Gender pay gap UK: what it looks like and what companies can do about it

Written by Simon Goodall

September 28, 2021

In short: The gender pay gap in the UK stands at 15% – though it is much higher for startups & scaleups (25%). The two main drivers of the gap are (1) a skew in seniority levels (men tend to be in more senior positions than women) and (2) a skew in terms of functions that men and women work in (highly-paid technical jobs are predominantly held by men). In this article, we explore various ways in which companies can aim to close the gap and improve gender parity.

Along with Equal Pay Day, the gender pay gap is the dominant measure of how much women are underpaid compared to their male counterparts. While it was not uncommon in the past that a man and a woman would be paid different salaries for the exact same job, the gender pay gap is nowadays driven by more subtle forces. Blatant pay discrimination on the basis of gender has been replaced by structural and cultural issues that – on average – lead to lower salaries for women than for men.

In this article, we look at the UK gender pay gap, its drivers and levers that companies can pull to get it down. We’ll cover the following topics – do feel free to jump to whatever section is most interesting to you.

Gender pay gap UK – overview

The gender pay gap across all employees in the UK is 15% according to official ONS data. This means that the average hourly earnings of all women are 15% lower than the average hourly earnings of all men. Now there are 2 possible reasons for why this is the case:

(1) Women get paid less for the same job

(2) Women are in jobs that pay less

We’ll dive into the drivers of the gender pay gap in the UK in the next section but in short, (2) is the main driver of the gap today. While it’s a bit less infuriating than (1), it’s still very problematic. Why are women systematically in jobs that pay less than men’s jobs? And what can employers do to avoid this?

Before going into detail, let’s look into the UK gender pay gap for a specific type of companies – startups & scaleups. Since 2017 all UK employers with over 250 staff are required to report on the pay gap in their organisations. But this still leaves a big blind spot when it comes to smaller firms. Just how wide is the gender pay gap in the UK startup scene?

From our pay & diversity benchmarking with >70 UK startups and scaleups, we know that the gap is 25% – in other words almost twice as high as in the economy as a whole. Another way to look at it is that the average salary of men is higher than the average salary of women in 92% of UK startups. 

The UK gender pay gap is pronounced in startups - 92% have a positive gap
Chart 1: In 92% of startups, the average salary of men is higher than that of women

Drivers of the gender pay gap in UK startups 

As mentioned earlier, a gender pay gap does not necessarily mean that women are being paid less for the same work – as a matter of fact, such obvious discrimination has been illegal in the UK since 1970. Today, the gender pay gap is mostly about the distribution of women and men across roles that command different salaries. To illustrate, if a company’s C-level is all-male whereas the new hires are all-female, the company is going to show a big pay gap overall, even if salaries are rigidly tied to roles and pay scales. The same would be true if all Engineers were male and all Customer Service reps female.

And these are exactly the two main drivers of the gender pay gap today – a skew in seniority levels and a skew in the functions that men and women work in:

Men tend to hold more senior positions than women

In our startup dataset, the headcount across companies is nearly equal (48% women vs. 52% men). However, when we look only at leadership positions (Director and C-level), the representation of women drops down to 33%. When only looking at the very top (Founders and C-level), it drops further down to 19%.

The gender pay gap UK is driven by a skew in seniorities - while women are well represented on junior levels, they are underrepresented on senior levels.
Chart 2: Representation of women in different seniority levels in UK startups & scaleups

It’s interesting to note that the underrepresentation of women in C-level roles is even more pronounced in startups than in the economy as a whole – across the UK, the percentage of women in C-level roles is 21% according to ONS data. The reason for this is that the C-level in startups is commonly dominated by the founding team – and 80% of startups are still founded by men.

The good news is that this at least is an issue that seems to be improving. Research suggests that the proportion of female founders in the UK has doubled in the 2010s – while 21% of funded UK startups had female founders in 2018 it was only 11% in 2011.

Men tend to dominate highly-paid tech roles

Delving deeper into the UK gender pay gap data we see that there are some disparities between average salaries of men and women also at similar levels of seniority. This suggests that the gap is not just about not enough women being in managerial positions. It’s also about men being overrepresented in departments that – across seniority levels – command a high salary (e.g. engineering, software development, data science).

