National innovation strategy: equality impact assessment

• Early-Stage entrepreneurial activity is highest among younger entrepreneurs (18-24 year olds at 13.3%), and the lowest with 55-64 year olds at 6/6%.
• Scotland's leading rate in entrepreneurial activity of 13% from 2020 improved marginally to 13.3% in 2021, and is now second in the UK.

• Intersectionality: "Women are marginally more likely to start a company between the ages of 41-60."

• As of January 2022, the age breakdown of founders of spinouts was as follows: 20-29 (3.06%), 30-39 (16.4%), 40-49 (28.9%), 50-59 (39.5%), 60-69 (4.34%), 70-79 (7.13%) and 80+ (0.73%).

• "Globally, just over half (55%) of us believe that technological development has the capacity to improve age for a lot of people."

Global Entrepreneurship Monitor: Scotland Report 2021/2022^[14]

Pathways: A New Approach for Women in Entrepreneurship^[15]

Spotlight on Spinouts 2022 UK Report, Royal Academy of Engineering^[16]

A Fairer Scotland for Older People: A Framework for Action^[17]

Limited data suggests that entrepreneurial activity is greatest among lower age groups, but the average age of spin out founders^[18] is much higher.

More analysis of the potential effect, success rate and economic value from entrepreneurial activity of younger people could be undertaken in order to improve our understanding and take steps to improve success rates across all age groups.

• People with disabilities are less likely to be in employment than non-disabled people and earn less on average than non-disabled people.
• People with disabilities are employed across all occupation types and sectors of Scotland's economy, however they are more likely to work in lower paid occupations.
• Disabled people with a degree or above had a higher employment rate than disabled people with qualifications below degree level (75.6% and 43.0% respectively). This was the same for non-disabled people (88.8% and 77.6% respectively). However, the difference in employment rates between disabled people with a degree and disabled people without a degree was nearly three times the size of the difference amongst non-disabled people.

• Non-disabled people with a degree or above had an employment rate of 88.8% in 2022, around 13 percentage points higher than disabled people with a degree or above.

• The difference between the employment rates for non-disabled and disabled people is the disability employment rate gap. It is defined as the employment rate for non-disabled people minus the employment rate for disabled people.
• In 2022, the disability employment rate gap was:
  • wider for men compared to women
  • widest for the 35-49 year old age group
  • wider for white groups compared to minority ethnic groups.

• Disabled people are more likely to be living in poverty, earn less if they are in work, have higher living costs, are twice as likely to have unsecured debt of more than half their income, and on average have much less in the way of savings and assets (i.e. lack of start-up capital) than non-disabled people (Papworth Trust, 2018). Disability may therefore create barriers to accessing appropriate training / support, affecting the diversity and accessibility of talent pipelines of emerging innovative sectors.
• Disabled people aged 16-18 are at least twice as likely not to be in education, employment or training (NEET) as their peers (Papworth Trust, 2018).

• Public perceptions (1 in 3) that disabled people are less productive may affect not only job opportunities, but promotion and development opportunities that could be pathways to innovation (Scope 2018).
• Disabled innovators may not identify as 'disabled' or disclose their status owing to social stigma around disability, therefore becoming 'invisible' and limiting options for promoting diversity (e.g. via role-models and mentors).

• The median hourly pay for disabled employees has increased since 2014 to £10.58 in 2019. Despite being higher than in 2014, the median pay for disabled employees has seen years where median hourly pay has decreased. The median hourly pay for non-disabled employees has been steadily increasing since 2014 to £12.63 in 2019.
• Although there are fluctuations in the disability pay gap, the gap has widened from 12.8 per cent in 2014 to 16.2 per cent in 2019. The gap in 2019 was 3.4 percentage points wider than in 2014 and 7.9 percentage points wider than in 2018.

• In 2019, "around 3% disclosed a disability, although this has risen from about 2.5% five years ago, chiefly through slightly more declaring mental health conditions or a cognitive or learning difference, whereas physical or medical conditions have not increased."

• HESA data: 2,160/51,375 research only staff have a disability (2021).

