A new report by Ravio reveals that European tech startups are prioritizing retention over hiring, while also working towards closing the gender pay gap.
The European tech industry is undergoing a significant transformation as hiring sprees become a thing of the past and startups shift their focus towards retaining talent. A report by hrtech Ravio highlights the changing landscape, pointing to decreased hiring rates, increased emphasis on profitability, and efforts to address gender pay disparities. These shifts come as European tech companies adapt to a new economic reality shaped by decreased VC funding deployment, a challenging IPO market, rising interest rates, and the need for financial stability.
Decreased Hiring and Smaller Raises:
According to Ravio’s report, hiring across European startups has dropped by nearly 40 percent year over year. Late-stage startups have been particularly affected, with a 50 percent decrease in hiring. This decline in hiring can be attributed to the changing economic conditions and the need for startups to prioritize financial stability. As a result, startups are aiming to keep their employee numbers stable in H1 2024. Additionally, base salaries are expected to see a reduced increase of 4.8 percent, a significant decrease from the previous year’s 8 percent increase.
Raymond Siems, Ravio co-founder, and Chief Product and Technology Officer, emphasizes the need for HR and people leaders to navigate these challenging times and make informed decisions about compensation packages. With limited budgets, companies are increasingly relying on non-cash incentives such as equity and benefits to retain and motivate their employees.
Closing the Gender Pay Gap:
The EU Pay Transparency Directive, set to take effect in 2024, is pushing startups to address gender pay disparities. The Ravio report highlights the need for startups to focus on both pay and representation in order to close the gender pay gap. Currently, women have the lowest representation in C-suite positions, accounting for only 19 percent. However, in terms of median salaries, there is no significant difference between genders.
The gender pay gap is most pronounced among individual contributors, where women make up 41 percent of the workforce but earn 22 percent less than their male counterparts. Merten Wulfert, Ravio co-founder, and co-CEO, acknowledges that while startups are eager to address the gender pay gap, other business priorities often take precedence. By providing transparency and facilitating the identification of systemic issues, Ravio aims to remove the barriers that prevent companies from taking action.
Conclusion:
European tech startups are adapting to a new economic reality by shifting their hiring strategies towards retention and addressing gender pay disparities. With decreased hiring rates and a focus on financial stability, startups are looking to keep their employee numbers stable and reduce salary increases. The EU Pay Transparency Directive adds further pressure for startups to close the gender pay gap and improve representation. Ravio’s report provides valuable insights and transparency, enabling companies to make informed decisions and take action towards a more equitable and sustainable future.
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