Gender pay gaps in UK businesses are continuing to narrow for companies that reported their 2020/21 data. PwC analysis shows a three-year decline among companies that disclosed their pay gaps, from an average gap of 14.3% in 2017/18 to 12.5% in 2020/21.

While more than three quarters of companies have delayed reporting in line with the extension granted by the Government Equalities Office due to the impact of the pandemic, 58% of those that did report before the original 5 April deadline recorded a drop in their mean pay gap.

All companies with more than 250 employees are required to report their gender pay gaps. The delay in enforcement of this year’s deadline follows a suspension in 2019/20 but PwC’s analysis shows that larger companies are much more likely to have already reported for the year, with more than 60% of those with 20,000 or more employees having done so before 5 April. This highlights a continued focus on gender balance, inclusion and diversity from the largest companies though these companies are also less likely to have experienced resourcing challenges over the past year.

The impact of Covid-19 clearly influenced which industries were most likely to report their pay gaps. Businesses from the banking, investment and utilities sectors are most likely to have disclosed early while those in the hospitality industry understandably reported at lower rates. Analysis shows there has been a decrease since 2017/18 for 18 of 24 sectors considered in each of the past three years.

Katy Bennett, Inclusion and Diversity Director at PwC, said: “We know from our own research that women are more likely than men to have lost their jobs or experienced reduced hours or pay as a result of the pandemic and also to be more fearful for their future job security.  During the next 12 months, the external pressure on companies in respect of inclusion and diversity will only build. We expect to see greater focus in particular in relation to the impact on pay gaps of diversity initiatives discussed over recent years and how inclusion and diversity link to ESG goals and ambitions.

“It’s been a complex reporting year for many companies and the decision to defer reporting will not have been taken lightly. The six-month delay in enforcement by the Government Equalities Office has been welcomed by many employers, who are understandably addressing the ongoing impact of the pandemic and its effect on their April 2020 gender pay gap results. However, organisations must continue to report and the optics of this reporting cycle will be especially important given the disproportionate impact on women of the pandemic.

“In reality, with so many companies still to disclose their gender pay gap, it will only be after October that we get a true picture of this year’s reporting. This data will also likely give us a much richer picture of the impact that the pandemic has had on women compared to men. This is because the statistics reported will be in respect of those who were in employment, and not on furlough, in April 2020. Therefore we may see noticeable differences in the pay gap levels in companies and industries where significant numbers of individuals were furloughed or no longer in employment by April 2020.”