The Metric That Would Close the Gender Pay Gap

The Metric That Would Close the Gender Pay Gap

It’s reporting season: the time of year when companies release their achievements and publicise their pledges. This year’s backdrop could hardly be more uncomfortable.

Across parts of the economy, the gender pay gap is no longer closing and, in some sectors, it is widening, according to recent analysis from the TUC, Glassdoor and the FTSE Women Leaders Review.

Ironically even industries that vowed to disrupt the status quo like challenger Fintech have, given time duplicated most of what they sought to supplant. It’s not down to bad policy, or unfair remuneration for equal work. Fintech (like most sectors) simply isn’t tracking what matters…progression.

Claudia Goldin’s discovery

Claudia Goldin is a Harvard economist. In 2023 she won the Nobel prize for economics for her study into female labour market participation. One of her biggest insights was into “greedy jobs”. These jobs, she says, reward people who are available at all hours of the day rather than how skilled they are and punish workers who cannot be available constantly.

Her research established that bias against women does not explain most of the gender pay gap. It is driven by the entirely rational economic choice couples make about who takes the flexible lower-paid job and who takes the greedy job when children arrive.

That choice repeated millions of times across millions of families becomes the pay gap that stares us in the face every year on Equal Pay Day.

An uncomfortable thought for financial services employers

Goldin's work highlights that one of the greediest industries of all is finance and if you work in financial services and care about this, pause and sit with this uncomfortable thought.

You (probably) work at a place that, in good faith and with real effort, has equalised pay between men and women in similar roles. You offer flexible working. You should be congratulated on those things.

But if fundamental job design penalises absence, even an extended parental leave will become a career slowing device if there is nothing proactive to counteract it. This is not down to sexism, but the incentives designed into the work itself.

Goldin names finance, law and professional services among the greediest sectors.

In these industries total availability commands the highest premium and the consequences of disengaging, even briefly, are most punitive.

A metric that actually tells us something useful

Organisations typically measure return to work rates following parental leave. Few measure what would show us something useful: the rate of career progression in the two to five years after return compared to the two years before.

This would reveal what most chief people officers suspect but cannot necessarily see in their KPI dashboards. The male/female divergence in career trajectory doesn't just begin when someone takes leave, but it is materially compounded when they come back.

The data bears this out: motherhood results in women suffering a wage penalty over the long-term.

UK employer benchmarking consistently shows that structured return support reduces mid-term attrition among women. The mechanism is well established even where the precise figures vary by sector and programme design.

There's sound business case for this. Losing and replacing a mid-level professional costs the equivalent of 75% of their salary, taking into account recruitment, lost productivity and onboarding costs.

That figure increases significantly when it comes to high performers. Retaining talented women at this stage safeguards the leadership pipeline and it also protects the budget.

You don't have to change the job for the outcomes to change, it is the transition that needs to change. When that period is handled well, with coaching, manager engagement and a clear pathway back, the impact on retention is both measurable and commercially meaningful.

Scaling fast creates a specific challenge

Every organisation with parental leave faces this challenge. Organisations that scale faster face a harder version because when someone returns from parental leave to a business growing at 15-20% per year they don't return to the same team. They return to a culture that has shifted beneath their feet.

Goldin's work strongly implies a particular mechanism at play here. Greedy jobs don't just lead to individual workloads that expand to fill the time available, they create a culture in which expectations about face time reinforce themselves, making absence more costly than the policy intended.

The limitations of policy

The most advanced organisations have approached this through policy.

Generous leave, flexible working on return, return apps, wellbeing benefits. All of these are valuable but none of them alone are enough.

What the research consistently shows is that the single most important relationship for a returning parent is the one with their line manager.

Managers are the variable that most determines whether someone's return to work is truly successful; whether they come back on trajectory or start a slide towards the exit.

Most managers want to do the right thing but get zero guidance on how to do it.

Unfortunately, the instinct for many - to lighten their workload, ease their commitment, be protective of their schedule - can feel less like being supported and more like a career being sidelined for the returnee.

It's the dashboard that's the problem

The solution is not complex. Build a dashboard that measures forward-looking indicators of career progression. Track promotions granted before and after parental leave at the person and cohort level. Treat return to work as an organisational process that requires as much management attention as onboarding does. The research suggests it deserves at least as much.

The gender pay gap is a lagging indicator and when it reveals itself in your numbers, the career decisions that created it happened years ago.

Organisations serious about closing their pay gap will stop waiting for it to appear and start measuring for the leading indicators that will predict it.

1. Glassdoor, Beyond the Gap report, (HR Dive, 4 March 2026) Report found the gender pay gap grows over a woman's career, starting at 12% at career entry, widening to 19% after 10 years, and reaching 25% after 30 years. Women's earnings stop growing in their late 30s while men's wages continue rising through their 40s, with Glassdoor attributing the divergence to men being more likely to advance into new roles with higher pay. HR Dive

2. FTSE Women Leaders Review, (24 February 2026) The Review found that while 43% of FTSE 350 board positions are now held by women, women hold only 15% of executive director roles. Only 8% of FTSE 350 CEOs are women. Linklaters

3. TUC Women's Pay Day analysis (23 February 2026) The TUC found the gender pay gap in finance and insurance stands at 27.2% the equivalent of women in the sector working for free until 9 April 2026, the longest of any sector in the UK. Trades Union Congress

4. FTSE Women Leaders Review / Yahoo Finance (25 February 2026) A pointed quote Vivienne Artz, chief executive of the FTSE Women Leaders Review, said the pace of change at board level is "naturally beginning to level as parity approaches", but noted that women continue to occupy only 8% of CEO roles and face greater scrutiny and unconscious bias in the most senior positions. Yahoo!

5. Employment Rights Act 2025 (Day-one parental leave rights, effective April 2026) From 6 April 2026, the Employment Rights Act removes the qualifying period for paternity and unpaid parental leave, creating day-one rights for an additional 32,000 fathers and partners annually. Oakwood Solicitors