Inexplicable pay gap between men and women in finance: "It makes me both furious and exhausted"
There is a considerable difference between what men and women earn in the financial sector. About half is explained by differences in job functions whereas 7.1 per cent is inexplicable. “That's 100 per cent unacceptable,” says the vice president of Finansforbundet.
A structural issue
According to the analysis, part of the pay differential is explained by the fact that men and women perform different job functions, and that men to a greater extent than women have staff responsibility.
Conversely, women have, on average, more work experience than men, which pulls in the other direction.
But although 7.3 per cent of the pay gap is accounted for, the difference is still problematic, maintains Klaus Mosekjær Madsen, Senior Economist.
"It's obvious that the sector has a structural problem when men hold the highest-paid jobs," he says.
The analysis takes into account a wide range of factors, including fields of education, educational length, work experience, absence, region, working hours, staff responsibilities, maternity/paternity leave, sickness absence and job changes. But the inexplicable pay gap of 7.1 per cent still remains, and, according to Klaus Mosekjær Madsen, that's precisely why the result is important.
“When a significant pay gap remains after such a detailed comparison, it indicates a genuine equal-pay problem,” he says.
Far from good enough
HBS Economics performed a similar analysis in 2024. Since then, the overall pay gap has decreased by 1.4 percentage points, while the inexplicable pay gap was 7.1 per cent then too.
Steen Lund Olsen is pleased with the small improvement, but, in his opinion, it is far from good enough when the inexplicable pay gap remains substantial and unchanged from Finansforbundet's last analysis in 2024.
"The sector has built up an entire compliance army to meet regulations on money laundering, GDPR and sustainability. But when it comes to legislation on equal pay, the troops appear to be on leave.
If the sector had worked as methodically with equal pay as it does with compliance and the bottom line, the pay gap would have been closed long ago," he claims.
Pay gap grows wider in step with management responsibility
Diving deeper into the analysis, we also see that women enter the sector at a lower pay level than men.
Among graduates, there is an inexplicable pay gap of 1.8 per cent.
At the same time, the analysis shows that the difference typically becomes greater as you move up the hierarchy.
The pay gap is generally most substantial in specialised and highly-paid functions. As an example, the pay gap is 17 per cent in staff and specialist functions, of which 7 per cent cannot be explained.
In addition, the pay gap increases as you move up through the management layers. In top management, the pay gap is 20 percent of which 11 per cent is inexplicable.
"Some may think 'OK, a 1.8 per cent pay gap for graduates – is that worth the bother?'. But inequality tends to grow. And our conclusion is that such inequality continues to affect women throughout the years. The pay gap becomes a bitter travelling companion taking up more and more space. And it's most significant when women reach management level,” says Steen Lund Olsen.
New rules on the way
In June, a new EU directive on pay transparency will enter into force. This means that specific requirements will be introduced for information on pay in job advertisements, prohibition from asking questions about previous salary during job interviews and reporting of gender pay gaps for companies with more than 100 employees.
"We need action. This year, the Danish Equal Pay Act turns 50, but we still haven't achieved equal pay. That's insane. We know from research that transparency about pay reduces pay inequality.
Therefore, we urgently request that the politicians who are currently conducting election campaigns implement the new EU rules on pay transparency in Danish law as soon as they are back in parliament," he says. And he also has a message for the business sector:
"An equally urgent request is made to companies about seizing the new rules and taking them seriously. The new transparency rules are not a bureaucratic monster. They're a tool for fighting inequality."
Employer responsibility?
The newsletter Finans also asked Morten Schønning Madsen whether employers have a responsibility for adjusting the pay differential. To that he replies:
"Employers definitely have a responsibility for ensuring that pay is determined solely based on objective criteria with gender playing no role at all." However, gross differences in pay caused by structural circumstances such as gender-segregated educational and career choices and other cultural aspects cannot be imposed on individual employers and individual salary contracts.”