‘Class pay gap’ worst in finance professions

People from working class backgrounds who get a professional job in finance or accounting are paid an average of £6,800 (17%) less each year than colleagues from more affluent backgrounds

This trend is particularly prevalent in the finance sector, according to research by the Social Mobility Commission,conducted by academics from the London School of Economics (LSE) and University College London (UCL), who used data from the UK labour force survey (LFS) to examine access to the professions and the impact of socio-economic background on earnings.

The report found that access to the UK's professions remains dominated by those from more privileged backgrounds and that even when people from working class backgrounds manage to break into a professional career, they face an earnings penalty compared to colleagues who come from better-off backgrounds.

The odds of those from professional or managerial backgrounds ending up in a professional or managerial job are 2.5 times higher than the odds for those from less advantaged backgrounds moving to the top.

The research suggested almost 50% of those working in the accountancy and finance fields are from a professional or managerial background, compared with 17% from a working class background. The remaining third come from intermediate backgrounds, for example clerical, retail, owner businesses, self-employed, etc (classified NS-SEC3-5).

Even if they get into the professions, working class entrants find it harder to get on.

The research finds that they do not go on to achieve the same earnings or levels of success. The report found the biggest class pay gaps exist in finance (£13,713) and medicine (£10,218), while the pay gap in the accountancy field is £7,867.

Overall, researchers found that even when those from working-class backgrounds are similar to those from advantaged backgrounds in terms of education, human capital and a range of other measures, they still face a £2,242 class pay gap.

The report says those from poorer backgrounds may be less likely to ask for pay rises, have less access to networks and work opportunities or, in some cases, exclude themselves from promotion for fear of not ‘fitting in’. Other explanations for the ‘class pay gap’ could include conscious or unconscious discrimination or more subtle employment processes which lead to ‘cultural matching’ in the workplace.

Alan Milburn, chair of the Social Mobility Commission, said: ‘Many professional firms are doing excellent work to open their doors to people from all backgrounds, but this research suggests much more needs to be done to ensure that Britain is a place where everyone has an equal chance of success regardless of where they have come from.

‘How much you are paid should be determined by your ability not your background. Employers need to take action to end the shocking class earnings penalty. The commission will be sending major employers details of this research and asking them how they intend to close the class pay gap.’

The academics who wrote the report say they are now going to carry out four in-depth occupational case studies to look at why the class pay gap is so significant, with accountancy one of the areas for study, along with the media, acting and engineering.

Social Mobility, the Class Pay Gap and Intergenerational Worklessness: New Insights from The Labour Force Survey is here.

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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