The findings, described as "shocking" by the head of the Equality and Human Rights Commission (EHRC), show a financial sector dominated by a "macho" or "lads' culture" where bonuses paid to women are just a fifth of those received by men.
Women working in banks and other financial institutions told the EHRC that workers who become pregnant routinely face redundancy, and that recruitment was all about "jobs for the boys". Clients were often "entertained" in lap-dancing clubs, hostess bars or at sports such as golf, from which women were excluded.
One female worker said: "Every single type of activity, whether it was customer-facing or designed to increase cohesion within the organisation, was masculine; and so women seemed to be really excluded from participating in all of the informal and other networking."
The report found: "It is this culture that denigrates certain tasks, which then become associated with women's work, from which men are encouraged to progress so that women become ghettoised, contributing to occupational segregation."
It added: "This sex stereotyping of work across the sector was compounded by the sexism that was described by some witnesses as pervading wholesale banking."
An entrenched culture of sexism prevented some women from securing higher pay, said the report.
In one incident reported to the inquiry, a woman who wanted to speak to her male manager about possible re-grading, was told: "If you show up for work in fishnets for the next month then maybe we'll talk about it."
Another witness summarised difficulties faced by women in this culture by saying: "If you do not attend large drinking sessions, play billiards and speak and act like a man (that is, no crying and never sleeping and never taking any days off for yourself or your children) then you still have a small chance of success provided you dress like a model and express a wish never to have children."
Women employed full-time in the City earn 47 per cent less in annual gross salaries than men, compared to a 28 per cent pay gap across the economy, said the commission. A disparity in bonuses and other performance-related pay is a major factor behind the "massive gender pay gap" in the finance sector, the commission found.
In one case the inquiry was told: "Some men who are making these decisions are naturally less encouraging of female talent or would say things such as 'She's just got married, she's going to have a baby soon. There's no point in paying her this year'." In another case a company's bonus policy was characterised as "We won't pay her, we will pay him: he's not going to have a baby."
The commission warned that the worst offenders who failed to respond to warnings to change their pay policies would face tough legal action.
In its report the equality watchdog has published confidential data from 50 companies which together employ 22.6 per cent of workers in the sector.
It shows that nearly all women taking up new jobs still start on lower average salaries than men, suggesting that the gender gap is being further entrenched by recruitment patterns.
This is also reflected in the disparity in first-time bonuses. Here, the average award paid to a woman was £300, compared to £800 for a man.
Women employees earned an average of £2,875 in annual performance-related pay, compared to an average of £14,554 for men. Only a quarter of companies said they had undertaken an equal pay audit.
The inquiry also suggests that the sector's age profile may be a key factor blocking women's success. An unusually high proportion of workers in the sector fall into the 25-39 age group – when women tend to have childcare responsibilities.
This is the first time that such data on City pay gaps has been collected; the commission used its powers under the Equality Act 2006 to require firms to provide information on their working practices and policies.
Trevor Phillips, chair of the Equality and Human Rights Commission, said the financial sector has to "address this shocking disparity of rewards," if it is to play a central role in Britain's recovery. "By bringing down arbitrary barriers, and changing practices that, intentionally or not, inhibit women's success, financial firms have the chance to boost morale, bring on new talent, and maximise the potential of their existing employees."
He said that he was "encouraged by the firms which are developing transparent pay policies and flexible approaches to work. But there aren't enough of them. The many need to learn from the few."
Case Study: Overlooked and out
*Gill Switalski, 52, a City lawyer, is claiming £12m in compensation from F&C Asset Management for allegedly forcing her out of a job in September 2007 through bullying. She claimed that she was treated unfairly at the company, despite making "significant bonuses". A London tribunal heard that she had been questioned by managers over flexible working hours, holidays and expenses. One of her managers became "fixated" with her working hours, which had been adapted to give her more time with her family, and often checked up on her indirectly through her colleagues, this despite the fact that she was hitting her performance targets, the tribunal was told. Ms Switalski has four children, including a son with cerebral palsy and another with Asperger's syndrome. The tribunal heard Ms Switalski's deputy was selected instead of her for the task of securing a hedge fund and she was overlooked for management roles. But, her lawyer said, a male colleague who had children with special needs was allowed to work from home to care for them.
Comments