Women working in financial services could unlock up to £147bn of value for the UK economy by 2035 if wages increase and the gender pay gap shrinks, according to a report by the London Stock Exchange.
Analysis from the Centre for Economics and Business Research on behalf of the UK exchange found the contribution from women in the City to gross domestic product has nearly tripled from £22.6bn in 1997 to £64bn in 2022 – some 35% of the total UK finance sector’s gross value added.
Adjusting for inflation, this would amount to a £1.1tn “gender diversity dividend”, according to the figures released on International Women’s Day.
LSE chief executive Julia Hoggett said the near three-fold increase in value added over the past 26 years, which has been driven by higher wages and productivity as participation of women in the industry ramped up, “should make every politician working to solve the UK’s productivity puzzle sit up and take note”.
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The findings come as the government unleashes a wave of initiatives including its Edinburgh Reforms to make the City more competitive and turbocharge growth in the UK.
By 2035, the CEBR expects the contribution from women in finance to grow 75% and exceed £112bn in its baseline case, where women’s share of the job market and wages remains constant but productivity and prices increase.
If women’s wages increase relative to men’s, narrowing the gender pay gap, it expects this figure could grow by £39bn, resulting in £147bn for the UK economy, even if their employment share remains the same.
“What this report illustrates is how much value add women create in financial services,” Hoggett told Financial News. “Let us do more and we create more.”
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Despite companies investing heavily on initiatives to attract more women to the City and diversify their upper ranks, the report shows the number of women in finance has dwindled.
In absolute terms, the number of women in the industry peaked in 1997, when 589,000 were working in the sector in the UK. By 2022, this number had declined by more than 30% to just over 400,000.
While women’s wages have more than tripled from £16,000 in 1997 to £50,000 on average last year, they still earn considerably less than men, with the average male finance worker earning £80,000 in 2022.
Hoggett told FN that as the industry has become digitised many of the administrative and clerical roles that tend to be dominated by women have disappeared.
“If you walk into most high-street banks nowadays you aren’t going to see a bank of six to eight tellers in front of you, you’re going to see possibly two to three people in the branch and a whole lot of machines through which you now transact,” she said.
“An awful lot of that tech has probably been built by men, not women, which strikes me as ironic.”
But there are also “structural issues” holding women back as well, Hoggett said, one of the biggest being the assumption in society that women are primarily responsible for childcare.
“[In investment banking] you bring people in and train them up through the degrees of analyst, associate, vice-president and managing director. Just at the point where they’re reaching VP level – around seven years in – and about to deploy all that learning on the markets and their clients, for women it is very often quite an important strategic decision point in their lives about having children,” Hoggett said.
“We’ve had ‘follow the sun’ principles for trading books for years. We’ve passed US Treasury and gilt books from London to NY over to Asia and back round again. Why can’t we have trading books that follow the school bell? It’s not beyond the wit of man. It’s just that we haven’t traditionally.”
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To contact the author of this story with feedback or news, email Kristen McGachey
