Trends & Insights

Does the gender pay gap exist in the world of entrepreneurship?

The gender pay gap still exists in the workplace, as was highlighted on Equal Pay Day, which took place last week.

But is a different picture taking shape for women who are taking control of their destinies by branching out as entrepreneurs?

The number of new female entrepreneurs in the UK is on the rise according to the latest research from Aston University using data from the Global Entrepreneurship Monitor (GEM).

The GEM data shows that between 2003-06 and 2013-16, the proportion of women that went into business rose by 45%, compared with just 27% among men.

Why entrepreneurship?

A combination of factors has led women to start their own businesses, from taking a career break after having a family to wanting more independence, flexibility and a better salary.

So, it is good news if you are a female entrepreneur? No, unfortunately. The research also reveals that there are large disparities between different parts of the country when it comes to this “enterprise gap”.

And overall, men are still nearly twice as likely to be entrepreneurs (10.4% of men versus 5.5% of women).

There’s also disparity in relation to pay, depending on industry sectors. For example, business services, banking or engineering.

Ute Stephan, professor of entrepreneurship at Aston University, says: “The reasons for the overall pay differential are various, like women cluster in low-paid sectors; they make family a priority; they lack confidence; they fail to ask for more money or they are discriminated against.”

Ute suggests that female “social entrepreneurs” may also opt to reinvest in their company rather than reward themselves and are more “risk averse”. There’s also the possibility that men are more likely to be the main breadwinner.

Hot spots across England

Women in the south east of England are most likely to take the entrepreneurial plunge, with 7% describing themselves as “early stage entrepreneurs”. By contrast, just 2.8% of women in the north east of England fall into this category.

The region with the closest gender parity is the West Midlands, where there are 74 new female entrepreneurs for every 100 males, compared with just 33 in the north west.

Dr Karen Bonner, senior researcher at Aston Business School, said the reasons behind the continuing disparity between male and female entrepreneurship rates were complex.

“On the one hand, we could point to different societal expectations, with women still taking on the bulk of unpaid caring roles and entrepreneurship still stereotyped as a ‘male’ career choice in our wider culture,” she said.

“When asked why they started their business, women are significantly more likely to cite ‘greater flexibility for my personal and family life’ and the desire for ‘freedom to adapt my own approach to work’ than men.

“But despite these differences, and controlling for other factors like sector, age and start-up capital, both men and women display similar levels of ambition when it comes to growing their businesses.”

At the global level, the UK’s rates of female early stage entrepreneurship remain well below many other advanced economies. Canada has the highest absolute rate of female early stage entrepreneurs at 11.6%, while Spain has the closest male/female ratio of any developed economy, with 74 Spanish women entrepreneurs for every 100 men, compared with 53 for the UK.

Many developing economies display even higher rates of female entrepreneurship. In Ecuador, 31.9% of women are entrepreneurs, while other Latin American and South East Asian nations dominate the top spots. Indonesia and Brazil are the only GEM-participant countries where there are more female entrepreneurs than male.

Miss Macaroon’s on a mission

Rosie Ginday’s business Miss Macaroon is combining sales success with a social mission to help disadvantaged people gain new skills.

Since starting up in 2011, the Birmingham-based entrepreneur has offered intensive work-based training to 26 unemployed people – including ex-offenders, care leavers and victims of domestic violence. Six of them have been taken on as employees and five have moved on to mainstream employment, while others have found jobs with Rosie’s wider network.

Late last year, Rosie, 33, launched her first macaroon and prosecco bar in Birmingham’s city centre and she’s now looking at other UK cities. A trained pastry chef with experience at a Michelin-starred restaurant, Rosie is even taking her passion for macaroons back to their French roots – by selling them to customers in Paris and Cannes.

Coming from the “very male dominated” world of top kitchens, Rosie says the split among social enterprises such as her business is close to 50/50. She thinks the surge in female entrepreneurship over the past decade is unsurprising.

She says: “With the effects of austerity and wages not growing in line with inflation to cover living costs, people feel they’ve got a better chance doing something by themselves. For me, it was about doing something I’m passionate about and learning new things. As a business owner, you’re constantly having to do that and improve.”

Rosie has taken full advantage of new private sector-led mentoring schemes for business owners, having won a place on the prestigious Goldman Sachs 10,000 Small Businesses programme and NatWest’s Entrepreneurial Spark network. Last year, she was named EY Emerging Entrepreneur of the Year for the Midlands.

Having access to peer and expert mentors is so important, because you can ask them silly questions rather than floundering in the dark trying to search for the right answers,” says Rosie.

“And developing a network of like-minded business owners is crucial, because it can be lonely and invariably quite stressful, so it’s good to have people who know what you’re going through.”

Try these start-up resources

There are lots of resources available to women starting their business, from online communities to nationwide free events, talks and workshops. Here are some you can try:

Federation of Small Businesses (FSB)

A non-for profit organisation that can offer you expert advice, tips and financial advice.

A website packed full of resources if you are trying to set up a business.

UK government business start-up site

A website offering free advice on all aspects of setting up your business in the UK from registering your business to tax matters.

The National Enterprise Network (of England)

A unique membership body representing the enterprise support sector across England.

Your local bank

It may be able to offer your support or advice in branch, or even a start-up loan or funding, such as Barclays or Natwest.