No matter your background, being fairly rewarded for our work is what we all expect. But yet again, our research has revealed that it pays to be privileged.
Professionals from working-class backgrounds are paid an average of £6,287 – or 12% – less per year than their more privileged counterparts in the same occupation.
By the end of this parliament, that means someone from a working-class background in a professional occupation could be £30,000 worse off – around the cost of a typical degree.
Millions are losing out. 39% of the UK workforce comes from a lower socioeconomic background – more than the entire population of London, Manchester, and Leeds combined.
This is holding both brilliant people and the UK economy back. Recent research from Demos and Co-op found that improving social mobility in our workplaces could boost annual GDP by £19bn per year. That could generate £6.8 billion in tax revenues – enough to pay for over 800,000 school places.
We’ve turned a problem like this around before and we can do it again. Introducing gender pay gap reporting was a historic moment in the fight for gender equality. And what gets measured gets done – the gender pay gap has decreased to 7% in 2023, down from 9% in 2017 when reporting was introduced.
Now it’s time to do the same for class.
We’re calling on the Government to introduce mandatory class pay gap reporting for all large employers to break down barriers to opportunity and unlock the growth that our country desperately needs.
A number of forward-thinking employers have shown that measuring their class pay gap is achievable, useful and has become part of business as usual in their workplaces. Nineteen organisations, employing nearly 135,000 people, already collect and publish their socioeconomic pay gaps. They include Co-op, PwC, Teach First and KPMG.
But the law sets the standard. It was the catalyst for reducing the gender pay gap: even though many businesses supported gender pay gap reporting, very few voluntarily published data before the law changed.
The Equality (Race and Disability) Bill, announced earlier this year, will introduce mandatory ethnicity and disability pay gap reporting in a bid to break down barriers to opportunity. It would be a missed opportunity not to include socioeconomic background and make the Class Pay Gap a thing of the past.
The Research
Our research shows that workers in higher managerial, administrative and professional occupations from working-class backgrounds are paid an average of £6,287 – or 12% – less per year than their more privileged counterparts in the same occupations.
Professional women from working-class backgrounds are hit with a double disadvantage. There is a Class Pay Gap of £6,855 between women from working-class and professional-managerial origins in the same occupation, in addition to the pay gap between male and female workers overall.
*‘Class Pay Gap within group’ refers to the class differences in pay within that group, such as between men from professional-managerial origins and men from working-class origins who are all working in Class 1 occupations.
The Class Pay Gap varies considerably by ethnic group but some groups face an additional disadvantage. The largest Class Pay Gap within an ethnic group is between Indian workers from a working-class background and those from a professional-managerial origin. Those from a working-class background are paid £6,813 less per year, despite being in the same occupations.
*Data for within-group Class Pay Gap based only on 2014-2022 as small sample sizes in 2023 prevent analysis using that year of data.
Workers in the private sector, which currently employs 82% of the UK workforce, face a larger Class Pay Gap than those in other sectors. Those from working-class backgrounds in a professional occupation in the private sector are paid £7,774 less per year than those from professional-managerial origins.
Workers in Northern Ireland face the largest Class Pay Gap, followed by Wales, The South & East of England, the North, and London, who have Class Pay Gaps that range from £4,780 to £7,393. The lowest Class Pay Gaps are found in Scotland, at £2,000, and the Midlands, at £3,540.
The research, conducted for the Social Mobility Foundation in partnership with Co-op, uses Labour Force Survey data from 2014-2023 (the July-September season). It was conducted by researcher Dr Chris Percy, Visiting Research Fellow, University of Derby, building on previous research by the academics Professor Sam Friedman and Dr Daniel Laurison, who originally conceived of the Class Pay Gap.
To give a large enough sample size for a reliable estimate, the Class Pay Gap calculation is based on an average of the last ten years of data. Class groups including “working-class” are based on household occupation aged 14, which is the metric recommended by the government’s Social Mobility Commission.
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We know many employers want to lead the way by reporting on socioeconomic background, despite it not yet being a statutory requirement.
Our guide, Levelling The Playing Field, provides a seven-step summary for organisations that want to collect and report on socioeconomic background data. The guidance follows established best practice in gender pay reporting and makes recommendations on how this can be applied to socioeconomic background. Our methodology is suitable for organisations in the private, public or voluntary sector.
We worked with the Bridge Group, Clifford Chance, Co-op, KPMG UK, PwC UK and Teach First to make this possible.
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The Class Pay Gap is a harsh reminder of how it pays to be privileged. Many people from lower socioeconomic backgrounds haven’t had the same access to resources, work opportunities and connections as their peers. Unequal pay is just another blocker that can be resolved.
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Hannah Ayane, Sales Analyst and former SMF Aspiring Professionals Programme student
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