Gender pay gap among SMEs falling at twice the national rate

The gender pay gap among small business-dominated industries is falling at twice the rate as that of all companies across the UK, according to a new research.

The research found that while the national gender pay gap was at 21 per cent ten years ago, 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 .

Across the 12 individual SME-dominated industries we analysed, every area reported double digit percentage growth for female pay over the past decade – while five of the twelve did not report such growth in male pay across the same period.

Real estate activities reported the best narrowing of the gender pay gap, with 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 4 per cent.

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

Darren Nicholls, product manager for Informi, said:Small businesses are the life blood of the UK economy, and this report demonstrates that they are blazing a pathway towards wage equality and helping to eradicate the gender pay gap.

“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.

“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.”

Chloe Chambraud, gender equality director for Business in the Community, added: “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.”

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.”