Fairer Scotland for disabled people - employment action plan: progress report - year 2^[20]

Disabled people in the labour market in Scotland^[21]

Disabled people in the labour market in Scotland^[22]

Disabled people in the labour market in Scotland^[23]

Supporting Diversity and Inclusion, Innovate UK^[24]

Supporting Diversity and Inclusion, Innovate UK^[25]

Disabled people in the labour market in Scotland^[26]

The Profile of postdoctoral researchers in the UK eligible for Royal Society early career fellowship programmes, CRAC^[27]

HESA Personal Characteristics Data^[28]

The Scottish Government has published the Fairer Scotland for disabled people – employment action plan^[29] as part of the Fair Work action plan.^[30]

Fair Work principles must be embedded in all actions to encourage diverse hiring practices by private sector employers.

The National Innovation Strategy will be encouraging high sector growth in our innovation priority areas, creating high value and well-paid jobs. We must ensure that these jobs are accessible to those with disabilities in order to provide equity of opportunity for well-paid jobs for those with the right qualifications.

Disability may create barriers to accessing appropriate training / support, affecting the diversity and accessibility of talent pipelines of emerging innovative sectors.

More data is needed to determine how this will affect each innovation priority area identified in the Strategy, so that mitigating circumstances can be addressed to ensure diverse talent pools are available for highly innovative sectors of Scotland's economy.

• "A significant amount of an applicant's track record in STEMM is focussed on their publication output and prior grant history. We have a historic and cultural attitude towards referencing past work with respect to an individual's surname, e.g. through use of citations and the H-index. This is known to be problematic for those who change their name, e.g. through marriage or caste reasons (Holliday et al. (2015), COPE Case 13-02), but may also impact individuals who change their name during their gender transition. Some learned societies have made recommendations to address the need to systematically accommodate name changes in publication records (Atherton et al. 2016)."

• "0.98% have experienced transphobia, and 5.39% have experienced gender identity discrimination at work, college or university when trying to progress a career in STEM."

• When looking for work, more than half of survey respondents said they found getting into work difficult or challenging and 40% said their trans identity had a quite or very negative impact on their job prospects. Barriers included:
  • Feeling unable to apply at all because of fears of prejudice
  • Application forms which exclude non-binary identities
  • Difficulty obtaining references and proof of qualifications to match gender and new name
  • Lack of awareness, and sometimes transphobia, from interview panels
  • Feeling unable to be out about their trans identity when applying for jobs.

Barriers LGBTQI+ People Face in the Research Funding Processes, TIGERSTEMM^[31]

Women in STEM: An Intersectional Analysis of Multiple Discriminations, 2020^[32]

Trans People and Work^[33]

More information is needed to determine how this group is impacted and how the Innovation Strategy's actions can be used to break down barriers to career progression in innovation priority industries.

Fair Work principles must be embedded in all actions to encourage diverse hiring practices by private sector employers.

• "Currently, one in five of Scotland's entrepreneurs are women."

• Both male and female Total Entrepreneurial Activity (TEA) rates increased by about two percentage points in 2021 to 11.4% and 7.8%.
• Female TEA was growing from a much lower base so the year-on-year growth is higher at 44% compared to 21%.
• Among TEA entrepreneurs, there remains a significant difference between males and females in terms of the extent to which "to earn a living because jobs are scarce" motivated the entrepreneurial activity. 74% of female TEA entrepreneurs indicated this was a key motive compared to 57.7% of males.
• In 2021, the female to male TEA ratio in Scotland is 68%, five points below the UK average (73%) but an eleven-point improvement on the 57% reported in 2020.
• While overall regional TEA rates within Scotland are converging, gender disparity within regions remains. Female TEA is lower in Eastern Scotland (8.6% vs 10.8%), with parity observed in the Highlands and Islands (both at 9.2%).

• "Some research points to women having lower expectations when it comes to growing businesses. It is thought that this is due to women's lower level of confidence in starting businesses."

• "Self-confidence is not an individualised problem however, but a culmination of societal attitudes that results in lower female entrepreneurship rates."

• Innovation Strategy Steering Group members highlighted the critical importance of confidence to innovation, confidence personally to fail and for people to invest in female entrepreneurs:
• "There is a need to build confidence at scale in those who hear innovation is something they shouldn't do if we want to diversify the ecosystem. We cannot assume what these barriers are for those hidden entrepreneurs, and we need to have those conversations and share negative experiences."

