Why UK SMEs are twice as quick to bridge the gender pay gap

Every sector where UK SMEs dominate reported double digit percentage growth for female pay over the past decade. Here's why they are primed to bridge the gender pay gap.

With the national pay gap stagnant at 17 per cent, new research reveals that entrepreneurs in the UK are leading the charge in closing the gender pay gap. The gender pay gap among small business-dominated industries is falling at twice the rate as that of all companies across the UK, now at 13 per cent.

Ahead of this weekend’s Small Business Saturday, Informi studied businesses in a range of industries over the past decade, where at least 50 per cent of employees work for small businesses, against overall national figures. Just over two in five full-time workers in the UK are employed by SMEs, while 57 per cent work for a larger firm.

The research found that while the national gender pay gap was at 21 per cent ten years ago (and at 22 per cent in SME-dominated industries), current wage inequalities in those sectors with a greater number of SME employees has fallen to 13 per cent, compared to a national average of 17 per cent.

Every sector surveyed reported double digit percentage growth for female pay over the past decade, but five of the 12 did not report similar growth in male pay across the same period.

“Small businesses are not shackled by tradition, legacy or bureaucracy in the same manner as many large companies can be. That said, clearly a double digit gap is still far too high. There’s a great deal more to be done, with some industries lagging behind others in implementing the necessary changes to ensure that females get just as many opportunities to thrive in their profession of choice,” Darren Nicholls, product manager for Informi, said.

“The fact that mandatory reporting has been brought in by the government for larger companies should act as an encouragement for small businesses to consider female progression within their own firms, auditing their own internal data and acting upon their results.”

Real estate saw a 30 per cent improvement in female pay compared to that of males in the sector, while the relative improvement of the gender pay gap was least pronounced in the construction industry, where it narrowed by only 4 per cent.

Chloe Chambraud, gender equality director for Business in the Community, believes closing the gender pay gap is not just about equal pay, but about a much bigger organisational culture shift. “Employers should understand any factors driving their pay gap, and address the root causes of inequality. This means reducing bias and increasing transparency in the recruitment, appraisal and promotion processes, normalise agile working, and offer financially viable parental leave packages for all,” she said.

With a 9 per cent overall fall in the gender pay gap across these SME-dominated industries over the last ten years, the report expects these sectors to tackle the remaining 13 per cent average wage inequalities by 2034 should it continue to fall at current rates.

Sophia Morrell, chair of Labour in the City, added: “It is really encouraging to see SMEs leading the charge in the UK on closing the gender pay gap. Legislation can be helpful in pushing us towards equality, but the most forward-thinking companies have already been embedding these principles into their workplaces rather than waiting for regulation to force their hand.”

Praseeda Nair

Kellen Rempel

Praseeda was Editor for GrowthBusiness.co.uk from 2016 to 2018.

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