The gender pay gap: five lessons from new CMI research

The UK’s gender pay gap is gradually closing – but progress is too slow. In April 2024, the gap stood at 7% for full-time employees, down from 9.1% when mandated reporting began in 2017. Positive action is needed to change employer behaviour.

A new CMI report, published on the deadline day for companies to report their data (4 April), aims to “move the needle”. Filling in the Gaps uses available data on gender wage disparity and company performance, analysis of the FTSE Women Leaders Review and input from employers including PwC, Renishaw and NatWest to take a fresh look at the issue. 

The research comes amid a global backlash against equality, diversity and inclusion (EDI) measures. A growing number of UK managers believe the push for gender balance has “gone too far”, according to CMI’s latest survey, with more than one in four (28%) saying that businesses over-prioritise gender diversity, up from 20% in 2023. But, according to the new report, they risk losing out to forward-thinking competition. 

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Here are five of the report’s key points:

1. Many firms that reduce their pay gap increase revenue

Good news for companies actively reducing their gender pay gaps: the research found a strong link with double-digit revenue growth. Analysis of ten FTSE 350 companies that achieved the largest reductions in their median hourly pay gap over the past five years also showed revenue growth in the same time period in nearly all cases. FTSE Women Leaders data showed that many firms with the most significant progress closing their gender pay gaps had also increased the proportion of women in leadership roles. 

Online real estate company Rightmove, for example, between 2019 and 2024, improved its gender pay gap by 13 percentage points (pp), increased the proportion of women on its board by 7pp and saw a 10pp rise in the number of women in executive roles. The company experienced the highest revenue growth among those listed, with a 77% increase in the same period. 

“Our analysis shows that the top firms that take gender balance seriously are thriving,” said Ann Francke OBE CMgr CCMI, CEO of CMI. “The smartest businesses are proving that closing pay gaps isn’t just fair – it’s fuelling growth. Those ignoring the issue are losing talent, credibility and competitive edge.”

2. Pay gaps also hold back minority communities

Women are far from the only group to be affected by pay gaps. Black employees have consistently earned less than White employees, according to the report, along with Bangladeshi and Pakistani employees. The disability pay gap, meanwhile, has remained relatively unchanged since 2014, standing at 12.7% in 2023.

CMI analysis shows that certain groups are under-represented in management positions, with a need for 490,000 more female managers, 290,000 more disabled managers and 200,000 more managers from ethnic minority backgrounds to equal demographic proportions in the UK.  

This wider issue is also linked to business success. More diverse teams “operate more effectively, with a greater breadth of perspectives helping to foster more innovation and new thinking”, said Kate Seljeflot, chief people officer at Kingfisher, in the report.