• "Attitudes are shaped by a number of elements including gendered entrepreneurial spaces and male-dominated networks, women starting businesses with lower levels of capital and a number of other factors" in the Not Now Social Renewal Advisory Plan Report, 2021.^[34]

• The Innovation Strategy's Steering Group members highlighted that there are a number of 'hidden entrepreneurs', including women, who are not currently as visible or supported by the innovation ecosystem. This is a significant opportunity that could be targeted.

• The UK rank fell to 42^nd for "women's entrepreneurial activity rate" on the 2021 Mastercard Index of Women Entrepreneurs (MIWE), however the proportion of female entrepreneurs who started a business due to the desire to make a difference ("female aspiration driven entrepreneurship") rose markedly from 46.1% to 60.0% (rank 10^th, MIWE 2021).

• In 2021, 23 per cent of SME employers in Scotland were women-led. This is higher than 2020, with statistical significance (17 per cent) and higher than the proportion in the UK as a whole (19 per cent). Medium-sized businesses (14 per cent) were less likely than average to be women-led.

• A further 24 per cent of SME employers in Scotland were 'equally-led' (24 per cent in the UK as a whole), with an equal number of men and women in the management team. This proportion was broadly in line with the previous year. A further 9 per cent had a minority of women in the management team and 40 per cent were entirely male-led (both broadly in line with the UK as a whole at 10 per cent and 44 per cent respectively).

• "Data on company turnover by company age and gender [indicates] a slower rate of growth in female-led companies."

• "In 2018, the British Private Equity & Venture Capital Association reported that "only 6% of senior investment professionals in the UK are females", with "15% of mid-level roles (Directors, Principals, VPs, etc.) and 27% of junior roles (Associates, Analysts, etc.)" filled by women.
• Overall, BCVA reported that "only 14% of investment professionals in the UK are women."

• From Scottish EDGE and Converge Challenge investment/awards initiatives that have "undertaken efforts to diversify judging panels, selection candidate pools, finalists and winners have become more diverse, particularly mixed-gender founder groups."

• "Between 2009 and 2019, 68.33% of the capital raised across the seed, early and late venture capital funding stages went to all-male teams, 28.80% to mixed teams and 2.87% to all-female teams."
• "Female teams raised lower sums of money than their male counterparts at each funding stage. Seed stage: £3.5B raised all male 84.17% mixed 12.51% all female 3.31%, Early stage: £16.5B raised all male 76.61% mixed 21.64% all female 1.74%, Late stage: £33.2B raised all male 62.56% mixed 34.05% all female 3.39%."

• Of the 2020 convertible loan agreements from The British Business Bank's (BBB) (Future Fund), 7/465 loans (£7.1m) went to all female teams (1.5%).

• In the United Kingdom, female entrepreneurs' "access to entrepreneurial finance" has improved in recent years, (from rank 14^th to rank 10^th in MIWE 2021).

• For UK venture and growth capital in 2021, data from the 40 signatories of the Investing in Women Code shows that all-female teams account for only 10% of investment pitches that reach signatory firms, and only 6% of teams that receive funding are all-female. The market average for Venture Capital (VC) investors is 4% for all-female teams.
• From angel investors, data from 9 signatories shows that only 16% of the pitches were from all-female teams, however "more all-female teams reached the next stage of investment (a 47% success rate) than their all-male counterparts (a 32% success rate)."
• "Over the past five years the gap between female and male-led companies securing institutional investment has widened."
• "Over the past five years, excluding first round investments, the average value of female-led investments was £833,754 per investment vs £3,219,146 for male-led investments."

• 2021 – From the pool of researchers eligible for UK Royal Society's early career fellowship funding, "42% are female, a proportion which has remained essentially steady during this time, but which masks lower proportions in physical sciences and engineering and higher in biomedical and biological sciences, but also different gender profiles with nationality."
• "The proportion of women researchers in the Royal Society 'A' subjects (physical sciences, engineering, maths, computing) at 27% is substantially lower than in the 'B' subjects (57%), and lowest in the subjects of engineering and physics (both 23%). Detailed analysis suggests the proportion of UK researchers that [are] female is actually falling."

• "Female participation in patenting activities increased at a faster pace than the average rate at which all patent applications grew over the period 2004-15."
• Yet "at the current pace, it will be 2080 before women are involved in half of all patented inventions within the five largest IP offices (IP5)."

