What have Australian businesses achieved since the last [Un]Equal Pay Day?

Did you know that the current gender pay gap means that women work an extra 59 days to earn the same as men?

Using Average Weekly Earnings data collected by the ABS, the Workplace Gender Equality Agency (WGEA) has revealed this week that the national gender pay gap remains stable at 14%, a drop of just 0.6pp over the last 12 months for full-time employees. Comparing like for like work, Australian employers still value men’s contributions more highly than women’s by approximately $244.80 per week, an increase of only $3.30 since last year.

Despite a slight improvement on the 15.3% gap reported in 2017, according to KPMG’s latest report, over the last 20 years, the gender pay gap has fluctuated between 14% and 20% and Australia still has much work to do.

How does Australia compare this year?

The World Economic Forum (WEF) conducts annual research on gender equality, ranking OECD member countries against four key pillars; economic participation and opportunity, education, political empowerment, and health and survival.

According to WEF, in 2018, Australia experienced a drop in the rankings of three places as a result of slight decrease in female legislators, senior officials and managers, as well as some reversal of progress on wage equality. It has closed 73% of its gender gap and lags in fourth position in the East Asia and Pacific region, behind New Zealand, Philippines and Lao PDR.

Australia ranks 46th on the World Economic Forum on the Gender Gap subindex for Economic Participation and Opportunity and 39th in the overall Gender Gap global rankings, three places lower than in 2017. We only need to look at the Top Ten to understand where domestic policy and society is limiting progress.*

The first step to closing the gap is measuring it. WGEA Director Libby Lyons said “More organisations are introducing strategies and policies to ensure women and men are equally valued and rewarded in their workplaces. Gender equality has become an important focus for Australian employers. However, we also know that policies and strategies cannot just live on paper. They have to be implemented. Targets need to be set, outcomes monitored, and managers, executives and boards made accountable for the results.”

But it’s not only employers that need to act. Achieving gender equality and pay equity is a shared responsibility with the Government.

Those OECD members with strict legislation around equal pay and generous Government paid parental leave schemes such as Iceland and Sweden, continue to outperform those that don’t. Effective strategies to debunk stigmas around caring responsibilities and support men to take an active role in the home are helping women to participate more fully, and more equally, in the workforce. In Australia, women still do 64.4% of the unpaid work, such as domestic chores, and hold only 29.4% of political seats. Rwanda, although as a result of a particular civil history, has the highest share of female parliamentarians in the world (61%).

Is the gender pay gap real?

There is a myriad of articles discussing how the pay gap is a myth, suggesting that it stands to reason women earn less; because women choose to work less, choose to take time off to have children, and choose not to seek opportunities for promotion or leadership positions.

Research shows that these ‘choices’ are dictated by Government policy, such as insufficient paid parental leave for men, a lack of employer support for workplace flexibility, and outdated gender stereotypes that limit women’s education and career opportunities.

WGEA cites several drivers of the pay gap:

• The undervaluation of ‘female’ jobs

• Barriers to higher-paid male-dominated industries

• Conscious and unconscious bias and discrimination

• Women’s disproportionate share of unpaid caring and domestic work

• You can’t be what you can’t see – a lack of female role models and mentors.

The gender pay gap is very real.

We’ve come a long way since schools taught girls needlecraft and boys mechanics, yet society still deems certain jobs as ‘women’s work’. This leads to a disproportionately high representation of women in caring professions such as health care and teaching that offer much lower rates of pay than traditionally male-dominated industries.

Why the difference in pay? History shows that once women start to populate a previously male-dominated profession, the average wage drops. Conversely, when men start to work in occupations previously dominated by women, those roles grow in prestige and the average salary increases. The simple fact is, that at a societal level, we value the contribution that women make less than we value the contribution of men.

Gender Gaps in the Workplace of the Future

The WEF has recognised that Artificial Intelligence (AI), as a critical driver of change, is redrawing the division of work between human and machine, warning employers that in an era when human skills are increasingly important and complementary to technology, the world cannot afford to deprive itself of women’s talent in sectors where talent is already scarce.

