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Meg Munn MP - Sheffield Heeley's voice in Parliament | Welcome
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Women in Finance

Wednesday, November 16, 2005

Speaking at a seminar organised by the British Federation of Women Graduates on the topic ‘Women in Finance’ in the House of Commons, Meg made the following contribution.

 

 

I would like to thank Dr Poskitt and the British Federation of Women Graduates for organising this seminar, and for giving me the opportunity to speak to you this afternoon.  I would like to take this opportunity to commend the British Federation of Women Graduates for their much valued support offered to women graduates in helping them to achieve their aspirations.

 

You don’t often hear the words ‘women’ and ‘finance’ in the same sentence, and that’s something we have to change. We need more women in the finance industry and institutions, perhaps then they will speak a language that we can all understand!  

 

Today young women are more likely than men to gain a degree. But the strange fact is that when it comes to employment, women are often earning considerably less than their male counterparts. This gender pay gap isn’t just bad news for women.  It is bad news for business and the economy.

 

As a society we must reduce the persistent gap between men and women’s pay. It means that women’s abilities and skills are not being fully realised. If women are currently working less, in lower skilled jobs, jobs that do not fully utilise their actual or potential skills, then the economy is operating below its productive potential. 

 

This is bad news for the individual, for whoever they work for, and the rate of growth of the economy.  This is serious, especially at a time when labour markets are tight in many parts of the UK. The increased participation of women in the labour market, in many sectors, could help to reduce skill shortages.  That is why we put so much emphasis on tackling the gender pay gap - it is good for women, business, and for the economy.

 

Last year the Prime Minister set up the Women and Work Commission to examine the problem of the gender pay gap and other issues affecting women's employment. We are looking to them for concrete recommendations for dealing with this long-term problem and closing the gender pay gap. I very much look forward to receiving their report and recommendations early in the new year.

 

Cause of gender pay gap

Now the reasons behind the gender pay gap are complex and long-standing, there is not one underlying cause.  But we do know that occupational segregation has been pinpointed as one of the main causes. 

 

We know that women dominate the lower skilled, lower paid sectors, whereas men very much dominate the higher skilled sectors which give higher financial returns - this is evident in the banking, finance and insurance sector, where men make up 55.8 per cent of the workforce.

 

We have set up Sector Skills Councils to address industry-specific training needs. The Financial Services Sector Skills Council is working to boost the profile of British qualifications in the global community.

 

We launched ‘Equal Opportunity and Choice: Tackling Occupational Segregation’ in October last year.  This is a cross government plan highlighting government action to encourage both men and women into non-traditional areas of work.

 

The Trade & Industry Select Committee published its report Jobs for the Girls: The effect of occupational segregation on the gender pay gap in April 2005.  The Government’s response to its recommendations includes details of Government initiatives to ensure that women are able to make informed choices regarding their training and careers. In addition to this, the Equal Opportunities Commission launched the final report of their investigation into occupational segregation in March this year.

 

I’m sure I don’t need to tell you that men, on average, earn more than women - the full time median gender pay gap, that is the difference in average hourly earnings between men and women currently stands at 13.2 per cent.  This is a substantial improvement from the staggering 30 per cent it was some 30 years ago.  But when you compare this to men and women working in the finance sector, the story is bleak - men earn an unbelievable 41.2 per cent more than women.

 

So, what can be done about this unfair situation?

 

Equal pay reviews are part of the answer.  Not only can equal pay reviews significantly help reduce the difference in pay, we also believe that it’s in a firms’ best interest in the long term to do them.  That’s why we’re helping firms to carry out pay reviews sensitively and fairly.

 

I’d like to tell you a bit about the DTI Strategic Partnership Initiative.  As part of this initiative we support the team of Equal Pay Panel of experts, which is led by the TUC.  These experts offer free advice and guidance sessions to organisations looking to investigate or undertake an equal pay review.  But this is only available to organisations that have a trade union.  This initiative builds on the TUC Equal Pay Project, which has trained over 400 union equal pay reps.

 

Most of us enter our workplace with the intention of doing a good job, with high ambitions and hopes for the future. Maybe we aspire to be the best, to reach the top, and why not? 

 

But all too often women are held back by the ‘glass ceiling’. Women work so hard to get a foot in the door of the financial sector, but once there, they get stuck at a certain grade and do not appear to be able to progress past this. 

 

Although this ‘glass ceiling’ has risen slightly over the past couple of years, it is still very much in place. It is a serious hindrance. A look at the female FTSE 100 will confirm this - we have seen steady improvement in 2004 when 17 per cent of new FTSE 100 board appointments have been women (up from 13 per cent in 2003 and 10.5 per cent in 2002). 

 

But in the UK, only 9.7 per cent of the top UK companies’ board members are women, and only 4.1 per cent of those are in executive roles. Only one woman made it to Chief Executive Officer (CEO), and only one woman chairs a FTSE 100 board.  In fact in the UK financial sector as a whole, 70 per cent of people at senior management grade are men.

 

Though I must stress that it’s not all doom and gloom. Isabella Moore was appointed the first ever female President of the British Chambers of Commerce in September 2002 - proving that the glass ceiling can be broken.  

 

We commissioned the Tyson and Higgs report to analyse boardroom diversity.  Following that, the publication Building Better Boards built on the recommendations made by Tyson and Higgs for more effective and diverse boardrooms.  This guidance sets out the business case for effective diversity and better practices in the boardroom. It gives benefits for companies, with evidence from some of Britain’s best-known businesses, and outlines government and business-led initiative to develop the talent pool of women.

 

Getting more women on the boards isn’t just about furthering the careers of women.  A strong relationship is evident between companies having women directors and having market capitalisation.  18 of the top 20 companies (90 per cent) by market capitalisation have women directors, but only 8 (40 per cent) of the bottom 20 firms do so. 

 

The Government is committed to encouraging a work-life balance culture across all levels of employment. Part of this is opening up part time working in a much wider range of jobs. At present, those women who work part time can find it harder to get the development opportunities they need to progress within their organisations. 

 

Flexible working legislation from 2003 is making it easier for women to combine their work and caring responsibilities.  Indeed, almost a quarter of parents with children under the age of 6 have requested to work flexibly since it was introduced.  We want to help give children the best start in life and enable families have a genuine choice about how they balance work and family. The Work and Families Bill will establish a balanced package of rights and responsibilities of both employers and employees, in line with the Government’s better regulation agenda.

 

Women have just as much to offer as men when it comes to the labour market and the finance sector is no exception.  Women are playing an increasingly important part of our economy - creating wealth and jobs. It’s estimated that by 2010 there will be 2 million more jobs in the economy, 80 per cent of which will be filled by women. This gives us the opportunity to ensure more women enter the higher skilled, higher paid jobs. If we as a society can do this we can all share in the rising prosperity of the UK.


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