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Contents
Women's Enterprise in the the UK
Women’s Enterprise in International Contexts
International Comparators of Women’s Enterprise
The Socio-economic Context of Women’s Enterprise
Women's Enterprise in the the UK
There are approximately 1,013,000 self-employed women (7.6% of women in employment) and 2,706,000 self-employed men (17.4% of men in employment) in the UK. Self-employment rates (the percentage of people ‘in employment’ who are self-employed) vary at the regional level and these variations are explored in section 3.1.1. Most self-employment (76.6%) is undertaken on a full-time basis.Women comprise 17.5% of full-time self-employment and 59.1% of part-time self-employment.
Different levels of male and female self-employment are largely attributable to gendered divisions within the labour market. Traditional occupational choices have steered men into skilled trades, while women are over-represented in administrative and public service occupations where conversion into self-employment is less obvious. The bulk of male self-employment is within the skilled trades (39.4%), managers and senior officials (16.3%), associate professional and technical (13.5%) and professional occupations (13.1%). In contrast, most female self-employment falls within four occupational categories: managers and senior officials (22.1%), associate professional and technical (19.6%), personal services (18.1%) and professional occupations (11.8%).
Survey evidence indicates that businesses that are wholly or majority female-owned account for between 12.3% - 16.5% of the UK business stock. A large proportion of female entrepreneurial activity takes place in businesses that are co-owned equally by men and women. If the definition of women’s enterprise included co-owned businesses (an approach often used by US researchers), it is estimated that between 34.1% - 41.2% of the UK small business stock is either owned or co-owned by women.
Total Early Stage Entrepreneurial Activity (TEA) rates for women in the UK are 3.9% of the total working age female population. This compares with 6.2% of the total (male and female) population. The female entrepreneurial activity rate is only half that of male entrepreneurial activity.
Growing educational attainment by women coupled with long-term and consistent increases in female entry into managerial and professional employment sectors, in particular the professions (law, accountancy, medicine, veterinary science) where there has been a tradition of private practice, offer important opportunities for the development of women’s enterprise.
There is some evidence to suggest that women-owned businesses may experience a higher rate of exit than male-owned businesses. While churn reflects a dynamic business population, it is unclear whether the faster rate of female exit is solely the result of competitive pressure forcing out less sustainable enterprises or whether other factors have a disproportionate
Women’s Enterprise in International Contexts
The USA has long been regarded as a leader in the issue of women’s enterprise. The remarkable increase in women’s enterprise in the USA contrasts with the relatively low and slow growth experienced in Western Europe. Higher rates of women’s enterprise in the USA are largely attributable to historical, cultural and economic factors: high long-term levels of new migrants; affirmative action policies used in the 1970s and 1980s; a popular discourse of pioneering enterprise; and smaller social security systems. The establishment of the Small Business Administration’s Office for Women’s Business Ownership in 1979, coupled with long-term and consistent investment in research and advocacy, has led to the development of an effective political lobby around women’s enterprise in the US.
Caution must be exercised in US – UK comparisons. The estimated 10.6 million ‘women-owned firms’ in the US (48% of all US enterprises) includes male and female co-owned enterprises. Female majority-owned enterprises account for 6.5 million firms, 28% of the total US business stock.
Overall, levels of business ownership in the US are higher than in the UK and there is a greater representation of women as business owners. This greater representation of women is also apparent in the self-employed population, although self-employed women are a lower proportion of the working population than in the UK.
Self-employment in the US totals 8,490,000 (6.4% of total employment); male self-employment accounts for 5,124,000 (7.3% of total male employment) and female self-employment accounts for 3,366,000 (5.4% of total female employment). The female share of self-employment has increased modestly but consistently over the past thirty years, from 26.8% in 1976 to the current level of 39.6%. This contrasts with the UK where the female share of self-employment has been more or less static, at around 26% - 27% for the past twenty years. Despite this, female self-employment as a proportion of total female employment (i.e. the rate of self-employment) is higher in the UK (7.8%) than in the USA (6.1%). Female rates of self-employment in the UK have been consistently higher than those in the US for over 15 years.
The proportion of self-employed women in the UK is broadly comparable with other Northern European countries. UK rates of female self-employment are closest to those seen in Ireland, France and Germany. The UK’s closest comparators in Western Europe with regard to female TEA rates are Germany, France and Ireland.
Between 1990 and 2003, rates of female self-employment grew in only five OECD countries. Small increases occurred in Canada and Portugal and larger increases occurred in the Czech Republic, Mexico and the Slovak Republic. Rates of male self-employment rose in ten OECD countries, in small amounts in Belgium, Canada, Italy, Mexico, Portugal, Sweden and Switzerland and significantly in Czech Republic, Slovak Republic and Germany. Rates of female self-employment are higher than the equivalent male rate in only three OECD countries: Turkey, Japan and Mexico.
International Comparators of Women’s Enterprise
While the US has been the traditional comparator nation against which UK women’s enterprise is benchmarked, the US context is highly distinctive. A range of historical, cultural and economic factors have created a unique pattern, high female shares of self-employment co-existing with low rates of self-employment, that is specific to the US.
A more useful international benchmark can be gained through a group of five nations (USA, Canada, France, Germany, and Ireland) using self-employment and TEA rates as the measure of relative change. Ireland, France and Germany offer closer comparisons with regard to historical, economic and cultural factors, while Canada provides a model of successful development of women’s enterprise in North America without the unique factors that distinguish the US.