• As of January 2022, "86.4% [of UK spinouts tracked by Beauhurst] had all-male founders contributing to the commercialisation of university research. In contrast, only 2.39% of spinouts had an all-female founding team, and 11.2% of companies had at least one female founder."
• As of January 2022, 7.69% of UK spinouts had 1 or more female directors.

• On spinouts, a key stakeholder consulted for the Innovation Strategy notes:

• In November 2022, the majority of working age people receiving Carer's Allowance in Scotland was made up by women (69%) compared to 13% of men.
• Unpaid carers are more likely to be aged over 45. In November 2022, 57% of Carer's Allowance claimants were aged over 45.

• In interviews conducted for the Stewart Review, "the majority of the most successful and well-established female entrepreneurs reported being well supported by partners and/or their families in either or both of the home manager and primary carer roles, often fully sharing responsibilities with them."

• Intersectionality: In a 2020 'Women in STEM' report, "64% of 400 women surveyed did not feel enough was being done to create inclusive workplaces or educational institutions. Within this:
  • over 80% of minority ethnic women;
  • 70% of women aged 35+;
  • 74% of women with caring responsibilities;
  • 90% of disabled women;
  • 80% of LGBT+ women."
• Of women surveyed, "60.54% have experienced sexism at work, college or university when trying to progress a career in STEM."

• "£3.8 billion (equivalent to a 2.7% boost to the Scotland's GVA or 75,000 new and parttime jobs) could be added to the Scottish economy by levelling up the Scottish female workforce participation to the highest performing region of the UK (Scotland are currently second behind the South West of England)."

• The gender pay gap for full-time employees in Scotland increased from 3.0% in 2021 to 3.7% in 2022 due to men's hourly earnings increasing at a faster rate than women's hourly earnings. However, this is still below the gap of 7.2% in 2019 (pre-pandemic) and so continuing the longer-term downward trend.

• In 2022, the gender pay gap for full-time employees was largest for Skilled trades occupations, followed by Process, plant and machine operatives occupations and Managers, directors and senior officials occupations.^[35]

mnAI Data Analysis of Scotland's Incorporations, 2022^[36]

Global Entrepreneurship Monitor: Scotland Report 2021/2022^[37]

A Fairer Scotland For Women: Gender Pay Gap Action Plan, Scottish Government^[38]

A Fairer Scotland For Women: Gender Pay Gap Action Plan, Scottish Government^[39]

National Innovation Strategy Steering Group^[40]

A Fairer Scotland For Women: Gender Pay Gap Action Plan, Scottish Government^[41]

National Innovation Strategy Steering Group^[42]

The Mastercard Index of Women Entrepreneurs, 2021^[43]

Small Business Survey Scotland 2021 (Last updated: 12^th January 2023)^[44]

Pathways: A New Approach for Women in Entrepreneurship^[45]

'Women in Private Equity', 2018 (BCVA)^[46]

Pathways: A New Approach for Women in Entrepreneurship^[47]

Diversity Beyond Gender | Extend Ventures^[48]

British Business Bank, 21 July 2020^[49]

The Mastercard Index of Women Entrepreneurs, 2021^[50]

Investing in Women Code Progress Report, 2021^[51]

Pathways: A New Approach for Women in Entrepreneurship^[52]

The Profile of postdoctoral researchers in the UK eligible for Royal Society early career fellowship programmes, CRAC^[53]

'Bridging the Digital Gender Divide', OECD^[54]

Spotlight on Spinouts 2022 UK Report, Royal Academy of Engineering^[55]

National Innovation Strategy stakeholder feedback, 2023^[56]

Stat-Xplore - Carer's Allowance - Cases in Payment ^[57]

Pathways: A new approach for women in entrepreneurship^[58]

Women in STEM: An Intersectional Analysis of Multiple Discriminations, 2020^[59]

PWC Women in Work Index, 2023^[60]

Annual Survey of Hours and Earnings, 2022^[61]

Annual Survey of Hours and Earnings, 2022^[62]

The Stewart Review goes a way to bridging intersectional knowledge gaps on gender and entrepreneurship in Scotland.

However, the report highlights the continued lack of trend data on entrepreneurial participation rates and limited data aggregated by gender and ethnicity. This data gap is also prevalent in other countries and has been identified by other reports concerning women in entrepreneurship.^[63]

More information is needed to determine how new emerging industries, and the potential for job losses, transformation and job substitution will impact men, who currently make up the majority of the industrial workforce.

