Bridging the Gender Pay Gap

Australian women working full-time earn 14.2 per cent less than men, a rise of 0.8 per cent over the last six months. This equals a pay difference of $261.50 per week between women and men, or more than $13,000 over the course of a year.

From the boardroom through to the sports field, the gender pay gap exists across most industries and while there is a myriad of factors behind the disparity, there are solutions that will benefit business, the economy and society.

Each year, the Workplace Gender Equality Agency (WGEA) releases the Australian gender pay gap and calculates the number of extra days women need to work to reach earnings parity with men.

The national figures released in August show that women had to work an average of 61 extra days to earn the same amount as men in the last financial year.

Further highlighting the divide, Australia recently ranked equal last with the United Kingdom on a gender pay gap analysis across six countries reported in “Bridging the gap?”, a study undertaken by The Global Institute for Women’s Leadership (GIWL), King’s College London and the Australian National University.

Dr Miriam Glennie, who co-authored the report, said “The main failure in Australia and the UK is that, unlike the other European nations assessed, neither country requires companies to work to close their gap and there’s no mandate to implement action plans that lead to specific outcomes or improvements for women.”

A companion report, Gender pay gap reporting in Australia: Time for an upgrade, points out that Australia now compares poorly with other wealthy nations on gender equality. This is reflected in plummeting international rankings – in the last seven years Australia has fallen from 14th to 70th on women’s economic participation in the World Economic Forum’s global gender gap index, despite ranking first on women’s education.

Addressing gender pay inequality and building a diverse and inclusive workforce requires action and commitment. “Bridging the Gap?” features a best practice guide for employers.

Specifying this list as “by no means comprehensive,” recommendations are based on GIWL research and identify important steps employers can take to help reduce gender pay gaps:

• Conduct annual gender pay analyses of employees
  – Include and assess information on bonus gaps and additional forms of compensation such as shares
  – Include information so part-time and full-time work can be disaggregated
  – Assess whether employees are paid equally for work of equal value
  – Include intersectional information in analyses and assessments
  – Assess where and why there are gender pay gaps
• Publish top-level and explanatory data on your website
• Include results of the analysis in information given to shareholders and investors
• Ask for this information from companies you work with
• Create clear and transparent processes for pay and promotion
• End pay secrecy clauses and work to increase pay transparency
• Advertise all jobs as flexible/part-time where possible
• Review job descriptions and keep them up to date
• Address “blockages” to women’s employment and progression, bearing in mind any intersectional findings, through for example reassessing recruitment and promotion strategies, improving opportunities for parental leave and flexible working
• End outsourcing of low paid workers where possible

Additional strategies include:

• Ensure positive change is led from the top and commit to gender balance in leadership
• Foster a new way of thinking and address unconscious bias
• Build a business case demonstrating the positive impact of closing the gap on business outcomes
• Track progress to best identify impact, and to enable updating and expanding initiatives to ensure they are effective.

According to WGEA Director Mary Wooldridge, research findings demonstrate that improving gender equality in the workplace brings clear economic benefits to companies and nations, importantly, the work of Australian women deserves to be equally and fairly valued in our workplaces as a basic principle.

Wooldridge identifies gender pay audits as a key lever of change and says these audits help employers identify and address discriminatory pay, to ensure that women are equally compensated and valued.

“Research proves that regular audits close pay gaps faster. The 2021 Gender Equity Insights Report from BCEC and WGEA showed that employers who consistently did pay audits between 2015-20 closed their managerial pay gaps faster than all other companies. By contrast, those who stopped doing pay audits actually saw their managerial pay gaps increase,” she said.

Equal pay audits are a diagnostic tool, not an intervention, so they will not of themselves remedy the gender pay gap. Businesses still need to delve into the detail, using data and results to inform an action plan so they can move forward.

To assist with the audit process, WGEA has an online Gender Equality Strategy Guide and a Gender Equality Diagnostic Tool.

Legislation and international gender pay gap reporting

In the United Kingdom legislation came into force in April 2017 that required employers with more than 250 employees to publish data on their gender pay gap.

Research found more than half of the businesses reporting their gender pay gap data externally felt this had been positive for the organisation, with the rest stating it had little effect either way (37 per cent) or were unsure (9 per cent).

Countries that performed better in the “Bridging the Gap” study, such as France and Spain, have follow through and accountability set into law, with both countries having high levels of mandated engagement and or negotiation with either employees or their representatives to make sure gender equality plans are developed.

In Australia under Commonwealth law, there has been a requirement for mandatory reporting of non-public sector employers with 100 or more employees to submit an annual report to the Workplace Gender Equality Agency, however, this is not publicly reported, and organisations are not required to act on the gender pay gap.

According to recommendations within Gender pay gap reporting in Australia: Time for an upgrade, enacting legislation to publicly release pay gap reporting for individual organisations could have a major impact.

While this is not legislated, the federal government recently called for feedback on how Australia’s workplace gender equality laws can be improved, with a view to guiding the focus of the WGEA for the next 10 years.

In a statement, Minister for Women Marise Payne said the review would consider gender indicators, including the gender pay gap and employment figures, and ongoing employer reporting obligations.

Labor has pledged to address the gender pay gap, if it wins office, with measures that include auditing gender pay gap in the public service, legislating that companies with more than 250 employees report their gender pay gap publicly, and banning pay secrecy clauses and give employees the right to disclose their pay, if they want to.

About the national gender pay gap

The gender pay gap is often confused with equal pay – where men and women receive equal pay for work of equal or comparable value – this has been a legal requirement in Australia for over 50 years.

Instead, the national gender pay gap measures the difference between the average weekly full-time base salary earnings of women and men, expressed as a percentage of men’s earnings. It is a measure of women’s overall position in the paid workforce and does not compare like roles. It is an internationally established measure of women’s position in the economy in comparison to men.

References and further reading:

Victorian Equal Opportunity & Human Rights Commission: Business guide, understanding why and how to achieve pay equal pay in small-to-medium businesses

Australian National University: Gender pay gap reporting in Australia, Time for an upgrade

Acuity: Five reasons why there’s a gender pay gap (and what to do about it)