Women working in UK startups are paid far less than their male counterparts and poor governance is to blame.
This is according to a London School of Economics expert who spoke following the release of new figures showing that pay for women lags far behind men in small British businesses.
Not only is the gender gap greater now than before, but it’s also larger than comparable European nations like France and Germany – although the gap for startups in these countries is still significant.
The gender pay gap for startups in the UK was twice as big as the national average (30.3% for startups vs 14.3% across all companies).
Pay in UK startups varies by gender
New salary research has just been released from benchmarking firm Figures and startup news agency Sifted.
It found two main points that should strike worry into the hearts of gender pay advocates:
- The gender pay gap for startups in the UK was twice as big as the national average (30.3% for startups vs 14.3% across all companies).
- This pay gap in startups was far worse than equivalents in Germany (23%) and France (16%). Both countries are in the same ballpark as the UK regarding population and GDP.
Lack of accountability
Associate professor at the London School of Economics Grace Lordan told Sifted that this trend stemmed partly from a lack of will at the leadership level.
“Startups have lower levels of governance than public companies and can use size as an excuse to explain anomalies,” she said.
Lordan called for a greater emphasis on gender pay reporting, stressing that it should be mandatory in the UK.
Governance in startups
Governance in startups is tricky; its goal is to apply consistent standards and protocols to a business, even though that business may be growing too fast for those standards to settle in.
In startups, methods of governance can change quickly – sometimes overnight. Also, initially, a CEO and founder may be the only person on a company’s board, but as the board grows, seats are limited to investors or experts in the field.
This tends to leave little room for gender diversity at the highest levels of startups. Although the latest government figures say, board positions occupied by women have gone beyond 40% overall, Sifted estimates this to be closer to 30% for startups.
These factors can easily lead to an underrepresentation of women at the highest level and, thus, less focus on what other women attached to the company are paid.
What else have the figures shown?
Tech and finance are the worst offenders when it comes to gender pay gap
The median gender pay gap in both areas hovers around -22%.
This figure doesn’t refer to entire companies – instead, the teams within companies. Other examples include data, customer support and sales – all of which reported negative median gender pay gaps.
The only area within startups reporting a positive gender pay gap was admin – a field historically dominated by female candidates.
Laws? What laws?
In the UK, unequal pay has been against the law for decades, so the idea that women cannot be paid less than men is nothing new. We can say the same for France, Germany, and the rest of the EU.
But these figures continue to demonstrate that laws against unequal pay are challenging to uphold. The volume of companies, ever-changing governance methods, and the movement of people between companies are some of the reasons why.