There is a gap in equalities data for innovation active businesses, as outlined in the UK Innovation Survey, and therefore it is unclear as to whether the equalities data for SME employers in Scotland differs if the businesses are innovation active.

Work done through the UK Government's Investing in Women Code has led to a positive impact in the targeted data collection, transparency, and active interventions to drive female entrepreneurship that are undertaken by Code signatories.

The difference in average value of female led investments may be in part due to sectoral differences. More analysis would need to be undertaken on a sectoral basis to take account of different sectoral circumstances and baseline values.

More work needs to be done on cross-analysis of different sectors to see if this trend differs from innovative sector to sector.

More information is needed about how emerging industries can incorporate more flexible working practices to assist this group to return to the workplace.

Fair Work principles must be embedded in all actions to encourage diverse hiring practices by private sector employers.

A number of the Innovation Strategy's innovation priority areas are related to STEM specialisms, and therefore work will be done to address inequalities within these sectors through any subsequent interventions through tailored packages of support.

• "By the age of 42, mothers who are in full-time work are earning 11 per cent less than full-time women without children."

• "When personal characteristics – such as education, region and occupational social class – are controlled for, the motherhood pay penalty for those in full-time work falls to 7 per cent."

• "This motherhood pay penalty is entirely associated with mothers who had their first child when they were under 33. The women who became mothers at a younger age earn 15 per cent less than similar full-time women (i.e. those with similar levels of education etc) who hadn't had children by the age of 42. By contrast, mothers whose first birth was at 33 or older experience a wage bonus of 12 per cent compared to similar women who hadn't had children."

• "The TEA rate among the white ethnic population in Scotland in 2021 was lower than that of the non-white population, at 9.2% compared to 15.5% respectively although within the margin of error."
• "Unlike white TEA which held steady in 2020 and has grown by 31% in 2021, the TEA rate for the non-white ethnic group saw a marked decline in 2020 and with slower growth in 2021 is yet to recover to pre-pandemic levels."

• Four per cent of SME employers in Scotland were Minority Ethnic Group (MEG)-led in 2021, slightly higher than the prior year (two per cent). The proportion in Scotland in 2021 was found to be statistically significantly lower than that in the UK as a whole, at six per cent.

• Intersectionality: In 2022/23 the proportion of female-led, ethnic minority owned businesses in Scotland was 18.67%.

• Compared with the UK as a whole, Scotland's population is less ethnically diverse and its minority ethnic population is less likely to be born in the UK.
• In 2022, the employment rate for minority ethnic groups aged 16 to 64 was estimated at 67.6 per cent in Scotland. This was lower than the rate for white groups (74.9 per cent), resulting in an employment rate gap of 7.4 percentage points. This is the lowest employment rate gap since the series began.

• Intersectionality: The minority ethnic employment rate gap is larger for women than men. In Scotland in 2022, the ethnicity employment rate gap was estimated at 9.7 percentage points for women and at 4.8 percentage points for men. [ONS Annual Population Survey, Jan-Dec 2022]. The wider gap for women than men may be partly attributed to cultural factors for particular ethnic groups.

• The UK's Black and Multi-Ethnic communities comprise 14% of the UK population, yet all-ethnic teams received an average of 1.7% of the venture capital investments made at seed, early and late stage between 2009 and 2019.
• "While all ethnic entrepreneurs are underfunded, those who are Black experience the poorest outcomes of all. Just 38 Black entrepreneurs received venture capital funding. Alongside their teams, they received just 0.24% of the total sum invested" – in the last ten years.

• Ethnic minority businesses face persistent challenges in accessing finance in the appropriate forms and volumes (Carter et al., 2015; Davidson et al., 2010).

• "According to a 2016 survey commissioned by UK Finance (then known as the British Bankers' Association) and carried out by research firm BDRC Continental, some 73 per cent of black-owned businesses had a higher than average risk rating, compared with 47 per cent of SMEs as a whole. The survey also found that some 30 per cent of black black-owned businesses were lossmaking."

• Mainstream public sector business support is under-utilised by ethnic minority businesses (Kitching et al., 2009).

