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The UK financial services sector has issued new targets for at least half of senior leaders to come from working-class or lower socio-economic backgrounds by 2030.
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London – Essential to the UK’s financial services sector According to a government-backed task force, “Do more to break the ‘class’ ceiling,” with new targets calling for at least half of senior leaders to come from working-class or lower socio-economic backgrounds by 2030.
The City of London Corporation, the governing body that oversees the UK’s finance industry, said on Wednesday that the move was important not only to improve boardroom diversity but also to spur growth in the sector.
In a new report, the governing body’s “socio-economic diversity taskforce,” which was commissioned in 2020, outlined a path to ensure that accents and parentage don’t dictate workplace advancement.
“We need to break the ‘class’ ceiling – removing unfair barriers to progress is not only the right thing to do, it will enable companies to increase productivity, retention levels and innovation,” said task force chair Catherine McGuinness.
Decrease in diversity
According to the study, almost half of UK financial services employees are currently from non-professional backgrounds, defined as working class and middle class backgrounds. However, they progress 25% slower than their peers.
A third of those employees (36%) manage to climb the ladder to senior levels, the report said. Meanwhile, employees from non-professional backgrounds get paid as little as £17,500 ($20,890) per year, with zero link to their professional performance.
The report also said the UK 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”.
For too long, personal growth has been hindered by people’s socio-economic backgrounds.
Andy Haldane
Co-Chair of the City of London Corporation’s Socio-Economic Diversity Task Force
Under the targets, banks and other financial and professional services companies will be expected to collect data on the socio-economic background of their employees to provide an accurate baseline as they work towards the 2030 targets.
The task force, which worked with more than 100 sector representatives on the report, will review the sector-wide targets in 2025 to ensure they remain realistic.
The report did not refer to what consequences companies could face for failing to meet the threshold.
The goals coincide with the release of a separate report from the task force that outlines the business benefits of increasing socioeconomic diversity. As well as helping to boost productivity and innovation, the report found that socioeconomic diversity can also increase a company’s profits by 1.4 times.
“We cannot develop as a country unless people develop. For too long, individual development has been constrained by people’s socio-economic backgrounds. Today’s recommendations signal a break with the past,” Andy Haldane, Socio-Economic Force, co-chairman of the Diversity Task Force, said.
It comes as the UK’s financial services industry seeks to reaffirm its position as a global finance hub following a series of post-Brexit company relocations and a drop in international rankings.
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