The European Banking Authority’s most recent report on European Union financial sectors highlighted a prevalent gender pay gap, urging institutions and investment firms to enhance transparency and conduct more rigorous reviews of their gender equality measures. on Tuesday 16 July, the report underscored that although many institutions followed gender-neutral remuneration policies, a notable number of investment firms faced challenges in monitoring and rectifying gender disparities in pay.
According to the report, while 85% of banks and credit institutions monitored the representation of women, only 62.6% of investment firms did so. Similarly, 80% of institutions reviewed the gender pay gap regularly, whereas only 61% of investment firms undertook this practice.
Contractual practices
The report noted that in more than two-thirds of institutions (71%), collective bargaining contracts covered the majority of staff, typically ranging from 95% to 99%, which helped mitigate the risk of gender pay discrimination. In this category, 64% of total staff were covered by bargaining contracts on average. In contrast, smaller institutions and 81% of investment firms predominantly relied on individually negotiated contracts. At these firms, 79% of all staff fell under bespoke agreements, while only 21% enjoyed the benefits of collective negotiations.
Gender pay gap
Despite efforts towards gender-neutral remuneration policies, persistent gender pay gaps were observed across both institutions and investment firms, stated the European regulator. The EBA recalled Eurostat data that women’s gross hourly earnings in the EU were 13% lower than men’s in 2022. Within management roles, female executives earned 12% less than their male counterparts, excluding CEOs, and 9% less in supervisory roles. Alarmingly, more than 20% of banks reported pay discrepancies exceeding 30% for both functions, underscoring significant under-representation of women in higher-paying positions.
Pay transparency
Transparency in remuneration policies was prevalent, with 95% of banks and 85% of investment firms making their policies transparent to staff. Regular reviews to ensure gender neutrality were conducted annually by the majority, though some banks and investment firms opted for less frequent reviews every two or three years.
Diversity and equal opportunities
In the report, the EBA highlighted the low representation of women in senior management as a key factor contributing to the gender pay gap, advocating for greater diversity to foster a broader range of perspectives and reduce biases. While the existence of a gender pay gap didn’t necessarily indicate equal pay violations, it underscored the need for continued efforts to ensure equal opportunities, particularly in senior positions.
Recommendations
The EBA acknowledged in the report that while remuneration levels generally aligned with market conditions based on responsibilities and skills, challenges remained in implementing gender-neutral policies. Enhanced transparency, including quantitative indicators on gender neutrality and diversity metrics, could play a crucial role in narrowing the gender pay gap across financial institutions and investment firms in the EU.
The report covered a total of 254 institutions and 99 investment firms, comprising a workforce of 1.1m staff members, categorised based on their total assets into three groups: under €1bn, between €1bn and under €15bn, and €15bn or above. 15 banks and credit institutions and five investment firms from Luxembourg took part in the survey.