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Accounting firms target socio-economic pay gaps

Author: ICAEW Insights

Published: 20 Sep 2021

ICAEW has hailed the recent publication of socio-economic data by two Big Four firms as ‘a step in the right direction’ but highlighted that data must be used effectively to bring about positive change.

PwC recently joined KPMG in publishing its firm-wide socio-economic pay gaps, detailing targets towards achieving improved working-class representation in their workforces.

“Social-economic equality needs to act at all levels of the career life cycle, to ensure progression is real, and not recruited from outside”, commented Sharon Spice, ICAEW’s Director of Global Marketing, Brand and Belonging. “This leads to the need for greater focus on the ‘missing middle’ careers stage, to ensure there is a pipeline of diversity into senior roles.”

Spice, who sits on a working group within the government’s City of London Social Economic Diversity taskforce and leads several social mobility initiatives across the profession, praised what KPMG and PwC have published calling it, ‘definitely a step in the right direction’. She also highlighted that data any organisations collect needs to be used effectively in order to bring about positive change and not just a game of evening up ratios.

“People want to be recognised and progressed on their merit and potential – this is not about an easier pass. This means we just need to think differently about how we support people so they can thrive in their working environment, irrespective of where they came from. It’s about truly embracing difference”, added Spice.

KPMG sets working-class background targets

KPMG in the UK became one of the first organisations to publish its socio-economic background pay gaps and set out ambitious targets to increase the number of senior employees from working-class backgrounds by one third by 2030.

The data, published 9 September, measures pay gaps between colleagues from different socio-economic backgrounds by looking at their parental occupation. This method of measurement is recommended by social mobility experts, such as the Bridge Group, as the most robust and reliable indicator of socio-economic background.

“We know that investors, clients, employees and communities want greater transparency from business, and our Impact Plan is just the start”, said Jon Holt, Chief Executive of KPMG in the UK. “But by taking this important step in reporting and giving more details about the way we run our business, we’re measuring our progress and holding ourselves to account to ensure that opportunities are open to all.”

The firm has also introduced the firm’s first-ever socio-economic background representation target, which will aim to see 29% of its partners and directors come from a working-class background by 2030. Currently, 23% of the firm’s partners and 20% of its directors are from a working-class background and working-class representation across KPMG’s Board is 22% and 14% in its Executive Committee. A total of 70% of KPMG’s UK partners and employees completed the survey.

PwC targets improving access to opportunity

PwC UK followed suit and published their socio-economic background and disability pay gaps for the first time as part of its FY21 Annual Report. The analysis, based on information shared by 80% of PwC’s people on the occupation of their highest-earning parent, shows that 14% come from a lower socio-economic background.

The firm said that disclosure of data is higher among senior levels within the business compared to more junior levels. PwC’s stated hope is that by publicly sharing this data and speaking about how it intends to use it to improve social mobility, people applying to work with the company will feel comfortable sharing their socio-economic background data.

Kevin Ellis, Chairman and Senior Partner of PwC said: “Improving access to opportunity and striving towards a society where a person’s career is based on their potential and not their background remains a priority for PwC, and for me personally.”

Ellis continued: “The key to enacting real and meaningful change is starting with a strong platform of data. We’ve been focused on social mobility for a number of years and, by putting their trust in us through sharing their data, our people are giving us the information we need to take action in areas where it is needed.”

Accountants can play a vital role 

KPMG and PwC’s announcements dovetail with the launch of the City of London Social Economic Diversity taskforce, a government-backed taskforce designed to break down socio-economic barriers at senior levels across the UK. 

ICAEW’s Chief Executive, Michael Izza is one of the 30 members appointed to the taskforce from different subsectors, regions and backgrounds. He firmly believes chartered accountants can play a vital part in achieving the taskforce’s goal as it aligns with ICAEW’s focus “to develop an even more diverse pipeline for not only our own profession but for the wider professions''.

“Studies have shown that training as a chartered accountant is a positive escalator for many young people and, as a professional body, we are proud to support our accountancy firms as they attract, develop and retain diverse talent and build pipelines of progression towards senior leadership,” said Izza.

Further reading:

ICAEW joins socio-economic diversity taskforce

City taskforce to tackle socio-economic diversity

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