Despite the UK slipping four places to 17th on the OECD Index – the largest annual fall in rankings experienced by any OECD country this year – nine of the UK’s 12 nations and regions improved their Index scores on the UK regional Index compared with last year.

Having consistently ranked either second or third in the regional Index over the last three years, Scotland has secured the top spot thanks to an overall score increase of 3.1 points – largely driven by an increase in the female labour force participation rate (from 73.2% in 2021 to 74.9% in 2022).

Scotland also recorded the lowest gap in participation rates between men and women across the UK as of 2022, at 4.4%, and saw the female unemployment rate fall from 3.4% in 2021 to 2.9% in 2022.

Although the majority of the UK nations and regions improved their Index scores in comparison to last year, the analysis shows that progress has not been evenly distributed. Whilst Yorkshire and the Humber, and the North East, also rose by two places, the West Midlands – the worst performing of the regions – fell two places from 10th to 12th. The East Midlands experienced the largest annual fall in rankings, dropping by six places to 11th on the Index.

Despite its fall in ranking , the UK increased its OECD Index score by 1.1 points, reflecting small improvements on most indicators, demonstrating that it is being outpaced by other countries in terms of progress made towards achieving gender equality at work. The UK does, however, remain the top performing G7 country on the Index.

Mairi McInnes, PwC Scotland’s Place and Purpose Lead, said:

“It’s heartening to see Scotland not only retain what has become its usual top-three spot, but rank first in terms of women’s employment outcomes. It is also particularly encouraging  to see that the closure in the participation gap between men and women in Scotland is largely due to more women entering the workforce, as opposed to being a result of men exiting employment. 

“However, whilst these gaps are closing, this is not a pattern being played out across the UK nations and regions and, from a UK-wide perspective, the progress being made is not at pace with the rest of our OECD peers.

“There is a continuing need for more work to be done locally and nationally to level the playing field and provide equity and equality for women, regardless of where in the UK they live and work. I am fortunate to see firsthand the work done by numerous organisations in Scotland like TechSheCan, Business in the Community, Scottish Financial Enterprise, and our own gender inclusion networks within PwC, to empower young women into entering futureproof careers. However, there must be a concerted effort and broader investment into the creation of more inclusive workplaces and equal opportunities across the board.”

The UK ‘gender pay penalty’

The report finds that, even after accounting for a range of pay-determining factors, the pay disparity between women and men in the UK still persists with women earning almost a tenth less than men on average.

This ‘gender pay penalty’ worsens with age, with women between the ages of 46 and 65 experiencing more than twice the gender pay penalty than that of women between 16 and 30 years. Indeed, while a woman entering the workforce faces a pay penalty of around 5.2% on average, this widens to nearly 13% as her career unfolds. The report highlights the ‘motherhood penalty’, with women taking on an unequal share of childcare responsibilities, as a key driver. This is compounded by men often having more time available to perform so-called ‘greedy jobs’, which demand unpredictable and longer hours and tend to be more highly paid. In addition, women between 46 and 65 are also likely to be impacted by health conditions and the menopause, which may require them to take more time off work, potentially affecting their career progression and compensation.

Strikingly, married women and those in higher income brackets also face a hit to their earnings when compared with men with similar personal and professional backgrounds – for example, people living in the same area and working in the same industry.

Ian Elliott, Chief People Officer at PwC UK, said:

“Our analysis is a timely reminder that employers have to look at all the factors that contribute to pay gaps. Alongside transparent and robust gender pay gap reporting, it’s also vital that health and wellbeing resources are accessible and the workplace is an empowering place for employees experiencing the menopause and other health conditions. Moreover, it’s crucial that working parents are properly supported – championing flexible and hybrid working, alongside progressive parental leave policies, is key.”

Addressing the gender pay penalty could unlock significant economic gains for the UK economy. If women no longer faced a gender pay penalty, the total increase in women’s earnings in the UK could be up to £55bn every year. Moreover, it could also encourage more women to join or rejoin the workforce – a 5% increase in the total number of women in employment could boost UK GDP by up to £125bn every year.