Already in this new talent pool, only 24% of AI professionals in Australia are female, creating a 68% gender gap to close. Globally, women with such skills had highest representation in the education, non-profits and health care industries, fields that continue to be female-dominated in general. WEF reported data also suggests that women are less likely hold more senior and lucrative positions or to gain expertise in high-profile, emerging skills.

WEF cites several contributing factors, including the image of the ‘boy genius’ working in a garage and changing the world, for example Steve Jobs or Bill Gates, going back to a lack of female role models and entrenched biases relating to roles in society which alienate women from technical roles.

People with skills in this field are fast becoming the most in demand, with a shortage actually cited as the biggest barrier to implementation of technology at EY. Increasing the number of women in this field will help to resolve this economic issue.

There is also a deeper risk that because humans build AI and it relies on algorithms which learn from real-world data, instead of solving gender bias, AI will exacerbate it. According to EY, there are already algorithms perpetuating the pay gap by targeting listings for better-paid jobs toward men, and due to the roles traditionally fulfilled by women, many more women than men are predicted to lose their jobs to automation.

There is a similar trend in other areas of innovation and development, for example, when Apple first launched its health app, it included no function to track menstrual cycles. From stab vests to crash test dummies, these products have all been developed by men, for men, to the detriment of women.

What can employers do to address these challenges?

Several major employers in Australia, including Lion, AECOM and AbbVie, have already closed their gender pay gap, allocating millions of dollars to achieve pay equity across their business.

While not all organisations can close the gap in one move, strong leadership and absolute transparency on pay equity and gender equality, including a commitment to annual gender pay gap reviews, such as that made by AGL, are steps that all employers can take.

WGEA’s latest figures show that unfortunately, nearly 40% of employers in Australia still do not have a formal remuneration strategy in place to address pay inequity.

It’s also important to recognise that it’s not just a case of achieving balance – it’s about maintaining it. Employers need to regularly review their talent acquisition and management processes and identify the risk areas where bias and inequality creep in and manifest.

For example, a business could eradicate its pay gap and then allow it to reappear by inheriting pay gaps during the recruitment process. To mitigate this, Lion recently announced that they will no longer ask questions relating to previous salary during interviews. Having a robust remuneration strategy and interview process should removes the need to ask questions about a person’s previous salary, allowing offers to be based around each individual’s unique capabilities and fit for the role.

The bias and challenges that women face in the workplace are many and complex, including leadership and ambition in women being viewed less favourably than in men, a reduced ability to negotiate and poorer outcomes, and a lack of role models and mentors to help direct and shape their careers. The result is that women begin their careers earning less than men, and the gap widens as they progress into more senior positions.

Where to from here?

It's important that we generate discussion and encourage employers to take-action towards the economic betterment of women, particularly with a view to future proofing the workforce by upskilling them in critical areas.

It’s critical, however, that we recognise a lack of pay equity as symptomatic of a more deeply entrenched and pervasive issue and that efforts to reduce the gender pay gap form part of a broader strategy, with shared responsibility between employers, business leaders and the Government, that addresses the many barriers facing women, both at work and at home.

Reduced earning potential is not about the choices that women make. It’s about the how we undervalue women’s contribution to society and the limitations we place upon them, issues that have no place in Australia, or anywhere in the world, today.

Further reading

As talent partner to businesses across Australia and Asia Pacific, we are dedicated to promoting conversation and positive action towards achieving pay equality for women and have recently published white papers on what corporate Australia has achieved in the area of gender equality in the last five years and gender diversity in Australia’s mining industry.

We believe that it's critical that employers regularly evaluate their progress and share strategies that are having an authentic and meaningful impact in addressing the gender pay gap and developing a deeper understanding of the challenges that women face when it comes to work. For us, #TheGapMatters.