Why it is so important that we close the gender pay gap in self-employment

The gender pay gap is a problem that has existed for many generations with men out-earning women in virtually every industry. While the Office for National Statistics data shows that the gap has closed from 27.5% in 1997 to 15% in 2021, it still means that women only get paid 85% ?of what their male counterparts earn in comparable roles.

Worse still, the disparity is even greater when looking at the self-employment marketplace.

The self-employment gender pay gap

A national study into self-employment found that self-employed men earn, on average, 43% more than their female counterparts . In 2019, women charged just ￡117 as a day rate compared to ￡182 for men. Further statistics showed that 63% of the UK’s self-employed workers are male. Worryingly, the pay gap within self-employment is actually widening from recent years as 2017 stats showed that the disparity between the genders was ￡32 per day.

The figures are particularly worrying for female business owners and contractors who are mothers or plan to start families in the future, of which 1 in 8 of solo self-employed people are, not least because they often won’t gain the financial support they deserve when taking a career break for this purpose.

As such, female employees are essentially working for free from November 18th to the end of the year compared to their male colleagues. For self-employed women, though, this moment occurred far earlier - back at the end of July.

?In general employment, the pay gap is often attributed to employers undervaluing women.?In many cases of self-employment, however, it is largely because they undervalue themselves - or at least fail to negotiate their way to fair pay in line with their talent.

Why do women tend to price lower than men and what impact does it have?

Female business owners and self-employed contractors regularly undercharge clients compared to their male counterparts. And it has nothing to do with a lack of quality or effort. Similarly, it is not a case of women not knowing their worth - they simply do not feel able to push for a satisfactory day rate, largely because of the institutionalised inequality.

Research found that 43% of female business owners feel that they would benefit from training in setting and raising their rates. Ultimately, the only way to overcome this challenge is to inspire an individual and collective mindset shift.

Gender discrimination has seen a significant reduction but it would be wildly inaccurate to suggest that it has disappeared. Both anecdotal and statistical evidence shows that;

●?????Some people would still rather trust a male contractor than a female one,

●?????The UK is the 10th worst market for the self-employed gender pay gap,

●?????While the gender gap has fallen, even employees have only seen a 12p improvement.

Female entrepreneurs understand the landscape that they have entered. And the harsh reality is that all business owners have to worry about themselves first. If lowering the fees is the only way to survive, it’s what most self-employed contractors will do - not least due to the financial impacts of the pandemic on virtually every business in all sectors.

The impact on future savings, pensions, mortgages

The same UK study found that half of all female entrepreneurs constantly worry about their financial status while two-in-three state they will never be able to purchase all the things they want. Mortgages are one of the key areas where female business owners may feel worse off, which is supported by a 46% acceptance rate compared to 54% for males.

It is already stated that self-employed people are ill-prepared for retirement with limited savings and pensions. After earning less due to reduced rates despite providing the same services, female business owners are set to face even bigger issues in later life.

The impact on the next generation

While the gradual decline of the pay gap has served as a source of optimism for female workers, it can have a reverse impact for self-employed women. As detailed by Yahoo Finance , even a small pay gap costs women thousands due to compounding interest rates. With the gap as large as it currently is, the long-term costs could be huge.

As the gender pay gap for the self-employed falls further behind the improving situation for employees, many young women may put their business goals on ice and focus on the security of traditional employment.

The impact on their businesses

As already stated, men are more likely to be self-employed. Moreover, the businesswomen who choose to go it alone may face difficulties. Charging less than male counterparts makes it far harder to survive. Not least because living costs are outgrowing the inflation of potential earnings.

It is already known that over half of all small businesses fail within the first few years . When the profit margins are reduced due to lower day rates, the hopes of sustained success and future expansion can be severely damaged.

How can the self-employed gender pay gap be removed?

?Even if the rate of closure has been slower than it should have been, it does offer some hope and provides something of a blueprint. Furthermore, the Alison Rose Review of Female Entrepreneurship in March 2019 found that 250 billion of new value could be added to the UK economy if female-owned businesses were scaled at the same rate as male-owned firms. However, female entrepreneurs will need to force the issues.

Actively challenging stereotypes and/or gender discrimination in the business arena is essential. While it is a unique case in a very specific working environment,?the USWNT pay dispute in America has highlighted a wider problem. Changing the perceptions of clients and the public is as important as impacting government issues or the entrepreneurial mindset.

While 74% of female entrepreneurs have raised concerns about the potential access to funding, the opportunities are improving on the back of the Rose Review while Business Grants for Female Entrepreneurs have become increasingly common. Nonetheless, it will be necessary to establish winning protocols. Some of the steps that can be implemented to support themselves and each other include but are not limited to;

●?????Be more confident and aggressive in pricing modules. Having done the research into what services are worth, female business owners should price their work accordingly.

●?????Support other female business owners by partnering with other companies that are managed by women or by hiring female contractors.

●?????Have the confidence to reinvest profits into the business.

●?????Show an understanding of the continued gender pay gap but realise that low costs can often be associated with low value.

●?????Gain support from male allies. Most actively support the demands for a fairer landscape. After all, they are sons, dads, or brothers.

It is a monumental moment for the self-employed work arena. Now is the time for women to finally receive the pay that they deserve.

If you want to know more about how you can raise your income and close the gender pay gap in your business then email [email protected].

Or you can access this free "behind the scenes" masterclass on how to position and price yourself for more power in your marketplace. This holds nothing back and sharing Emma's 25 years in business, inspires every woman to feel confident and uplevel their business through their pricing.

FREE PRICING AND POSITIONING MASTERCLASS

Emma Clayton is a Business Strategist who empowers women to create limitless businesses through proven world class strategies, an unstoppable psychology and unshakeable systems.

Emma is on a mission for every self-employed women to lie to her fullest capabilities and all patriarchal obstacles to be removed.

Emma wants the next generation of women to know that the opportunities are rich and vast and to ensure that we leave a legacy of generational wealth.?

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