The truth about the gender pay gap

There’s no denying the existence of the gender pay gap. Women are at an economic disadvantage and despite the rhetoric around breaking the glass ceiling, it seems more intact than ever.

The gender pay gap is the result of social and economic factors in society that reduce a woman’s earning capacity over the lifetime of their career. Many factors weigh into this, and it’s more complex than a woman simply deciding to have children.

If we are to make real strides in closing the gender pay gap, we need to understand why it exists and what changes we can make in both the workplace and society at large.

The gender pay gap in Australia

The gender pay gap is an internationally recognised measure that shows, as the Workplace Gender Equality Agency (WGEA) puts it, a woman’s “position in the economy in comparison to men.”

Diversity Council Australia, alongside KPMG and WGEA, recently hosted an event looking at the economics of the gender pay gap in Australia, She’s Price(d)less.

The most recent data shows that in Australia there is currently a:

• $966 million difference in earning potentials between men and women per week.
• $51.8 billion difference in earning potentials between men and women per annum.

These are significant figures.

More alarming, their data shows that as women climb the corporate ladder and attain positions with higher average hourly wages, the pay gap increases.

A woman in the highest earning quintile, for example, earns 18 per cent less than her male counterpart. A woman in the lowest earning quintile earns 6 per cent less than her male counterpart.

So, what causes the gender pay gap?

Why the gender pay gap exists

 According to their research, factors that affect the pay gap include:

• Gender discrimination
• Years not working due to interruptions (care, family etc.)
• Part-time employment to allow for care or family obligations
• Unpaid care and work
• Occupational segregation
• Industrial segregation
• Age
• Tenure with current employer
• Taking paid leave due to COVID-19

The leading factor at 36 per cent is gender discrimination, followed by the umbrella grouping of care and family at 33 per cent, and finally the type of job at 24 per cent.

When looking just at occupational and industrial segregation, they found some industries had more barriers to equality than others.

While Healthcare and Social Assistance, for example, has a high proportion of women in management positions as well as a high proportion of women in the workforce, others have much lower representation.

The most ‘male’ industries, lacking both women in the workforce and in leadership positions, include:

• Construction
• Electricity, Gas and Water
• Mining
• Manufacturing
• Agriculture, Forestry and Fishing
• Transport, Postal, Warehousing
• Wholesale Trade

What can we do about the gender pay gap? 

The research looks to provide business leaders with evidence-backed actions that can affect real change in the workplace.

Top of the list:

• Increase awareness about the pay gap in your workplace.
• Approach salary negotiations with new employees referencing the market rate and internal pay data rather than what they are currently earning. Offering only a slight increase based on their current earnings only enforces the gender pay gap.
• Make the effort to understand how discrimination manifests in a woman’s life.
• Women are not a homogenous group; every woman’s lived experience will differ based on their background, age and how they identify. Talk to the women in your workforce to understand their unique needs.
• Offer the tools for women to fully participate in the workforce. For example, flexible working hours.
• Implement pay transparency.
• Invest in female leadership potential.