Knowledge centre

The gender pay gap: addressing the problem, not the symptom.

Equal Pay Day is dedicated to promoting conversation and positive action towards achieving pay equality in Australia.

It’s an opportunity for employers across Australia to evaluate their progress and share strategies that are having a meaningful impact in addressing the gender pay gap and developing a deeper understanding of the challenges that women face when it comes to work.

Using Average Weekly Earnings data collected by the ABS, WGEA has calculated the gender pay gap in Australia as 14.6% for full-time employees, a difference of $244.80 per week.

It’s a slight improvement on the 15.3% gap reported in 2017, but the reality is, that over the last 20 years, the gender pay gap has fluctuated between 14% and 19% and Australia is yet to make real progress.[1]

There are a number of different types of gender pay gap, WGEA’s takes the average of all women’s wages, expressed as a percentage of all men’s.  It’s also measured on a like-for-like basis, by organisational level and organisational wide.  You can find out more here.

How does Australia compare?

The World Economic Forum conducts annual research on gender equality, ranking OECD member countries against four key pillars; economic participation and opportunity, education, political empowerment, and health and survival.

The economic participation pillar, which includes workforce participation and pay equity, reports an increasing gap between men and women, with WEF estimating that the global gender pay gap will take more than two centuries to eradicate.[2]

Australia is considered a ‘mid-range performer’ ranking 35th on the World Economic Forum on the Gender Pay Gap index (2017) and we only need to look at the Top 10 to understand where domestic policy and society is limiting progress.

Source: OECD

A recent study by Bankwest Curtin Economic Centre reports that Australian employers are taking decisive action to close the gender pay gap, particularly at senior levels where the largest gender pay gap exists, with significant re-balancing through discretionary pay.

The first step to closing the gap is measuring it.  WGEA Director Libby Lyons said “Organisational gender pay gaps do not close themselves. They must be quantified and analysed, shared with boards and executive teams and acted upon.”

But it’s not only employers that need to take action.  Achieving gender equality and pay equity is a shared responsibility with the Government.

Those OECD members with strict legislation around equal pay and generous Government paid parental leave schemes such as Iceland and Sweden, continue to outperform those that don’t, proving that effective strategies to debunk stigmas around caring and domestic responsibilities and support men to take an active role in the home are helping women to participate more fully, and more equally, in the workforce.

Is the gender pay gap real?

There is a myriad of articles discussing how the pay gap is a myth, suggesting that it stands to reason women earn less; because women choose to work less, choose to take time off to have children, and choose not to seek opportunities for promotion or leadership positions.

In actual fact, research shows that these ‘choices’ are dictated by Government policy, such as insufficient paid parental leave for men, a lack of employer support for workplace flexibility, and outdated gender stereotypes that limit women’s education and career opportunities.

We’ve come a long way since schools taught girls needlecraft and boys mechanics, yet society still deems certain jobs as ‘women’s work’.  This leads to a disproportionately high representation of women in caring professions such as health care and teaching that offer much lower rates of pay than traditionally male-dominated industries.[3]

Why the difference in pay? History shows that once women start to populate a previously male-dominated profession, the average wage drops.  Conversely, when men start to work in occupations previously dominated by women, those roles grow in prestige and the average salary increases. The simple fact is, that at a societal level, we value the contribution that women make less than we value the contribution of men.[4]

The gender pay gap is very real. Kelly Quirk, CEO of Harrier Human Capital said, “It’s important that we recognise the gender pay gap as a symptom of the wider and pervasive problem of gender inequality and discrimination, that women experience throughout their careers.  Employers need to look carefully at each stage of the employee lifecycle and identify where bias and inequality creep in.

It’s certainly unlikely that we’ll see a real move forward while we continue to entertain discourse around women’s earning potential being negatively impacted by the choices they make.

What can employers do to address the gender pay gap?

A number of major employers in Australia, including AECOM and Australia Post, have already closed their gender pay gap, allocating millions of dollars to achieve pay equity across their business.

Whilst not all organisations are able to close the gap in one move, strong leadership and absolute transparency on pay equity and gender equality, including a commitment to annual gender pay gap reviews, such as that made by AGL, are steps that all employers can take.

WGEA’s latest figures show a 10% increase in the number of employers in Australia that have a formal remuneration strategy in place to address pay inequity and that this is a direct result of employers undertaking a regular pay gap analysis.

It’s also important to recognise that it’s not just a case of achieving balance – it’s about maintaining it.  Sue Howse, Managing Director of Harrier Talent Solutions said, “Employers need to review their talent acquisition and management processes and identify the risk areas where bias and inequality manifest.

For example, a business could eradicate its pay gap and then allow it to reappear by inheriting pay gaps during the recruitment process.  Having a robust remuneration strategy and interview process should removes the need to ask questions about a person’s previous salary, allowing offers to be based around each individual’s unique capabilities and fit for the role.”

The bias and challenged that women face in the workplace are many and complex, including leadership and ambition in women being viewed less favourably than in men, a reduced ability to negotiate and poorer outcomes, and a lack of role models and mentors to help direct and shape their careers.  The result is that women begin their careers earning less than men, and the gap widens as they progress into more senior positions.

Where to from here?

Equal Pay Day is an important way to generate discussion and encourage employers to take-action towards the economic betterment of women.

It’s critical, however, that we recognise a lack of pay equity as symptomatic of a more deeply entrenched and pervasive issue and that efforts to reduce the gender pay gap form part of a broader strategy, with shared responsibility between employers, business leaders and the Government, that addresses the many barriers facing women, both at work and at home.

Reduced earning potential is not about the choices that women make.  It’s about the how we undervalue women’s contribution to society and the limitations we place upon them, issues that have no place in Australia, or anywhere in the world, today.

Essential Reading:

WGEA is an excellent starting point for organisations looking to take first step towards pay equity as part of a broader strategy to achieve gender equality and diversity in the workforce.

The Global Gender Gap Report, Word Economic Forum, 2017

She’s Price(d)less: The Economics of the Gender Gap, KPMG, 2016

Gender Equity Insights 2018: Inside Australia’s Gender Pay Gap, BCEC, 2018

WGEA Guide to Gender Pay Equity, 2018

Closing The Pay Gap, Male Champions of Change, 2017

The Pursuit of Gender Equality: an uphill battle OECD, 2017

WGEA Pay Equity Toolkit, 2018

PwC Women in Work Index, PwC, 2018

Social Incentives for gender differences in the propensity to initiate negotiations: Sometimes it does hurt to ask, Harvard University, 2005

Advancing Women in Australia, Bain & Co., 2017

[1] She’s Price(d)less: The Economics of the Gender Gap, KPMG, 2016

[2] The Global Gender Pay Gap Report, WEF, 2017

[3] https://theconversation.com/male-teachers-are-an-endangered-species-in-australia-new-research-83464

[4] https://www.nytimes.com/2016/03/20/upshot/as-women-take-over-a-male-dominated-field-the-pay-drops.html

“It’s important that we recognise the gender pay gap as a symptom of the wider and pervasive problem of gender inequality and discrimination, that women experience throughout their careers.  Employers need to look carefully at each stage of the employee lifecycle and identify where bias and inequality creep in.

It’s certainly unlikely that we’ll see a real move forward while we continue to entertain discourse around women’s earning potential being negatively impacted by the choices they make.