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Closing the pay gap

The Big 4 firms recently released new pay gap figures that included partners for the first time. So, how do they look?

May 2018

All the Big 4 firms, along with everyone else with more than 250 employees, now have to release their pay gap figures. They have, of course, been publishing these figures for several years now, but for the first time they have had to include partners’ pay, too. As KPMG’s Bill Michael says, if firms are to ‘get real’ about diversity they can’t do this without transparent data.
The problem is that the gender and BAME pay gaps don’t make pretty reading. But don’t take our word for it; Michael admits they are ‘not acceptable’. And there appears to be no quick fixes either, according to PwC’s Laura Hinton.
The basic truth is that there are simply not enough women or Black, Asian and minority ethnic (BAME) accountants at the senior levels of these organisations.
But we thought we should let the Big 4 explain their figures for themselves.
PwC’s gender and ethnic minority pay gaps are due to under-representation in senior roles and not pay inequality, says the firm. It explained its updated pay gap stats now combine the total earnings of all employees, including partners, and reveal a mean gender gap of 43.8% and a median gap of 18.7%. The BAME pay gap for all staff is 35.9%, with the median gap coming in at 11.7%.
Under the government’s methodology, which came into force in April 2017, PwC’s mean gender pay gap is 13.7% and mean bonus gap is 37.5%. PwC’s senior partner, Kevin Ellis, said: “The increase in our gender and BAME pay gaps when partners are included highlights our need for more women and ethnic minorities in senior positions, including within the partnership.” He wanted to make it clear that PwC pays its women and men equally for doing the same/or equivalent jobs across the business. The issue for him is one of senior representation rather than pay inequality.
PwC’s chief people officer, Laura Hinton, admitted there are no quick fixes to eliminate pay gaps. There is now senior level accountability to build a strong and diverse talent pipeline, driving fair allocation of work and opportunities.
Based on regular earnings, when partner pay is included, EY’s gender pay gap figures are a median of 19.5% and mean of 38.1%. The gender pay gap among the UK partnership is 19.8% on a median basis and 14.6% on a mean basis.
EY’s ethnicity pay gap figures, when partner pay is included, are a median of 15.1% and mean of 38.1%, again based on regular earnings. The ethnicity pay gap among the UK partnership is 19.8% on a median basis and 14.6% on a mean basis.
EY’s UK chairman, Steve Vardy, stressed that the pay gap legislation is more than a compliance issue for the firm. In 2013, EY was the first of the Big 4 firms to set public targets to have at least 30% female and 10% BAME representation in its new partner intake, measured on a three-year rolling period. In 2017, those figures stand at 28% and 11% respectively. Nearly 40% of EY’s UK LLP board are women and 6% are BME.
Over at Deloitte, the mean equity partner gender pay gap is 13.78%. Looking at all staff, and again including partners in this equation, Deloitte has calculated its gender earnings gap as a mean of 43.2% and a medium of 15.2%.
Deloitte’s managing partner of talent, Emma Codd, said: “These calculations again serve as a stark reminder that we don’t have enough women in senior roles – this is not about unequal pay but the shape of the firm.”
She went on: “We are now recruiting more women at both student and experienced hire level and are seeing a significant increase in the number of women choosing to stay with us at the points when we previously saw increased attrition for them. and the proportion of our partners who are female has increased from 12% in 2012 to 19% in 2017 against a published target of 25% by 2020, which we remain committed to meeting.”
Finally, KPMG’s figures show a 14% median and 34% mean gender gap for the firm, and 14% median and 9% mean gender gap at partner level. The firm first published its employee ethnicity pay gap in December 2017, which was 11.7% (median) and 13.9% (mean).
KPMG’s UK chairman, Bill Michael, said: “We have to get real about diversity and we cannot do this without transparency data.” He felt the current pay gap was ‘unacceptable’ and emphasised that the firm has a long way to go in this area.

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