In this week’s HR news round-up, we highlight everything from a new report on the increased return on investment from gender diversity to the latest gender pay gap figures.
Companies with more gender balance perform better, according to a new report by BlackRock.
Its white paper ‘Lifting Global Growth by Investing in Women’ shows there is an intermediate ‘sweet spot’ on the women’s representation spectrum – neither under-representation nor over-representation – that matters for performance.
It says its analysis shows companies with the most diverse workforces outperformed their country and industry group peers with the least-diverse workforces in terms of return on assets by 29% per year, on average, over the 2013-2022 period.
Companies closest to parity across key roles outperformed the companies that are furthest away from parity in these roles. The lack of women at middle management and senior levels had a detrimental impact on performance, the report said.
It adds that investing in companies with a more women-friendly culture may help boost performance, for instance, it calculates that allowing for portfolio tilts towards companies with higher average maternity leaves taken would have improved the portfolio’s performance by 1.07 p.p. per year over the benchmark (Russell 1000 Index) over the past four years.
The report further highlights that the MSCI World Index of companies with female CEOs [just 6% of companies had a female CEO in 2022] have outperformed companies run by men while women-owned or managed hedge funds have outperformed an average hedge fund by 10.5% over the last 16 years. A survey of more than 350 startups showed that women-owned start-ups delivered twice as much per dollar invested compared to those founded by men.
Middle earners are more likely to stay in work until state retirement age, with early retirement increasingly the preserve of the wealthy and poorer people more likely to stop working due to ill health, according to a new report.
The study by the Institute for Fiscal Studies [IFS] in partnership with the abrdn Financial Fairness Trust, found that employment rose for middle earners in the 2000s and 2010s at a significantly higher rate than for other workers, up from from 59% in 2002–03 to 76% by 2018–19 and considerably higher than that seen among the poorest fifth (46%) or the wealthiest fifth (65%).
In 2002–03, the fraction of those who were retired aged 55–64 was fairly similar across the wealth distribution: 20% in the poorest fifth compared to 28% for the wealthiest fifth. In contrast, by 2018–19, only 7% of the poorest fifth were retired, while for the wealthiest fifth it was still 24%.
Many of the poorest report being out of work for health-related reasons. 39% of the poorest fifth in 2018–19 were not in the labour force but not retired: most of them reporting themselves as permanently sick or disabled or (to a lesser extent) looking after family. This is unchanged from 2002–03 and compares to only 9% of people in both the middle fifth and the wealthiest fifth.
The report also found that many more people are in employment in their late 60s and early 70s in England, compared with 20 years ago, but the patterns of work are very different to those seen below the state pension age.
Wealthy people are disproportionately likely to be in paid work in their early 70s. Among people aged 70–74, the employment rate is 15% for the richest fifth, compared to 11% for the middle and 6% for the poorest fifth.
People from ethnic minorities are nearly twice as likely to be cutting back on their pension payments due to the cost of living crisis than their white British counterparts, according to new research on the ethnicity pension gap.
Legal & General Investment Management’s [LGIM] Ethnicity Pensions Gap Report, based on a survey of 4,000 people, found 20% of minority ethnicities state the cost-of-living crisis is preventing them from paying into a pension, compared with 13% of white British respondents.
The report also found a 54% ethnicity pensions gap, with the average saver from a minority ethnicity background having a pension pot of £52,333, compared with the average white British saver, who has an average pot of £114,941.
It says that, in addition to the cost of living crisis savings gap, the ethnicity pensions gap is driven by multiple structural and interrelated economic, social and educational factors, including:
– A lack of disposable income: according to the research, those from minority ethnicities are more likely to have lower incomes (20% of minority ethnicities vs. 11% of white British respondents), with the risk that many may be falling short of the £10,000 auto-enrolment threshold.
– A lack of pensions knowledge: 18% of minority ethnicity respondents said a lack of pensions knowledge
was the reason they weren’t invested in a pension.
– The compounding effects of gender inequalities: Nearly half (47%) of minority ethnicity respondents have taken time out of work to fulfil caring responsibilities, including maternity leave, versus 41% of white British respondents.
Read more here.
Black and minority ethnic (BME) women are nearly three times as likely to be on zero-hours contracts as white men, according to new analysis published by the TUC.
The analysis shows that BME workers are significantly overrepresented on zero-hours contracts compared to white workers (5.7% compared to 3.2%).
BME women are the most disproportionately affected group, followed by BME men (6.8% of BME women in work are on these contracts along with 4.8% of BME men).
White women are also significantly more likely than white men to be on zero-hours contracts (4.0% compared to 2.5%).
The new TUC analysis also reveals that the number of people on zero-hours contracts rose by nearly 150,000 over the last 12 months. There are now 1.18 million people on these contracts.
The biggest proportional increase has been among BME women. The proportion of BME women on zero-hours contracts has risen by 0.7 percentage points (15,200) over this period – three and a half times faster than the proportion of white men ((which has risen by 0.2 percentage points).
The TUC says this increase in zero-hours contracts for BME workers reflects “structural racism in the jobs market”.
The gender pay gap among full-time employees has increased since last year, according to Office for National Statistics figures.
The ONS says the gender pay gap for full-time workers rose to 7.7%, up from 7.6% in 2022. However, it is still below the gap of 9% before the coronavirus pandemic in 2019. Among all employees, the gender pay gap decreased to 14.3% in 2023, from 14.4% in 2022, and is still below the levels seen in 2019 (17.4%).
The gender pay gap for part-time employees stayed consistent at negative 3.3%, but the gap has been increasing since 2015. Because women are more likely to work part time [86% of men work full time compared to 61% of women] the gender pay gap for all employees tends to be higher.
The ONS figures also show the gap widens with age. Although the gender pay gap increased across all age groups between 2022 and 2023, except for those aged 18 to 21 years where it decreased from 1.1% to negative 0.2%, the largest increase was seen among employees aged 30 to 39 years, where the gender pay gap increased from 2.3% to 4.7%, the highest gap since 2009.
The gender pay gap for full-time employees aged 60 years and over is the largest of all age groups. Between 2022 and 2023, the gender pay gap for this group has increased from 13.5% to 14.2%.
The gender pay gap varies substantially between regions. It is higher in every region of England than in Northern Ireland (negative 3.5%), Scotland (1.7%) and Wales (5.6%). In the case of Northern Ireland in particular, the gender pay gap is affected by a higher proportion of women working in the public sector, where pay rates for some jobs are higher than in the private sector.
TUC General Secretary Paul Nowak said: “Our economy isn’t working for women. At this rate it will take decades to close the gender pay gap.
“We need bolder action now. Companies must be legally required to explain how they’ll close their gender pay gaps – and should face fines if they don’t comply with the law.
“And we must fix Britain’s broken childcare and social care systems, or women will continue to lose out as they bear the brunt of caring responsibilities. Fixing care is critical to raising women’s earnings.
“We desperately need more flexible, affordable and accessible childcare for all families, that works around shifts, weekend work and irregular working patterns.
“And we must address our social care crisis, by bringing in sectoral collective bargaining to stop the race to the bottom on pay and conditions.”