Mind the gap: Women still paid less than men in self-employment

By Inna Yordanova
Research Correspondent

Inna is a Research Officer at IPSE

Research shows that there is a consistent difference in pay rates between self-employed men and women.

Men earn nearly a fifth (16%) more than woman on average per day, showing there is still a consistent gender disparity in self-employment.

In the last 10 years, the rise in self-employment has been driven by a 63 per cent increase in the number of highly skilled female freelancers, choosing this way of work because of the freedom, flexibility and control it provides, according to the Labour Force Survey.

The research also shows that the number of mothers entering self-employment has almost doubled since 2008. Freelancing allows mothers to pursue their career and spend time with their family in a way that simply was not possible half a century ago.

And while the number of women in self-employment continues to rise, not a lot is known about the perceptions, attitudes and concerns of this group, as well as their experiences in self-employment. To address this gap, the Association of Independent Professionals and the Self-Employed (IPSE) has conducted numerous studies.

Satisfaction and pay disparity

Overall, research shows women in self-employment reported high levels of job satisfaction with their working life (7.7 on a 10-point scale), just slightly lower than the score for men (7.9 on the same scale).

However, despite their high levels of job satisfaction, self-employed women seem to struggle financially.

IPSE’s research shows that there is a significant gender pay gap in self-employment, with men earning 16 per cent more on average per day than women.

This pay difference, however, does vary. In fact, the less skilled the individual is, the larger the pay gap is between men and women. The pay gap also narrows for freelancers working in the most highly skilled managerial, professional and technical occupations.

It is simply unacceptable that in 2019, the average female freelancer still earns 16 per cent less than their male counterpart.

Low pay equals low mood

While the pay disparity is concerning, the studies show it not only affects the individual’s financial circumstances, but also their mental health and work performance.

In fact, the research shows that when asked about different financial scenarios, self-employed women seemed more likely to feel insecure about their financial future in comparison with men. For instance, self-employed women are more likely to say that, because of their money situation, they will never have the things they want in life and that they are just ‘getting by’ financially.

Women also admitted to feeling stressed, anxious and depressed as a result of their finances. A third of self-employed women said they had experienced feelings of inadequacy or failure and lack of confidence because of the same reason.

Despite these financial worries, women are continuing to choose self-employment and are largely happy with this way of work. That is why it is crucial for both government and industry to adopt measures and alleviate the financial worries women are experiencing in self-employment and close the gender pay gap.

Data shows that, by and large, women quote positive factors such as to maintain or increase their income (23%) and for better work conditions and job satisfaction (22%) as key motivations for becoming self-employed. Only two per cent entered self-employment because they could not find any other employment.

The vast majority (86%) of freelance women working in the most highly skilled occupations also agree that self-employment gives them the flexibility they need around the rest of their lives and that being self-employed has become central to their identity (60%).

What can be done?

Continuous training and development are important for the self-employed in order to keep abreast of technological, economic, legal and other issues in their respective occupational fields.

When asked about their training needs, self-employed women were more likely than men to admit training would be useful to them in eight out of the nine areas examined in the research. The top areas they mentioned included taxes and self-assessment (62%), accounting and bookkeeping (60%) and growing their business (59%).

Upskilling can, therefore, help self-employed women out of the low-pay cycle by allowing them to expand their skill set and giving them the means to develop their career and earning potential.

Training providers could also help women in self-employment cope with stressful situations and financial worries by offering them advice on how to deal with irregular work patterns and align their skills with the demands of running a business.

Chloé Jepps, head of research at IPSE, said: “Women – and particularly mothers – are one of the fastest-growing groups in the self-employed sector. But, as our research shows, like in so many other areas of the workforce there are still far too many obstacles holding them back.

“It is simply unacceptable that in 2019, the average female freelancer still earns 16 per cent less than their male counterpart. It is time for government and industry to step up and address the challenges faced by female freelancers. They should start by opening up more accessible training and development opportunities for female freelancers – and, indeed, all the UK’s self-employed.”