Another driver of the gender pay gap UK is that women are underrepresented in technical roles like Software Development which command high salaries
Chart 3: Representation of women in different functions / departments

This overrepresentation of men in tech roles is also the main reason why the gender pay gap is larger in startups than in the economy as a whole: startups tend to have a higher proportion of tech roles than traditional businesses and so the gender skew has a larger impact. 

Levers for employers to close their gender pay gap

So what can startups and other employers do to close their gender pay gap? There are 4 main levers:

(1) Create transparency

While companies with less than 250 employees aren’t required to report their gender pay gap in the UK, you should definitely create transparency around it internally. Understand how your gender pay gap compares to similar companies and what the key drivers are (seniority skew? functional skew? something else entirely?). If you need support with that, we’ll be happy to onboard you to our pay & diversity benchmarking.

By the way, transparency also helps in the recruitment process – including a salary range in job advertisements is not just a good practise in equal recruitment but also increases the number of applications you can expect

(2) Support equitable progression of men and women into senior roles

Ensure that your culture and processes support women being hired or progressed into senior roles. For instance, think about whether a senior role you’re hiring for could be part-time – employees with childcare responsibilities are often keen to work 60-80%.

Similarly, flexibility to work from home and flexibility around working hours help ensure that childcare responsibilities can be combined with work commitments. As Timewise puts it, all jobs can be designed differently, with a little imagination and a lot of collaboration. Organisations like the Fawcett Campaign as well as the Government Office for Equalities make flexible working arrangements a central plank of their efforts to see more women fill senior roles. 

Finally, encourage both male and female employees to take parental leave. The UK introduced shared parental leave in 2015, however many new fathers have found that their employers are not that supportive in terms of how much time they take off.

Paternity leave is not only good news for men who want to spend more time with their children, it also plays a key part in levelling the playing field between genders when it comes to the impact of parenthood on your career. If the perceived threat of “losing” an employee to parental leave was spread more evenly across the genders, employers would be less biased towards hiring men in the long run.

(3) Hire women into tech roles   

Hiring women into tech roles is a challenge that many companies struggle with – and it’s an especially important one for the tech-dominated startup and scaleup scene. What can you do?

Make a conscious effort to recruit female tech talent. Go to women in tech events (like this or this), focus on diversity and inclusivity on your blog and recruitment pages and highlight success stories of women in tech roles within your organisation. The effort you put into hiring women into tech roles early on will pay off tenfold in the long-run – hiring your 10th woman into a 20 person developer team will prove much easier than hiring your 1st woman into a 20 person developer team.

Aside from just making sure you actually compete for female tech talent, consider widening the pool of applicants to technical roles. A lot of companies have come to recognise that only 15% of computer science graduates are female and so are dropping the requirement for a CS degree to increase the amount of female candidates. The idea is that really strong candidates can be trained up or may already have some of the required technical skills even without the degree to show for. Consider if you can open the door to candidates with less technical backgrounds and invest in training them yourself or getting the relevant training for them by a third party.

(4) Ensure you have the right processes for recruiting, salary negotiations and pay rises

Finally, make sure there are no structural or cultural issues with pay differences in your organisation. Men tend to be more comfortable asking for a pay rise than women so you’ll have to make sure that you have robust processes around salary reviews and pay rises in place (don’t just give pay rises to the people who ask the loudest).

Men also have a tendency to just apply for a job even if it’s not a perfect fit whereas women tend to only send off that application if they’re sure the job fits their requirements. So while a man who wants a part-time job may simply apply to a full-time position and try to negotiate it down to 80%, a woman would be less likely to do so. If there’s a potential for a role to be part-time – just put it on the job spec.

So where does that leave us?

The UK gender pay gap is no longer driven by blatant discrimination but by structural issues – men tend to hold more senior and more technical positions than women, which leads to higher average salaries. The problem is particularly pronounced in startups because founders are still predominantly male and because they tend to have a higher proportion of tech roles than other companies. 

There’s a lot that employers can do to close the gender pay gap in the UK. But as always, it all starts with transparency. Do you know the gender pay gap in your organisation and how it compares to other companies like yours? Are you aware of how many women occupy leadership and tech positions in your company? If the answer is No, it’s high time to find out.

Keen to benchmark your own startup? Get in touch through our contact form and access our startup-focused dataset

Want more insights around work & pay for your startup? Have a look at this article

Need help closing your gender pay gap? Email us under [email protected]

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