• 59% of funding to senior management teams of mixed ethnicity (2020 Convertible loan agreements from BBB (Future Fund))
  • 23/465 loans went to all BAME management teams (£19.4m) – 4.9%.

• Top-quartile companies for ethnic / cultural diversity have been found to be 36% more likely to outperform on profitability (McKinsey Group, 2020).

• "The employment rate for Scotland's UK-born minority ethnic population has generally been higher than the rate for the minority ethnic population born outside the UK (68.1% vs. 60.7% respectively in 2021). This difference in outcomes is also illustrated through the employment rate gaps against the overall white population. The minority ethnic employment rate gap for Scotland's non-UK born population is much larger than this gap for the UK-born population showing that minority ethnic immigrants to the UK face poorer outcomes in our labour market than the minority ethnic population who were born here."

• "13% of UK nationals of known ethnicity are of minority ethnic group backgrounds, mostly of Asian background and only just over 1% Black background."
• "A much higher proportion (almost 29%) is of minority ethnic background when all nationalities are considered together, rising with the increase in researchers of non-EU nationality, particularly driven by males of Asian origin."
• There are "complex variations in relation to the ethnicity of researchers of UK nationality: minority ethnic representation is lowest in physics (7%) and highest in engineering (18%)"
• "the proportion of Black researchers (of UK nationality) in the physics or chemistry profiles in 2018/19 is zero (literally 1 or 2 individuals), and only 2% in engineering."
• "The proportion of Black researchers, however, does not increase substantially when all nationalities are considered, remaining below 1% in physics and highest in engineering at 3%."
• "there remain very few Black role models, of any nationality, despite the changing overall ethnic mix, and this may continue to deter young Black scientists entering the academic workforce. Equally, it begs the question of what ethnicity data to record – the focus has historically been on ethnicity of UK nationals, but this segment comprises under 40% of the eligible researchers (and for engineering under one quarter)."

• HESA data (2021): 12,420/51,375 research academic staff are of an ethnic minority background.

Global Entrepreneurship Monitor, 2021/22^[65]

Small Business Survey Scotland 2021 (Last updated: 12^th January 2023)^[66]

The Gender Index (2023)^[67]

ONS Annual Population Survey, Jan-Dec 2022^[68]

Diversity Beyond Gender, Extend Ventures^[69]

Supporting Diversity and Inclusion, Innovate UK^[70]

"Black-owned Businesses struggle to find investors", The Financial Times^[71]

Supporting Diversity and Inclusion, Innovate UK^[72]

British Business Bank, 21 July 2020^[73]

Diversity Wins: How Inclusion Matters, McKinsey Group, 2020^[74]

Analysis of Labour Market Outcomes of Scotland's Minority Ethnic Population^[75]

The Profile of postdoctoral researchers in the UK eligible for Royal Society early career fellowship programmes, CRAC^[76]

HESA Personal Characteristics Data^[77]

The Stewart Review highlights the continued lack of trend data on entrepreneurial participation rates and limited data aggregated by gender and ethnicity. This gap has been reinforced by this EQIA.

There is a gap in equalities data for innovation active businesses, as outlined in the UK Innovation Survey, and therefore it is unclear as to whether the equalities data for SME employers in Scotland differs if the businesses are innovation active.

Fair Work principles must be embedded in all actions to encourage diverse hiring practices by private sector employers.

• "4.9% of women have experienced religious discrimination at work, college or university when trying to progress a career in STEM."

• "Lesbian/Gay/Bisexual women feel less likely to report confidence when speaking about inequalities in the workplace and 4.41% have experienced homophobia at work, college or university when trying to progress a career in STEM."

• In contrast to non-LGBTQ+ adults, members of the LGBTQ+ community are more likely to be younger, live in deprived areas, report bad general health, be unemployed and have a degree.

Women in STEM: An Intersectional Analysis of Multiple Discriminations, 2020^[79]

Sexual Orientation in Scotland 2017: A Summary of the Evidence Base^[80]

More information is needed to determine how this group is impacted and how the Innovation Strategy's actions can be used to break down barriers to career progression in innovation priority industries.

Fair Work principles must be embedded in all actions to encourage diverse hiring practices by private sector employers.

There is limited intersectional data on LGBTQ+ entrepreneurs and innovators in Scotland. Part of the Strategy's delivery phase and further policy development will include consideration of how this can be improved and barriers addressed through policy development.