The UK’s persistently high gender pay gap prompted us to take a closer look at the factors driving gender pay disparities. We conduct analysis to explore whether gender disparities in pay in the UK remain once accounting for differences in personal and work-related characteristics other than gender that impact pay (such as qualifications or occupational grade). We find that even after accounting for a range of these pay-determining factors, the majority of the pay differential between genders persists. We call these pay differentials ‘pay penalties’. The presence of these pay penalties suggests that biases and structural inequalities in the workplace play a significant role in driving gender pay disparities. Additionally, we find that disparities in pay are accentuated when the intersection of gender with income, ethnicity and age is considered.
Our global results: Luxembourg tops the Index
Luxembourg ranks first on our Index, followed by Iceland and Slovenia. Luxembourg’s strong performance was driven by an improvement across all five indicators on the Index between 2021 and 2022. Luxembourg is a leader across the OECD on the gender pay gap, with a negative gap of -0.2%, meaning average earnings are higher for women than men.
Australia experienced the largest annual improvement in rankings, rising seven places from 17th place in 2021 to 10th place in 2022. Conversely, the UK experienced the largest fall in rankings since last year, dropping by four places from 13th in 2021 to 17th place in 2022.
You can explore our latest Index results and previous years’ results in the interactive data tool below.
UK results: The UK experienced the largest annual fall on the Index of any OECD country
Despite the UK’s Index score increasing by 1.1 points between 2021 and 2022, reflecting small improvements on most indicators, its rank fell from 13th place to 17th place - the largest annual fall in rankings experienced by any OECD country this year. This was driven by a widening of the gender pay gap in the UK from 14.3% in 2021 to 14.5% in 2022 and the fact that the UK is being outpaced by other countries in terms of progress made towards achieving gender equality at work.
On our UK Regional Index, Scotland took the top spot this year followed by the South West in second and the East of England in third. Scotland’s strong performance was driven by an improvement across most indicators, including an increase in the female labour force participation rate from 73.2% in 2021 to 74.9% in 2022. This also led to Scotland recording the lowest gap in participation rates between men and women across the UK at 4.4%.
“Across the OECD, progress towards gender equality at work remains slow. At this pace, it will take over 50 years to close the gender pay gap.”
“For every £1 earned by a man in the UK, an equally qualified woman with a similar personal and professional background earns 90p on average. This suggests that biases and structural inequalities in the workplace play a significant role in driving pay disparities between men and women.”
“At 14.5%, the UK’s gender pay gap is larger than the OECD average of 13.5% and the UK has consistently lagged behind the OECD on this measure for the majority of the last decade.”
Pay penalty analysis: Biases and structural inequalities play a significant role in driving gender pay disparities
Although a useful measure, the gender pay gap captures the difference in average earnings between women and men and does not account for differences in other pay-determining characteristics such as qualification levels, industry and occupational grade. We conduct analysis to explore whether gender disparities in pay in the UK remain once accounting for other personal and work-related characteristics that impact pay.
Even after accounting for nine pay-determining factors other than gender, we find the majority of the pay differential between men and women persists. Our analysis shows that, on average, for every £1 earned by a man in the UK, a woman earns 90p despite having a similar personal and professional background. This highlights the significant role that biases and structural inequalities in the workplace play in driving gender pay disparities.
Our analysis also shows gender biases do not operate in isolation in driving pay disparities. Gender often has intersectional impacts with other facets of our identity (such as ethnicity or age) in driving earnings and career outcomes. Understanding the multitude of factors and complexities that drive gender disparities in pay is a crucial step in addressing them and making progress towards a more equal workplace.
You can explore our pay penalty analysis results in the interactive data tool below.
Understanding the multitude of factors and complexities that drive gender disparities in pay is a crucial step in addressing them and making progress towards a more equal workplace.
Closing the gender pay penalty could also unlock significant economic gains. We estimate that if women in the UK no longer faced a gender pay penalty, the potential increase in women’s earnings could be up to £55bn per year. Moreover, it could encourage more women to join or rejoin the workforce - a 5% increase in the total number of women in employment could boost UK GDP by up to £125bn every year.
Note: In this year’s report, we present the latest Index results using 2022 data. A time lag in data availability across all 33 countries on our Index means this is the latest annual data available at the time of publication. When we refer to the latest results, we mean results based on 2022 data. (Similarly, our 2023 report provided the latest Index update using 2021 data, and so on). Our economic gains analysis is based on data as of 2022 and reported in nominal terms.
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