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The gender pay gap still exists. Here’s what employers can do about it.

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On August 19, The Workplace Gender Equality Agency (WGEA) released the new national gender pay gap figure of 14.2 percent, an increase of 0.8 percentage points over the last six months. As a result, WGEA announced that Equal Pay Day 2021 will be on the 31st of August, marking the 61 extra days women, on average, must work to earn the same as men earnt that financial year. It is a symbolic day that helps to raise awareness of the barriers women face in accessing the same financial rewards for their work as men. 

According to Average Weekly Earnings data from the Australian Bureau of Statistics (ABS), women earn an average of $261.50 less per week compared to their male counterparts. The data showed that lower wages for females were consistent across every industry in Australia, including those industries most dominated by female employees. 

The theme of this year’s Equal Pay Day is “#WhatsYourPayGap?” and is a call to action for both employees and organisations to address the continuing issue with a strategic and actionable plan, not just a promise to do better. 

Here, we look at the current gender pay gap, some of the driving factors, and those which organisations have the ability to address. 

 

The current state of play 

Despite closing somewhat over the last few years in Australia, it will still take 26 years to eradicate the remuneration gap at the current rate. For non-management occupations, this could take longer than 26 years, with some  occupations unlikely to see any change at all in coming decades. 

These numbers are worse when taken into account on a global scale, with the estimated global pay gap to be 23 percent. Globally, women also face the motherhood wage penalty, which increases as the number of children a woman has increases, Furthermore, they have less access to leadership roles, only representing 8.1 percent of Fortune 500 CEOs.   

While the work of Australian women deserves to be equally and fairly valued in our workplaces as a basic principle, it is poignant for organisations to understand the economic benefits of closing the gender pay gap. A WGEA’s report titled Gender Equity Insights 2020: Delivering on Business Outcomes revealed a strong relationship between an increase in the number of women in key decision-making positions and subsequent improvements in company performance, profitability and productivity. Despite this however, it was found that the number of women running Australia’s top 200 ASX-listed companies has fallen over the last four years, with only 10 female CEO’s in these roles. 

 

Contributing factors 

It is important for employers and leaders to understand the various factors contributing to this inequality, but to also know which of these their organisation is able to address. According to the UN Secretary General’s report, Leave No One Behind, there are seven primary drivers of transformation that need to occur to achieve female economic equality; 

  • Ensuring legal protection and reforming discriminatory laws and regulations 
  • Recognising, reducing and redistributing unpaid work and care 
  • Building assets—digital, financial and property 
  • Improving public sector practices in employment and procurement 
  • Changing business culture and practice 
  • Strengthening visibility, collective voice and representation 
  • Tackling adverse norms and promoting positive role models 

It is these three final factors that employers can directly address in order to drive change within their own organisations, which can in turn, contribute to global change over time. Here are just a few steps organisations and leaders can take to begin the process of closing the gap. 

 

Changing business culture and practice 

Address bias within the recruitment and promotion process 

Business culture, practice and policies are major drivers of women’s economic opportunities. At the bare minimum, employers should ensure they are following best practice when it comes to complying with workplace laws (such as Award Rates and minimum wages) and following ILO conventions on gender equality. This will help to reduce discriminatory practices and gender gaps, and enable the equal participation of men and women in trade unions and business or worker membership organisations. 

This is, however, simply the starting point. Leaders can first and foremost tackle gender inequality and the pay gap within their recruitment and promotion process, by addressing any explicit and implicit bias. Though a Hiring Manager may not intentionally, or even knowingly, act with a gender bias, gender discrimination continues to be the biggest contributing factor to the pay discrepancy, accounting for almost 40 percent of the gender pay gap. Furthermore, despite making up half of the workforce in Australia, women only account for 32.5 percent of key management positions, and even less for more senior roles.   

These statistics make it apparent that when it comes to recruiting for senior and higher-paying roles women are too often being overlooked. Employers can help women enter into these roles by providing training and mentoring opportunities, as well as understanding the systemic barriers that may impact a female employee’s ability to actively request promotion into a senior role. While men are characteristically more assertive when it comes to requesting promotions or pay rises, women tend to be less confident in doing so. 

To address this, training and educating Hiring Managers about unconscious bias will be key when it comes to creating a fairer hiring and promotional process. It can also be a good idea to enlist the assistance of external recruitment professionals, whose consultants implement practices that ensure biases don’t impact on the hiring decision. 

