LONDON — The U.K.’s financial services sector must do more to “break the ‘class’ ceiling,” according to a government-backed task force, with new targets calling for at least half of senior leaders to come from working-class or lower socioeconomic backgrounds by 2030.
The City of London Corporation, the governing body that oversees the U.K.’s finance industry, said Wednesday that the moves were crucial not only for improving boardroom diversity but also for boosting growth in the sector.
In a new report, the governing body’s “socio-economic diversity taskforce,” which was commissioned in 2020, outlined a pathway for firms to ensure that accents and parentage do not dictate workplace progression.
“We need to break the ‘class’ ceiling — removing unfair barriers to progression is not only the right thing to do, it will enable firms to boost productivity, retention levels and innovation,” Catherine McGuinness, chair of the task force, said.
Falling short on diversity
According to the study, around half of all U.K. financial services employees are currently from non-professional backgrounds, defined as working class and intermediate backgrounds. Yet, they tend to progress 25% slower than their peers.
Just over a third (36%) of those employees manage to climb the ladder to senior levels, the report said. Meantime, employees from non-professional backgrounds tend to get paid up to £17,500 ($20,890) less per year, with zero links to their professional performance.
The report also said that the U.K. has one of the poorest rates of social mobility in the developed world, meaning “those who are already economically advantaged tend to stay at the top”.
Under the targets, banks and other financial and professional services companies will be expected to collect data on the socioeconomic backgrounds of their employees to provide an accurate baseline as they work toward the 2030 targets.
The task force, which worked with more than 100 representatives from the sector on the report, will review the sector-wide targets in 2025 to ensure they remain realistic.
The report did not reference what repercussions firms might face for failing to meet the thresholds.
The targets coincide with the launch of a separate report from the task force outlining the business benefits of increased socioeconomic diversity. As well as helping to boost productivity and innovation, the report said socioeconomic diversity can also increase company profits by 1.4 times.
“We cannot grow as a country unless people grow. For too long, personal growth has been constrained by people’s socio-economic background. Today’s recommendations signal a break from the past,” Andy Haldane, co-chair of the socio-economic diversity task force, said.
It comes as the U.K.’s financial services industry is vying to reaffirm its position as a global finance hub following a series of post-Brexit company relocations and a drop in international rankings.