Here’s how the gender pay gap is fuelling other inequalities in women’s financial security

In fresh (and depressing) Gender Pay Gap news, it has been found that eight out of 10 companies pay men more than women. According to new research from the BBC, despite a continued push for equality, the wage difference is still 9.4%, the same level as in 2017/18, when companies were forced to publish figures.

Romi Savova, chief executive of pension provider PensionBee, said that the latest data was “bad news” and it was “pretty astounding” that the gender pay gap remained at the same level compared to five years ago.

Ms Savova told the BBC’s Today programme that the “main culprit” for the difference was that major corporations were setting “unambitious targets” for getting women into senior positions.

“You can look around many rooms and still see that they are unequally filled and unequally represented,” she said.

Banking and finance remain among the worst offenders, with women earning, on average, 22% less than their male colleagues, but it’s not alone. The gender pay gap has continued to widen across many sectors, including education, where it has increased by 0.9 percentage points.

Large businesses that have some of the widest gaps in pay between men and women include Easyjet, Lloyds Bank division and Savills. At Easyjet, despite an improvement from last year, the average woman takes home just 53p for every £1 earned by men.

And this all comes after analysis back in Feburary found that women work for free for nearly two months a year in comparison to men, according to the Trades Union Congress.

The organisation released the research on 23 February, also finding that the average gender pay gap for all employees stands at 14.9%, with the highest pay gap (20.8%) occurring for women between the ages of 50 and 59. 

With International Women’s Day on the way and all of the related lip service and hypocrisy — perfectly highlighted by the viral Gender Pay Gap Bot Twitter account — fresh in our minds, how our gender affects our financial wellbeing is understandably front of mind for many of us. As the cost of living rises sharply, it’s vital that employers work to correct this inequality as quickly as possible, especially as the central pay gap issue is causing other gaps in women’s financial wellbeing and security. Here are a few of the ways that being paid less can ripple out into other areas of our financial lives — and what we can do to mitigate them:

The pension gap

Perhaps the most terrifying of all the gaps, the gender pension gap shows the compound effect of a woman earning consistently less over the course of her life, as well as taking time out for things like maternity leave and other caring responsibilities, or working part-time in order to accommodate childcare. According to Scottish Widows, the average 20 year old woman is on course to have £100,000 less in pension savings than the average man by the time she retires, while Now:Pensions’ comprehensive report into the same issue highlights how this gap is further exacerbated by other factors such as race, single parenthood and disability. 

As part of this report, Now:Pensions have suggested some policy changes that would help to close the pension gap, including a family carer top-up for people taking time out of work or working part time to accommodate caring responsibilities, an increase in tax relief on pensions and the removal of the lower earnings limit on pensions, so that pension contributions are made on every pound earned. On an individual level, however, it’s vital that women are thinking about their pension and later-life financial security as early as possible, and contributing to a workplace or private pension as soon as they’re able to do so. Pensions should also be raised in any conversations about starting a family, as this is where women stand to lose out on huge chunks of pension savings. 

The rent gap

Young people in general are finding it more and more difficult to keep their rent at a manageable level in proportion to their salaries, but this issue is even more pressing for young women. People spending more than 30% of their take-home pay on rent are considered ‘rent-burdened’, while those spending more than 50% are considered ‘severely rent-burdened’ and, according to SpareRoom, the proportion of women classified as ‘rent-burdened’ is a shocking 85% – 10% more than their male counterparts.