Unexplained gender pay gap: “It’s just not good enough”

16. Apr 2024

5 min

There is an unexplained gender pay gap in the financial sector of 7.1 per cent.

In the financial sector, men generally earn more than women.

Men take home 15.8 per cent more than women to be precise.Some of the wage differential may be explained by the fact that women have less education than men, men and women work in different functions, and men have staff responsibility more often than women.

But even with this taken into account, we are still left with an unexplained gender pay gap in the financial sector of 7.1 per cent.

This is indicated by an analysis made by HBS Economics on behalf of Finansforbundet.

"In 2024, it’s simply not good enough that men earn 15.8% more than women in our sector, and that over 7% of the differences in pay between men and women is difﬁcult to explain by anything other than gender. We can and must fix this,” says Steen Lund Olsen, Vice President of Finansforbundet.

(Artiklen fortsætter efter boksen)

Differences are taken into account

The comprehensive analysis was based on payroll data from 32,313 employees in the sector.

“In the past, an often-heard argument would be that we had failed to consider matters like for how long people had been employed or if they had staff responsibility, but we’ve done so in this analysis,” says Klaus Mosekjær Madsen, Senior Economist at Finansforbundet, who, nonetheless, does offer an explanation to why a difference exists:

“Among the likely explanations are pay-related gender bias, and the fact that it is often said that women are more modest when it comes to negotiating pay,” he says.

Workplaces have a responsibility

Steen Lund Madsen, Vice President of Finansforbundet, finds that equal pay is a structural and cultural problem, and that it is the workplaces’ responsibility to do something about it.

“The key is more pay transparency, but we also need to change the existing corporate structures and cultures that cause men to earn more than women for the same work. Fortunately, things are moving in the right direction. But it is essential that we and the companies are persistent, because this is far too big a difference,” he says.

To illustrate, the companies could ensure a clear and objective pay policy and create pay transparency, he says.

“It can actually be done. “Some companies are actively and successfully working to reduce the pay gap," establishes Steen Lund Olsen.

“It can actually be done. Some companies are actively and successfully working to reduce the wage gap.”

- Steen Lund Olsen, Vice President of Finansforbundet.

Employers: There are different methods for calculating pay gaps

In a written reply, Morten Schønning Madsen, CEO Finance Denmark/Employer, maintains that, for many years, ensuring equal pay has been an important focal point for banks, mortgage institutions and the financial sector in general.

However, he notes that wage differentials may be calculated based on different methods, pointing, among others, to one of Finance Denmark's member companies that previously reported to have an unexplained gender pay gap of just over 2 per cent.

“Most likely, Finansforbundet has arrived at a different conclusion because they have chosen to use a model which compares figures across the sector and which uses average pay. To get a truer and fairer view, we find it appropriate to dive deeper and look at intra-company pay gaps, median pay and geographical pay differences,” says Morten Schønning Madsen.

Bring pay up with your manager

It is not the responsibility of the individual to ensure equal pay, but there is no reason not to bring it up with your manager. And rather sooner than later is the advice from Klaus Mosekjær Madsen, Senior Economist.

"Basically, this isn’t something you should postpone. It’s always a good idea to bring it up. It’s also important to see consider it a long process where it’s likely that you’ll be refused, but either way, you have set the process rolling, he explains and encourages you to be well prepared.

For example, you will do well to find out about the pay level in your department, the entire organisation and in the sector. Ask your colleagues and your union representative about the first areas, and for insights about the pay level in the sector, the salary calculator comes in handy, says Klaus Mosekjær Madsen.

Call for action

Klaus Mosekjær Madsen, Senior Economist, at kmm@finansforbundet.dk.

”I don’t get the methods used by Finance Denmark. The analysis has been made by HBS Economics – a recognised consulting firm, previously applied by employers. They use the most recognised methodology and include the parameters and concept of pay generally used for equal pay analyses in the Danish labour market – including by VIVE.”

“In our view, a debate on equal pay must obviously be based on the best possible transparent, objective and scientific basis. That's why we’ve made our analysis freely available – including a detailed description of the model and methodology. We consider it helpful for the debate, and it would be inspiring if Finance Denmark did the same,” he says.
Morten Schønning Madsen says that succeeding in reducing the unexplained pay gap remains an important focal point for Finance Denmark. He highlights the pay transparency directive that will become law in Denmark over the next few years.

Steen Lund Olsen acknowledges that, once implemented in 2026, the directive will provide some good, common tools, but also calls for immediate action.

"Whichever way you look at it, the result is the same – the pay gap is real. And for this reason, it's a shame to see Finance Denmark more concerned with methodology than the fact that there is an unexplained pay gap in our sector. We’d much rather discuss how to achieve more pay transparency and how to address the pay inequalities in our sector – for the benefit of employees and ultimately the companies," he says.

Find out more about the analysis.