Press Release

Financial rewards don’t pay as women walk out at work

06 September 2006 – Women have received higher salary increases than men for the tenth successive year and are more likely to be given a bonus. However, these growing pay packets are failing to stem the tide of female resignations. 

The findings, released today by the Chartered Management Institute and Remuneration Economics, show an average movement in earnings of 6.7 per cent for women and 5.6 per cent for men, in the twelve months to January 2006.  It is also the highest movement in earnings for five years.

At director level, the gap is even more pronounced with female earnings increasing by 9.2 per cent, against only 5.8 per cent for their male counterparts.  Women in team leadership roles were awarded an increase of 6.6 per cent compared to 5.2 per cent for men.

In real terms this means that female managers earned an average of £43,521 in the year to January 2006.  But this is still £5,147 less than the male equivalent of £48,668 – an 11.8 per cent difference.  The gap at director level is £40,588, with the average female director earning £164,762.  However, in organisations with a turnover of less than £25 million women directors come out on top, earning £127,369 compared to £116,511 for men.

This year’s survey also shows that bonuses are playing an increasingly important part in overall ‘take home’ pay.  The majority of employers (79 per cent) gave bonus payments to staff in the 12 months to January 2006, but women were more frequent recipients.  Almost three-quarters (71 per cent) of female executives were rewarded with a bonus compared to less than two-thirds of men (58 per cent).

In terms of value, smaller organisations, again, were more likely to give women greater rewards.  In organisations with a turnover of less than £25 million, women received an average bonus of £7,207 compared to £5,148 for men.

Yet despite larger pay awards and higher incidents of bonuses, women are more likely to resign.  In this year’s survey, female resignation rates stand at 5.7 per cent, compared to 4.0 per cent for men.  The region with the highest female resignation rate is East Anglia (11.8 per cent) and the manufacturing sector (15.3 per cent) has the highest female resignation rate compared to any other industry.

The 2006 survey also indicates that, despite the narrowing of pay differences for female managers, gender inequalities persist.  For example, the number of women in team leadership roles has fallen to its lowest level for five years (32.5 per cent) and the gender pay gap also grows as individuals get older (from £297 at the age of 25 or less to over £10,000 from age 50). 

Jo Causon, director, marketing and corporate affairs, at the Chartered Management Institute, says: “More than 30 years after Sex Discrimination legislation was introduced, some inroads appear to have been made in the workplace.  However, inequalities are still evident in pay packets and promotion and unless employers address the issue they are in danger of seeing a continuation of the trend in senior female executive resignations.”

It is also clear, from the survey, that the proportion of women as part of the UK workforce declines with age.  Amongst the younger management community (aged 29 or less), women occupy the majority of roles (55 per cent), but from age 35 there is a sharp decline.  Between the ages of 35-39 women only account for one-third of managers.  From age 50 onwards this drops to 11 per cent. 

Val Lawson, chair of the Women in Management Network, says: “This trend may be attributed to the number of women taking career break and potentially reflects the lower proportion of women in higher education, thirty years ago.  However, it is a pattern that must be reversed because, allowed to continue, it will deny employers access to a considerable pool of talent.”