The Gender Pay Gap

Every industry in Australia has a gender pay gap in favour of men, including female-dominated industries such as education and healthcare. Despite a long-standing emphasis on equality in the workplace, this is a challenging statistic to grapple with – particularly amid the current economic climate faced by workers across the nation.

The gender pay gap should not be conflated with equal pay, a legislative requirement in Australia since 1969, which ensures equal compensation for men and women in equivalent roles. Instead, it represents the average earnings disparity between men and women across organisations, industries, and the entire workforce. And spoiler alert – it’s not great!

Australia reports two gender pay gaps at a national level, published by the Workplace Gender Equality Agency (‘WGEA’), established under the Workplace Gender Equality Act 2012 (Cth). The first, from the Australian Bureau of Statistics (‘ABS’), is updated biannually in February and August. This data is sourced from various samples of employers selected from the Australian Business Register (‘ABR’). As of August 2023, ABS data indicates the national gender pay gap stands at 13%, a 0.3% decrease from February 2023.

However, because ABS data considers only full-time workers and their base salaries, a second gender pay gap is calculated to incorporate total remuneration – including base salaries plus additional earnings like superannuation, overtime and bonuses – and include all workers (i.e. part-time and casuals) with salaries annualised for comparison. Sourced from the annual Employer Census, which reports on non-public sector employers with 100+ employees, WGEA’s annual gender pay gap as of November 2022 is 22.8%, a notably higher figure when compared to ABS data.

Considering both data sets offers a more comprehensive analysis, highlighting various trends and differences that are valuable for improving workplace gender equality in Australia, because, speaking honestly, Australia’s trends need to improve.

In the Law:

March 2023 marked a significant milestone in the Australian government’s strategy to close the gender pay gap with the passing of The Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023. Aiming to accelerate workplace gender equality in Australia, the Bill builds upon six of the 10 recommendations made by WGEA in its review of the Workplace Gender Equality Act 2012.

Under the new legislative reforms, WGEA will publish the gender pay gaps of private organisations with over 100 employees, in addition to publishing the gender pay gap at national, industry and occupational levels. The first set of private sector employer pay gaps will be published in 2024, covering the 2022-2023 reporting period. This data will include employer gender pay gaps by median, and show employee composition and average remuneration by quartile.

With this new level of transparency, WGEA aims to encourage companies to actively address and close the existing gender pay gaps identified in their own workforce, therefore contributing to accelerating progress in closing the national gender pay gap. And for those who don’t? A very public call-out and potential exclusion from government contracts awaits – a powerful incentive to cooperate.

In the Company Boardroom:

While laws and regulations can drive change from the top down, genuine transformation originates within the walls of individual companies. Employers play a key role in addressing the deeply ingrained gender norms and stereotypes that often impede women’s progression or full participation in the workplace.

To merely point to the statistics is not enough. Companies should delve deep into the internal factors perpetuating their specific gender pay gaps and acknowledge the various social and economic factors that can limit a woman’s earning ability.

These factors can be direct or indirect, encompassing both conscious and unconscious bias in hiring, promotion and pay decisions, lack of flexibility in the workplace to accommodate caring and other responsibilities, greater time periods out of the workforce impacting career progression and opportunities, and women bearing a disproportionate share of unpaid caring and domestic responsibilities. Closing the gender pay gap requires a cultural shift to remove the barriers that hinder the full and equal participation of women in the workforce.

For companies with a gender pay gap — perhaps due to having a strong leadership team and limited opportunity for compositional changes — it is important to provide a clear explanation of the underlying factors and any corrective plans in response. This information could be in the form of a gender-equality strategy, action plan, or even a simple narrative outlining: ‘This is why we believe we have our gender pay gap, this is what’s driving it, and this is what we’re doing about it’. It is still possible to establish a strong brand identity with an ‘explainable’ gender pay gap by emphasising and addressing the areas that demonstrate the organisation’s commitment to gender equality.

In the Investment Houses:

For investment houses, the research is undeniable – there is a powerful economic case for gender equity. Global studies increasingly show the tangible benefits of diversity, with clear correlations between gender-inclusive leadership and positive financial returns.

Investors are progressively incorporating assessments of gender diversity and equity of target companies into their decision-making processes to determine their response to ESG risks and opportunities. As the importance of gender diversity in corporate strategy and performance increases, companies failing to make progress in promoting inclusivity may pose a risk for investors.

WGEA’s collaboration with Bankwest Curtain Economics Centre is a compelling example of gender equality’s influence within investor profiles. When women are given a seat at the table – particularly in top-tier management positions – the market value of ASX-listed companies increased by 6.6%.  ASX-listed companies with a female chief executive led to a 5% increase in market share. These same companies also showed a greater likelihood of outperforming their peers on three or more profitability and performance metrics. For investment houses, betting on gender diversity isn’t just a moral imperative; it’s smart business.

Our View:

Addressing the gender pay gap starts with measurement. Even with some notable strides over recent years, sectoral pay discrimination remains pervasive, and workplace biases persist. Now is not the time for the nation to be complacent

Pay transparency is a powerful tool that equips employers and employees with the knowledge and evidence to detect when pay discrimination is occurring. Encouraging accelerated action by employers can lead to improved workplace policies, practices, and environments that support gender equality and ensure a meaningful shift in Australian working culture

By publishing gender pay gaps we open a dialogue, not only between employers and their employees, but on a national scale. This conversation allows us to identify what is really driving this disparity and gain insight into how companies should be framing their engagement with gender inequality in the workplace. We believe that with collective responsibility and a proactive approach, we can, and will, bridge the gender pay gap in Australia.

For additional information on this important topic or ESG assistance, contact us today at info@anabranchesg.com.au

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