 

Assess your family-friendly policies 

Another significant factor contributing to Australia’s gender pay gap, is that women continue to perform most of a household’s domestic work and child rearing duties. According to Leah Ruppanner, Senior Lecturer in Sociology, University of Melbourne, this significantly impacts their ability to progress their career to high-paying roles.  

“The fact that women remain intimately tethered to the home based on gender role expectations, means women lose out on economic resources”, she told the Diversity Council Australia. “Australian women have some of the highest part-time work rates in the world, often reducing moving to part-time when children are born. A second child could knock a woman out of the labour force for close to a decade.” 

It is important for employers to recognise the impact that these stereotypical responsibilities have on women in the workplace, and actively seek to minimise the impact it has on their ability to earn equally to men. It is beneficial to assess your current family-friendly policies, including parental leave, flexible work options and support for child and other forms of care. 

2019 WGEA study, found that flexible workplace policies and employer-funded paid parental leave schemes are integral to retaining female staff members during and after pregnancy. Employer-provided onsite childcare also increases the retention of female managers by almost 20 percent. 

 

Strengthening visibility, collective voice and representation 

Champion diversity among women 

It is important for employers to understand the nuance of intersectionality that should occur in order to strengthen visibility and representation of minorities within the female workforce. Gender can intersect with other factors, such as disability, socio-economic status, race and age, all of which can impact on an individual’s lifetime earnings. 

According to KPMG’s She’s Price(d) Less reportwomen in such minority groups have a pay gap even greater than those women who sit in the majority. This means that for employers to truly strengthen the visibility and representation of all women within their workplace, this intersectionality needs to be addressed.  

 

Consider non-binary and transgender employees 

Additionally, employers should consider how the pay gap might affect non-binary and transgender employees. A 2016 US study found that nonbinary individuals typically faced hiring discrimination and experienced more discriminatory treatment within their workplaces. Additionally, nonbinary people as a whole were more likely to have been denied a promotion. Though limited research has been done into the Australian statistics regarding the pay gap affecting non-binary and transgender employees (which is in itself an issue), employers should acknowledge that it likely exists.  

 

Tackling adverse norms and promoting positive role models 

Increase the representation of women in leadership 

As previously mentioned, women in Australia and around the world, are significantly underrepresented in leadership and senior roles. 2019-20 WGEA data found that women comprise only: 

  • 32.5% of key management positions 
  • 28.1% of directors 
  • 18.3% of CEOs 
  • 14.6% of board chairs 

The annual Bankwest Curtain Economics Centre series has uncovered evidence of the importance of female representation in senior leadership roles—not only does it reduce gender pay gaps but to improve company profitability and productivity. Furthermore, the 2019 research revealed that women are now progressing into management roles at a faster rate than men. If this growth continues, it would take 20 years for women to have equal representation in full-time management positions, which would significantly aid in reducing the gender pay gap. 

 

Occupational segregation 

It is common knowledge that certain industries are traditionally dominated by either gender. But this segregation in the Australian labour market continues to be a persistent factor underpinning the gender pay gap, and shouldn’t simply be something that is accepted by organisations. 

Data collected using LinkedIn shows that women make up a small portion of the workforce in particularly technical roles with typically higher incomes. For example, female workers make up an estimated 26% of workers in Data and AI roles, 15% of workers in Engineering roles and 12% of workers in Cloud Computing roles. Conversely, industries that have a larger female workforce, such as healthcare and education, tend to receive lower rates of pay.  

This is in part due to greater overarching social norms and stereotypes eschewed by current society, but is also influenced on a micro-level by the way organisations promote and advertise for such roles. For example, a PD for an engineer could use language and incentives that would appeal more to candidates with traditionally masculine-associated characteristics, making others feel like they are an unsuitable choice for the role and therefore less likely to apply. 

This demonstrates the importance of writing job ads that are inclusive and gender neutral, which is not only beneficial from an ethical perspective, but also a business one. Companies that fail to effectively champion gender diversity will significantly under-utilise their available talent pools, which can result in stunted business growth. 

 

The journey to closing the gender pay gap is a significant one for all Australian companies and those in hiring or leadership roles, and will not be achieved without a strategic and systematic approach. 

If you need assistance with inclusive recruitment practices, contact our recruitment team today.

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