In comparison with these five nations, the UK female self-employment rate (7.8%) lies just above the average (7.6%); above the USA, France and Ireland, but below Germany and Canada. The female TEA rate in the UK (3.9%) is lower than the average (5.3%); above Germany and France, but below the USA, Canada and Ireland.
The Socio-economic Context of Women’s Enterprise
There is a growing recognition that the extent and nature of women’s enterprise is inextricably linked to the labour market and society at large. Women’s roles as business owners reflect their wider positions in society and in the economy; to a large extent these factors influence the number of women entering self-employment, their sector preferences and the resource base that they use. Three main socio-economic issues influence women’s abilities and prospects as business owners: the gender pay-gap, occupational segregation and unequal employment opportunities and work-life balance issues.
The continuing pay gap between male and female workers restricts the financial resources available for the creation and growth of women-owned business. Women working in a full-time capacity earn 17% less than men. Over a lifetime, men earn nearly £250,000 or 37% more than equivalently skilled women without children. One consequence of earning less in employment is that women have less financial capital with which to initiate business ownership. There is unequivocal evidence that under-capitalisation at start-up restricts future business growth and development.
Female employment continues to be concentrated in a narrow range of lower-paying occupations, often in a part-time capacity. Horizontal segregation has the dual effect of identifying certain occupations as being ‘women’s jobs’ and placing less value on these jobs. Vertical segregation concerns the barriers women face in entering senior management and higher paid occupations. Women’s experiences of employment provide them with fewer financial resources with which to initiate business ventures and lower levels of human and social capital necessary to establish and sustain a successful business.
Self-employment and business ownership are often identified as attractive career options for women because of the perceived flexibility offered in combining family and work responsibilities. However, recent research has found that pregnancy, maternity, childcare and caring responsibilities present particular challenges for women business owners.
Self-employed women do not benefit to the same extent as employed women from legal rights and social benefits associated with pregnancy, maternity leave and return to work. Women-owned businesses are generally small-scale, and their owners can ill afford the loss of time and income associated with statutory maternity rights. As a consequence, pregnancy and maternity pose substantially greater financial risks for women business owners than for women employees. While the research evidence on the impact of childcare on business ownership is equivocal, there is some evidence to suggest that the perceived risks of business ownership are heightened by parenthood and that the presence of dependent children reduces the likelihood of entrepreneurship.
More women than men use the home as a business base. Some researchers have argued that stakeholders, for example, customers and creditors, may question the legitimacy of women-owned home-based businesses. The growing numbers of (both male- and female-owned) home-based enterprises may reduce such negative perceptions in the medium term.
There is a growing recognition that the extent and nature of women’s enterprise is inextricably linked to the labour market and society at large. Women’s roles as business owners reflect their wider positions in society and in the economy; to a large extent these factors influence the number of women entering self-employment, their sector preferences and the resource base that they use. Three main socio-economic issues influence women’s abilities and prospects as business owners: the gender pay-gap, occupational segregation and unequal employment opportunities and work-life balance issues.
The continuing pay gap between male and female workers restricts the financial resources available for the creation and growth of women-owned business. Women working in a full-time capacity earn 17% less than men. Over a lifetime, men earn nearly £250,000 or 37% more than equivalently skilled women without children. One consequence of earning less in employment is that women have less financial capital with which to initiate business ownership. There is unequivocal evidence that under-capitalisation at start-up restricts future business growth and development.
Female employment continues to be concentrated in a narrow range of lower-paying occupations, often in a part-time capacity. Horizontal segregation has the dual effect of identifying certain occupations as being ‘women’s jobs’ and placing less value on these jobs. Vertical segregation concerns the barriers women face in entering senior management and higher paid occupations. Women’s experiences of employment provide them with fewer financial resources with which to initiate business ventures and lower levels of human and social capital necessary to establish and sustain a successful business.
Self-employment and business ownership are often identified as attractive career options for women because of the perceived flexibility offered in combining family and work responsibilities. However, recent research has found that pregnancy, maternity, childcare and caring responsibilities present particular challenges for women business owners.
Self-employed women do not benefit to the same extent as employed women from legal rights and social benefits associated with pregnancy, maternity leave and return to work. Women-owned businesses are generally small-scale, and their owners can ill afford the loss of time and income associated with statutory maternity rights. As a consequence, pregnancy and maternity pose substantially greater financial risks for women business owners than for women employees. While the research evidence on the impact of childcare on business ownership is equivocal, there is some evidence to suggest that the perceived risks of business ownership are heightened by parenthood and that the presence of dependent children reduces the likelihood of entrepreneurship.
More women than men use the home as a business base. Some researchers have argued that stakeholders, for example, customers and creditors, may question the legitimacy of women-owned home-based businesses. The growing numbers of (both male- and female-owned) home-based enterprises may reduce such negative perceptions in the medium term.
Source: Carter, S. and Shaw, E. (2006) Women's Business Ownership: Recent Research and Policy Developments
The most entrepreneurial age group for females is 35 – 44 (Global Entrepreneurship Monitor, London Business School, February 2006)
There are 602,000 female owned businesses in the UK representing just 14% of all businesses (Annual Small Business Survey February 2008)
Women of mixed ethnicity are over two and a half times more entrepreneurial than white women (Global Entrepreneurship Monitor 2006)
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