Read: A class pay gap shows why we need socioeconomic reporting
Calls to report the class pay gap have accompanied new research which reveals that people from working-class backgrounds are paid over £6000 less per year than those from professional or managerial backgrounds in the same occupation.
A report from the Social Mobility Foundation (SMF), based on Labour Force Surveys from 2014 to 2022, has shown that professionals from poorer backgrounds face a 12 per cent gap in average salary, earning £45,437 compared to £51,728 earned by those from more affluent backgrounds. That 12 per cent gap could be even wider than the median gender pay gap which has been estimated to be 9.4 per cent in 2022-23. The gap was even worse for female professionals from working class backgrounds who faced a 19 per cent pay gap, with a woman from a working-class background earning £36,737 compared to the average professional salary for women of all backgrounds which was £43,779 – a gap of £7042.
Workers in the private sector - which employs 82% of the UK’s workforce - face a larger class pay gap than in other sectors. Those from working-class backgrounds are paid £7,575 less per year than those from professional or managerial backgrounds. There is still a gap of £4,750 in other sectors but it is less pronounced than in the private sector.
The SMF carried out separate polling of young people aged 16-18 which found that nearly three in four of them, 72 per cent, said that the class pay gap would put them off applying from a job in elite professions such as law and finance. Nearly nine in ten, 89 per cent, said they would prefer to work for an employer who prioritised tackling social mobility and socioeconomic diversity.
Mandatory measurement of the gender pay gap, and guidance on how to measure the ethnicity pay gap, has helped employers to assess how well they are doing in tackling social mobility challenges in their organisations. It also helps them to identify gaps as well as the barriers that might prevent people getting in and getting on. The Purpose Coalition has been working with its partners to measure progress, sharing best practice and transformative results so that others will follow suit. Many of the Purpose Coalition’s partners already recognise the benefits of measuring socioeconomic background, introducing it to obtain more information on the make-up of their workforce and to get a clear picture of the progress they are making. Some are going even further. The Co-op Group, for example, has committed to publishing its first socioeconomic pay gap report in 2024 and encouraging its partners and suppliers to do the same.
These purpose-led organisations understand that a more diverse workforce is a more innovative and productive one - socioeconomic and class pay gap reporting make good business sense.
