Gender Pay Gap in European Startups: How To Reduce It?

Revealing gender pay gap data in the European Tech industry

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Our mission at Figures since October 2020 is to empower companies to make fair and efficient compensation decisions. Thus, we offer companies a compensation benchmark product: it enables them to access reliable data regarding compensation in the European market.

But as well as providing access to pay data, we want to make a difference regarding pay inequalities, particularly between men and women.

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The topic of gender equality, though not unique to start-ups, is becoming increasingly important, particularly in reference to pay. And women are raising their standards and becoming empowered to negotiate and earn their worth… as they should.

This is why we decided to create the most transparent picture possible of Gender Equality in European startups & scaleups.

The state of gender equality in EU startups

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Thanks to the tens of thousands of salaries in Figures, we were able to make a complete analysis of the current state of inequality in startups, in our gender pay gap report.

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The unadjusted gender pay gap measures overall differences in pay between men and women. It’s a consequences of many causes (representation of women per sectors, part-time work, glass ceiling effect, more on this here), and less an issue tied to compensation only.

The adjusted gender pay gap is the difference in pay between men and women holding the exact same role in the exact same location. It’s the best indicator of “pure” compensation-related issues when it comes to gender equality.

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A representation issue

And we discovered a 19% unadjusted pay gap in European startups.

These inequalities can be explained by :

• the representation of women in management positions
• the representation of women in the highest-paid job families

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Women are less likely to be promoted and paid relatively in leadership positions because of gender stereotypes and the patriarchal society we're living in that creates a glass ceiling:

→ Women are also more likely to deal with child-related constraints within the couple and therefore regularly organize their schedules around them.

→ Thus, they are viewed as a less worthy investment regarding promotions.

As a result, only 17% of women are in a C-Level position, 29% in a VP one.

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In addition, to the management representation issues, a lot of this unadjusted gender pay gap can be explained by the overrepresentation of women in Support Function or Customer Support roles, which – not coincidentally – are, on average, the less paid ones.

On the other hand, women are underrepresented in tech roles, often the most paid ones.

Of course, companies would answer that there are fewer women candidates when tech roles are open.

While companies can and must address these Tech representation issues, we must remember that the problem starts very early, from kindergarten onwards.

It's the whole society we have to change. As an example, we must start encouraging girls in science subjects. And create safe environments in engineering schools for women.

Same job, same pay?

Unfortunately, the answer is still no.

There is a 5% adjusted pay gap in European startups.

Men tend to not only negotiate their salaries better, and many companies base the employee's future salary on their current salary. This only perpetuates pay inequalities.

And this has, of course, it has a significant impact on the representation of women in tech: 1 in 2 women leaves tech after eight years of experience due to discrimination in the workplace, with unequal pay being a highly cited problem (source 50inTech)

How to reduce pay inequalities in companies?

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Representation issues start at the very top of companies: we can't create a fair and equitable startup ecosystem with so little diversity in founding teams (7,5% of founders are women). VCs and investors should take diversity into account when it comes to funding.

A change is also needed in hiring practices. Hiring based on “culture fit” tends to favour the status quo in a company, whether it be race, gender, age, socioeconomic level, etc. We hire people that look like us. In the case of startups: white males from the middle to the upper class.

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We decided to create some partnerships, the first of them is with 50inTech to shed light on existing initiatives to promote women in tech.

Caroline Ramade, 50inTech's Founder and CEO, says it best:

“There are two axes in the equal pay conversation: lack of equal pay for equal skills and lack of promotion of women in the industry. And with the increasing awareness about gender pay inequality, women tend to be more cautious when choosing for whom they will work. The impact is clear with only 8% of women C-Levels in Tech in Europe.”

And with the increasing awareness about gender pay inequality, women tend to be more cautious when choosing for whom they will work.

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It is time to act now for equal pay for men and women. We can all do something to move things forward in the direction of equality.

You can start by participating in collecting your data by joining Figures and thus gain an insight into gender equality in your company.

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