Startup Life/Analysis/

UK startups’ gender pay gap worse than national average in 1992

And the situation isn’t that much better in France and Germany…

By Kai Nicol-Schwarz

Michelle Gyimah

The gender pay gap at UK startups is more than double the national average — and worse than it was in 1992.

That’s according to data from salary benchmarking platform Figures, which looked at the median wages of workers at 317 UK tech companies with 10 to 200 employees. 

Women are paid 70p for every £1 men earn at startups in the UK, and the situation isn’t much better across Europe. 

At German startups, women are paid 77p for every £1 men earn and in France it’s 84p. Both these pay gaps are significantly wider than the national average in each country.

While a company-wide pay gap doesn’t necessarily mean an organisation pays women less than men for the same job, which is illegal, it does point to a lack of women in higher paying roles — and a lack of action from startup leaders on promoting women workers. 

The statistics are shockingly bad, but might come as little surprise to many working in the tech sector. Six in seven C-suite roles at startups are held by men and 34% of startup boards still include no women — highlighting just how difficult it is for women to rise to the top. In August, a number of Sifted readers also spoke of facing sexist attitudes in the workplace.

The roles with the worst gender pay gap

Across 849 startups in France, the UK and Germany, in nearly every startup department women tend to be paid less than men.

The pay gap is worst in finance and tech teams — and only one department — admin — has a gender pay gap in favour of women.

The lack of women in tech and finance is one reason scaleups often give to explain their pay gap. Earlier this year, Revolut told Sifted the reason it was so large when it first started reporting was because it was hiring from an “industry talent pool which tends to be male-dominated”.

But it’s a bad excuse, says pay gap consultant Michelle Gyimah. “Most departments have pay gaps, even ones that at first glance you would think are female dominated — so clearly the number of women in talent pools is not the only problem.”

Are women paid less for the same role as men? It seems so

Figures also provided Sifted with what it calls the “adjusted gender pay gap” in France, the UK and Germany, which compares the pay gap in similar jobs: factoring in location and seniority. 

The findings show that women are paid less than their male counterparts for comparable roles — as opposed to the unadjusted pay gap which largely shows the lack of women in higher paying roles.

 

Across Europe it’s illegal to pay women less than men for the same job, but one of the reasons that there is a gender pay gap in similar jobs is because the law is so difficult to enforce, says Figures founder and CEO, Virgile Raingeard.

“Companies can always come up with individual reasons to justify a pay gap: diplomas, experience, specific competencies,” he says. “However as a whole, given the sample size of our overall dataset, there should be no reason for that much of a gap, and it’s a testament to clear issues when it comes to rewarding men and women fairly.”

Investors don’t care

So, why are startups so bad at gender diversity? It comes down to their backers not caring enough, Gyimah thinks. “Startups currently are not rewarded for building equitable workplaces, only for having a viable product for investors to invest in.”

It’s highly likely that the huge gender imbalance at investor level has a direct impact on the gender pay gap at startups, she says. 85% of general partners in Europe are men, as are 86% of angels in the UK. There have been calls in the startup world to end the “boys’ club” culture among investors.

While it’s important not to assume all women investors do care about the issue and all men investors don’t, she adds, the former do tend to focus more on gender equality issues when deciding who to invest in.

You’ve got to “follow the money”, says Gyimah. “Investors should be doing more due diligence on pay gap issues right from the beginning. Raising expectations of startups to build in equity from the start would send a powerful message and influence behaviour change much sooner.”

Lack of accountability

Another key reason the gender pay gap is so wide is the lack of accountability, says Grace Lordan, associate professor at the London School of Economics and director of its research centre the Inclusion Initiative. 

“Startups have lower levels of governance than public companies and can use size as an excuse to explain anomalies,” she tells Sifted. But, mandatory gender pay gap reporting could help change things.

Since 2017, companies with more than 250 employees have been required by law to submit their gender pay gap figures — and while the situation is still dire at many of the scaleups Sifted has tracked, improvements have been made. 

When Monzo first submitted its pay gap figures back in 2017 it paid its women 52p for every £1 men earned, and has since closed the pay gap to 4.3p. Fellow digital bank Starling has also closed a 49p gap to 10p in the past few years, as have a number of other scaleups. But progress isn’t happening across the board; Deliveroo’s pay gap, for example, has widened since reporting began.

Despite that, accountability is the lynch pin for change, says Gyimah, and it’s shifting things in a good direction.

“The power dynamic between employees and employers is changing, and 61% of women now use gender pay gap reports to help make decisions about moving into new roles,” she says. “Employees are now starting to ask questions at interviews about the organisation’s pay gap action plan. This was unheard of before 2017.”

Kai Nicol-Schwarz is a reporter at Sifted. He covers healthtech and community reporting, and tweets from @NicolSchwarzK.

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