Based on the current annual pace of progress, the Financy index calculates it will take 24 years before we see pay parity in Australia. Whereas, worldwide according to the World Economic Forum’s Global Gender Gap Report 2023, at the current rate of progress, it will take 131 years to reach full parity.
This year, Equal Pay Day was marked on August 25th, a date selected because it signifies women in Australia working for 56 days after the end of the financial year to make up the difference caused by the gender pay gap.
The prevalence, pay and position of women in the workplace have grown significantly in recent times. Data from the ABS shows the gender pay gap is now the lowest on record at 13%, but women on average still earn $13,120 less than men each year. We should acknowledge that the gender pay gap is the lowest it’s ever been in Australia. However, 24 years is too long to wait for women to experience pay parity in this country.
What are the drivers of the gender pay gap?
1. Women don’t ask?
Notions that gender pay differences are linked to men being more proactive around salary negotiations may well be erroneous. Studies such as this one have found that the “women don’t ask” pattern doesn’t hold true amongst working adults. Calling for an update on beliefs about gender and the propensity to negotiate pay.
2. More men are hired in high-earning leadership positions
A key contributor to the gender pay gap is more men being hired in senior positions and securing greater bonuses. As highlighted in this AFR article, “a big driver of the gap is the disproportionate number of men, relative to women, in high-earning and senior leadership positions across most Australian industries.
Among the worst gender pay gap offenders by industry is financial services, where discretionary bonuses tend to inflate pay inequality.”
Our bias for male leadership runs deep. Research from Monash Business School has countered long-standing views around women’s suitability for senior roles, “it is not because women lack the competitiveness or risk-taking instincts that men have. Rather it is due to a general bias against female leaders that assesses them less positively and rewards them less generously.”
“Our findings were that women are assessed less positively and rewarded less generously than equally effective men. It may go some way to explaining why there are fewer female leaders because if followers don’t respond to female leaders, they are more likely to fail.”
What can employers implement?
The gender pay gap is a complex issue with varying influences ranging from: discrimination, working hours, age, parental responsibilities, education and gender norms around types of jobs.
- Transparent salary
Salary transparency has become increasingly popular as a way of preventing pay discrimination. The argument is that if everyone is aware of everyone else’s pay, then discriminatory behaviours will be called out and eventually eliminated. We would no longer see a gender pay gap. - Objective performance measuresEvery employer adds different strengths and value to a company. Measuring and quantifying the worth of each individual isn’t easy. Key to companies successfully implementing transparent pay is creating objective measures of performance wherever possible. This is more straightforward in certain industries such as sales, where individual revenue contributions can be measured. However, objective measures can still be identified in most companies. For instance, pay increases should increase as an employer’s scope increases.
It’s also vital to determine what the current market value for different job roles are so benchmarks can be set and employees can see that they aren’t being undervalued. - Support progressive parental leave and work flexibility
Women are still more likely than men to be the primary care givers. So offering them paid parental leave and where possible, flexible work arrangements, supports their career growth.
Additional, as outlined in The Guardian. “When men take parental leave, everybody benefits. Studies show a woman’s earnings rise about 6.7% for every month of paternity leave taken by her husband.“ - Be like Scandinavia
Finally, organisations that want to improve their gender pay gap should look at the policies and changes enacted by the top nine countries (Iceland, Norway, Finland, New Zealand, Sweden, Germany, Nicaragua, Namibia and Lithuania) reported in the Global Gender Gap report. These countries have closed at least 80% of their gap and for the 14th year running, Iceland (91.2%) takes the top position.