace of change remains slow, with projections indicating it may take over 40 years for the gap to close entirely.
“The dial is finally shifting. Whilst we’re seeing incremental change – this year’s data shows that when employers take deliberate action over the long term, progress follows although it will still take a long time for the pay gap to close,” said Andrew Curcio, global co-leader for reward and benefits at PwC.
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“From reviewing pay structures, improving gender balance of senior roles, and transparent and inclusive promotion and recruitment processes, the organisations making the biggest strides are those embedding equity and consistency into their day-to-day decisions, not just their annual reports.
“Employers are operating in a new world with increasing levels of compliance and regulation so it is more important than ever to sustain momentum – and shift the conversation from compliance to commitment.”
Sector and size differences influence reported pay gaps
Pay gaps vary significantly by sector. Industries with a high proportion of women in hourly paid roles, such as hospitality, public administration and health, report lower pay gaps. These roles are less subject to variation in pay levels, contributing to smaller reported gaps.
Financial services continue to record the largest mean gender pay gaps, despite having achieved some of the largest decreases this year. Persistent structural and cultural issues in the sector are cited as underlying causes for the disparity, despite improvement efforts.
When analysed by employer size, the most significant progress was seen among organisations with 5,000 to 19,999 employees, where the average mean hourly pay gap decreased by 1.1 percent. Larger employers, particularly those with over 20,000 staff, typically report the lowest gaps, whereas smaller organisations show greater year-on-year volatility in their figures.
Sam Greenhalgh, Partner in the Employment Team at law firm Birketts LLP, told HR review, “The latest data showing a narrowing gender pay gap is undoubtedly encouraging – especially where like-for-like comparisons can be made. It reflects a broader movement in the right direction, with many employers making genuine strides toward pay equity.”
The narrative behind the numbers
Greenhalgh cautioned that pay gaps should not be confused with equal pay violations, as the figures often reflect wider social and structural dynamics.
“Crucially, gender pay gaps are frequently misunderstood as equal pay issues. A pay gap does not necessarily mean that men are paid more than women for the same work. Instead, it often reflects structural and cultural dynamics that require deeper analysis,” he said.
He also noted that societal norms and domestic choices continue to influence workforce composition. “Sectoral differences, societal norms, and domestic choices often shape the roles men and women occupy, as well as the time they spend in the workforce. These factors can significantly influence pay gap statistics,” he said.
With the UK Government considering mandatory reporting of ethnicity and disability pay gaps under the Equality (Race and Disability) Bill, Greenhalgh warned that many employers will face new technical and compliance challenges.
“Many already struggle with the complexities of pay gap reporting. That’s why it’s more important than ever for organisations to prioritise accurate, transparent reporting and prepare for a more regulated future,” he said.
Despite the increase in submissions this year, critics argue that the current reporting regime remains too narrow. Legal requirements only apply to companies with 250 or more employees, which equates to roughly 8,000 businesses. This leaves a large proportion of the UK’s workforce unaccounted for in pay gap data, with over five million smaller businesses not required to publish any figures.
