Gender pay gap – beyond the corporate world

We’re all too aware of the effect that years of inequality has had – and still continues to have – on women in the world of business. Last week (5th April) saw the deadline for large companies to file their latest figures on gender pay, and it wasn’t a pretty picture. Overall, 78% of companies showed a pay gap in favour of men, with 14% favouring women and the rest reporting no difference – a clear demonstration that the gender pay gap remains a significant issue in the corporate world. In fact, since the introduction of legislation forcing larger businesses to publish data about their gender pay differences, several organisations seem to have taken a backward step; with 45% of firms now having a larger discrepancy between pay in favour of men compared to the previous year. There are too many to call out here, but some of the biggest offenders include HSBC, Npower and Virgin Atlantic.

But what about when women step out of the corporate environment? What happens then?

You might think that starting a small business or working as a freelance consultant would give women the ability to set their own rates, therefore giving the opportunity to redress the imbalance and allowing women to position themselves equally against their male counterparts.

However, there are a number of statistics that call this assumption into question…

The number of self-employed women has grown significantly over the last few years – and there’s a rapid increase in particular of the number of self-employed mothers. Figures released this week by the Office of National Statistics (ONS) found that the number of women in self-employment rose by 31,000 in the last quarter of 2018. A separate analysis published earlier this month by the Association of Independent Professionals and the Self-Employed (IPSE) revealed a 57 per cent increase in the number of women turning to self-employment since 2008.

Self-employed mothers in particular now account for around one in eight of the self-employed population.

Yet despite women representing a large and growing proportion of the freelancing and self-employed community, statistics suggest they’re getting paid less than men.

Data from 2016 shows that the median weekly earnings for self-employed men stood at £363 per week, compared with £243 for their female counterparts. – ONS

The ProCopywriters Survey 2018 showed a 21% pay gap between men and women freelance copywriters. As a comparison, the gender pay gap across UK businesses with 250 employees or more is 18.4%.

A report from FreshBooks found self-employed women earn 28% less than their male counterparts. Another study from YunoJunoshows it’s a similar story for creative freelancers – for example, art directors and creative directors – with women earning an average of £308 a day, compared to men who make £350 a day on average.

Perhaps one of the issues here is that stepping out of the corporate world into that of self-employment isn’t always a deliberate choice for women, but can come as a forced decision where the right working arrangements cannot be secured. Research shows that the age at which most British women choose to leave corporate life, regardless of whether or not they have children, is 38.

If women are being forced into making a decision to leave their job and set up shop on their own, it’s only natural they will find themselves on the back foot.  Having to make an abrupt decision allows far less opportunity to take the steps to plan for successful business growth – such as branding a business with a logo and website, forging networks and building a potential pipeline of clients in advance. Furthermore, where starting a business is planned, it allows time to plan financially – building a safety net to fall back on during those first few months and years. Being thrust into self-employment makes the need to secure clients much more urgent – perhaps therefore forcing the need to compete more aggressively on price.

Even outside of this, women have a more natural tendency to downplay their own abilities. We recently blogged about ‘imposter syndrome’ and its potential contribution to the issues faced by women in the corporate world. The statistics above would suggest that this is playing at least a small part.

You might ask whether the statistics matter. If each individual is making a decent living, and charging the rates they feel able and comfortable to, perhaps this shouldn’t be regarded as an issue at all. Then you re-read the stats and the question comes up – ‘why’?

Surely women that are in the position to be able to control their own rates of pay should be able to receive the same payment as men? And if they can’t, why can’t they?

Let’s not forget that being self-employed or running a small company means all of the benefits that come with working for a larger organisation – such as holiday pay, sick pay, pension contributions – are all forgone. We already know that the gender pay gap is translating into a pensions pay gap – with analysis of official data on UK household incomes suggesting the gap between men and women’s pension income is 39.5 per cent lower, or around £7,000 per year.

With so many women heading into self-employment or operating their own businesses, this issue really has to be highlighted or we could risk even further perpetuation of the pension gap.