Retirement age for women? 80, if they want to earn as much as men
19 August 2014 -
New salary figures show that a ‘mid-life pay crisis’ is hitting female managers, with women aged 40-plus earning 35% less than men. To earn the same as a male manager over a career, a woman would have to work the equivalent of over 14 years more – which, based on a pension age of 65, would mean working until nearly 80*.
The data, published annually by the CMI (Chartered Management Institute) and salary specialists XpertHR, paints a picture of a widening gender pay gap among managers, hitting professional women hardest in the second half of their working lives. Analysis of the National Management Salary Survey, which covers over 68,000 professional UK workers, shows the monetary value of the gap between men and women aged between 45 and 60 stands at £16,680 per year.
Including men and women of all ages, the current gender pay gap for managers stands at £9,069, with the average salary recorded as £39,461 for men and £30,392 for women. This means women are earning only three-quarters (77%) of what men in full-time comparable jobs earn – a 23% gender pay gap. Yet, the gap is far worse for women aged 40-plus, where the problem is two-fold. Not only does the salary gap increase with age and seniority, but there is also a persistent ‘bonus pay gap’. The average bonus for a female director stands at £41,956, while for male directors the average pay-out is £53,010.
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While annual salary increases for men and women, averaged across all levels, have been level-pegging at 2.3%, inequalities remain most obvious at senior levels. Male directors’ basic salaries increased by 2.7% compared to 1.9% for women. And, when bonus payments are added, male directors took home £204,373 compared to £171,945 for women (a difference of £32,428 on average).
However, the figures for the next generation of female managers show some cause for optimism. Women’s annual pay awards have edged ahead of men’s in three of the five most junior job levels (an average of 2.4% compared to 2.3%). The gap still exists for younger women but it is narrower than for their older, more senior colleagues, standing at 6% for those between the ages of 20 to 25, and 8% for those aged between 26 and 35, before leaping upwards for older women.
Ann Francke, Chief Executive of CMI, says: “Lower levels of pay for women managers cannot be justified, yet our extensive data shows the pay gap persists, with many women hit by a ‘mid-life pay crisis’. Women and men should be paid on the basis of their performance in their particular roles, but this is clearly not yet the case for far too many. It’s not right that women would have to work until almost 80 for the same pay rewards as men. We have to stamp out cultures that excuse this as the result of time out for motherhood and tackle gender bias in pay policies that put too much emphasis on time served.”
XpertHR’s head of salary surveys, Mark Crail, says: “The XpertHR data shows that women begin to fall behind at the age when they are most likely to be starting a family, and it just gets worse from then on. It appears that employers often give up on women in mid-career and are missing out on a huge pool of untapped knowledge, experience and talent.”
As reported in May, data shows that labour turnover among managers for the last 12 months is at a record low, with striking differences compared to the height of the recession three years ago (4.8% compared to 20%). For the first time since 2006 more men than women have been made redundant – 1.1% compared to 0.8%. Furthermore, the data shows that the “executive pipeline” is still failing women, who constitute a majority of entry level professional roles (69%) but become increasingly rare in more senior management roles (making up just 30% of directors).
Ann Francke continues: “With the economy looking healthier than ever, it’s the perfect time for employers to expand their talent pool by supporting more women to become senior managers and leaders. CMI is calling for employers to measure and report on the percentage of women at each level of management and what they are paid, which leading employers are increasingly doing.”
As part of its campaign for a Better Managed Britain, CMI is urging employers to use the free Management 2020 Benchmarking Tool - www.managers.org.uk/management2020. This allows leaders to compare their organisation’s performance against others and set goals based on three core areas of Purpose, People and Potential. Improving performance in these critical areas means employers taking action to help close the gender salary gap, including:Championing diversity in the talent pipeline at all levels by setting targets to benchmark achievement in terms of equal pay and promotion.
- Actively encouraging parents, carers or others to return to work after career breaks so that organisations can retain their best people, regardless of age, gender or family situation.
- Having senior leaders who act as role models on this issue. For women, this is about sharing their achievements by mentoring other women in order to give them the confidence, training and skills they need to flourish in top management roles. By seeing other women – of all ages – in positions of influence, female managers believe this is possible. For men, there is just as important a role to play in sponsoring or developing female managers in their company or sector.
For more practical advice and resources to help develop female talent, visit: www.managers.org.uk/wim
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