Women in finance: minding the (smallish) employment gap

Financial services employment is, overall, gender-balanced—but will it stay that way?

In a recent interview with Corporate Adviser magazine I was able to expand on the remarks I gave at TISA’s 2018 Annual Conference about women in financial services. And since the topic continues to feature prominently in the media and within the industry, I’m using this blog post to elaborate still further on this theme—in particular, delving deeper into the male/female split in industry employment.

One of the issues I explored in my previous work was the gap between male and female employment in financial services that opened up around the time of the financial crisis and has widened slightly since then. According to the latest available data, the gap stood at 148,000 employees in Q2 2019—down from 158,000 in Q4 2018 and from a peak of 181,000 in Q4 2017, but up from a negative gap (i.e., more women employed in the industry than men) of 30,000 in Q4 2001).

One potential explanation for this gap had been the possibility that women were disproportionately affected by redundancies in the post-crisis economic downturn than men. But new data reveal that this is unlikely to have been the case. The data from the Office for National Statistics (ONS) show that economy-wide, the redundancy rate for men was almost twice as high as that for women between Q2 2009 and Q2 2019. Of course, this tells us nothing about trends in financial services specifically—but it’s unlikely (though not impossible) that the trend in the industry would be the opposite of the trend in the economy as a whole.

Another potential explanation had been that women are disproportionately represented in the sorts of roles that are being eliminated because of automation and industry restructuring, which were accelerated by the crisis. Here, the evidence is more illuminating. The interim report of the Financial Services Skills Taskforce noted that the industry “will move towards more highly-skilled roles and that there will be reduced need for large numbers of admin/customer services/clerical roles”.[1] However, these are exactly the sort of roles in which female employment in the industry is concentrated. Detailed data on employment by occupation show, for example, that women account for 79% of the category ‘bank and post office clerks’—bank clerks being a part of the financial services industry where employment has in fact been declining because of operational restructuring as well as the impact of automation and digitisation. Research by the Financial Conduct Authority shows the average number of bank branches per person declined from 20.3 per 100,000 people in 2012 to 14.7 per 100,000 in 2017.[2] Similarly, women account for 61% of pension and insurance clerks and assistants, according to the ONS data.

As I noted in an earlier blog post on this topic, the gap needs to be kept in context—given industry employment of around 1.2 million, it is pretty marginal and financial services can reasonably be said to be gender-balanced overall, with women accounting for 44% of total industry employment. However, since we are trying to dig deeper into this issue, it seems safe to conclude that technology-driven change is a partial explanation for the widening gap between male and female employment in financial services—an idea that has implications for future employment trends as well.

This would probably come as no surprise to researchers at the McKinsey Global Institute, who recently published a report analysing how automation could impact women in the workforce. Their analysis suggests that UK financial services could see 100,000 net job losses by 2030—and that in the aggregate, these net losses are likely to be borne almost entirely by women. This stands in contrast to their scenario for the UK economy overall, which projects a possible net loss of 1.9m jobs across all industries, split almost equally between men (net loss of 1.1m) and women (net loss of 0.8m).[3]

In this context, the much-discussed idea of re-skilling will prove crucial for both men and women. The Financial Services Skills Taskforce interim report noted, for example, that “the onus for ongoing learning will be on the individual, with support from employers and the education sector”. But is worth highlighting the stark reality that this type of ongoing learning and re-skilling will, in practice, prove extremely challenging for large numbers of both men and women because of the cost, time and effort it requires. But it will, on average, prove more difficult for women than men. McKinsey Global Institute note that globally, “Women face a difficult reality that old barriers [in their working lives] will now be overlaid with new challenges as they set out to transition between occupations and sectors and to develop higher levels of, and new, skills.” For example, the significantly greater amount of time women spend, on average, on unpaid care and domestic work implies less time, energy, and geographical flexibility for retraining or reskilling than is available to men.[4] The McKinsey Global Institute is right not only to highlight this structural imbalance, but to suggest that both governments and private-sector industries—including financial services—will be responsible for taking steps to ensure that future changes in the world of work do not inadvertently widen gender inequality.

[1] TheCityUK, ‘Financial services skills taskforce: Interim report’, June 2019.
[2] Insight, Financial Conduct Authority, ‘When bank closures bite: the picture across the UK’, 13 March 2019.
[3] McKinsey Global Institute, ‘The future of women at work: transitions in the age of automation’, June 2019.
[4] According to the 2019 OECD Time use survey, in the UK women spend 29 hours per week on unpaid work including housework and childcare, compared with 16 hours for men.

 

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