Money talks: Australia’s persistent gender pay gap

Susan Muldowney

By

written on November 2, 2015

When TAL’s chief people and culture officer, Andy Moffat, quizzed his recruitment manager about the salary offered to male and female candidates applying for the same job at the life insurer a few years ago, he was concerned by the response. The candidates shared equal skills and experience, and the salary was $100,000. The male applicant, whose current salary was $90,000, would have been offered the full $100,000. The female applicant, who was earning $80,000, would have received $10,000 less than her male counterpart. “I asked him why they would be paid differently and he said that it would save TAL money,” Moffat explains. “I asked him, do you think that’s the right answer?”

Despite the fact that women have been awarded the legal right to equal pay three times since 1969, the gap currently sits close to 18.8 per cent. While diversity is firmly on the agenda of organisations across the country and initiatives such as Male Champions of Change are seeing male leaders pledge their commitment to gender equality in the workplace, the pay gap is still proving hard to close. The question then becomes: Why does this problem persist?

Equal pay is an obvious issue of fairness, but it also makes business sense. It can help attract, motivate and retain the best talent. It supports diversity of thought, which corresponds to improved business outcomes. It ensures rewards are free of bias and it drives a culture where salary is directly linked to employee performance. Equal pay would also help to bridge the gap in retirement savings that currently puts women at a huge economic disadvantage. The average superannuation payout for women is currently $37,000, compared to $110,000 for men.

The great divide

There are several factors that contribute to pay inequality. Kate Jenkins, Victorian Equal Opportunity and Human Rights Commissioner, who recently appointed the state’s first Male Champions of Change group, says the reasons can almost wholly be attributed to gender discrimination.

Jenkins points to industry segregation, where female-dominated industries such as education and health, historically, have offered lower wages compared to male-dominated industries such as the financial sector and engineering. Even within ‘feminised’ industries, men tend to dominate senior management roles. “There’s something at play where men get promoted through the ranks and women’s contribution can be discounted even in small ways,” Jenkins says.

The underrepresentation of women in senior management positions also contributes to the pay divide. Data from the Workplace Gender Equality Agency (WGEA) shows that women in Australia comprise 27.8 per cent of executive and general manager roles and 17.3 per cent of chief executive positions.

PwC took the unusual step of publicising its gender pay gap figures in September, revealing an organisational wide gap of 11.4 per cent in favour of males. Luke Sayers, CEO at PwC, concedes that this is due, in large part, to the greater number of men employed in higher paying roles. Only 18 per cent of partners at the professional services firm are women and Sayers says they know PwC has mountains to move.

“We believe transparency is one of the most powerful ways we can address the issue of pay equity. We hope that by sharing our results, others will follow, and we will start to close the gap, which is unacceptable in our society, said Sayers. 

The WGEA also highlights how the 46 per cent of women who work part-time, largely due to caring responsibilities, are penalised in their career and pay due to a general lack of part-time access to senior roles.

“There’s also the issue of unconscious bias,” says Jenkins. “People make decisions around perceived value of a part-time worker versus full-time workers and the perceived commitment of mothers to a career.”

However, even a senior rank does not guarantee an equal salary – the biggest pay divide actually occurs at key management personnel levels. “There’s a complex interaction of the cultural and structural barriers around work and family and the traditional stereotypes that we have, particularly in Australia, about the work men and women do and the way men and women should behave,” says WGEA’s acting director, Louise McSorley.

Avril Henry, author of The Gender Tipping Point and managing director of Avril Henry and Associates, says there’s another reason at play, suggesting that women aren’t assertive enough when it comes to salary negotiations. “In my time as an HR director, I would see men argue for bigger bonuses and bigger pay rises. Women are almost apologetically grateful for getting a bonus. I think women’s lack of willingness to challenge their remuneration is another reason they are paid less.”

The numbers don’t lie

While the ABS currently puts the gender pay gap at 17.9 per cent, WGEA data places the figure at close to 25 per cent. This number is based on 2013-2014 census figures of four million workers and 11,000 employers. It also factors in discretionary earnings, such as bonuses and car allowances. “Whichever data you look at, it shows a gender pay gap,” says McSorley.

WGEA advises employers to complete a gender pay gap analysis to examine disparities in pay. However, of the 24 per cent of employers who reported to WGEA on completing the analysis last year, only 17 per cent then went on to take action to bridge the gap.

Gary Wingrove, CEO of KPMG and a national member of Male Champions of Change, says his organisation began measuring the gender pay gap three years ago. “The first time that the issue of pay equity came to our executive team in 2012, many of us said we couldn’t have a gender [pay] differential. What we found out when we analysed it in detail, which we now do every time we go through pay review and promotion cycles, is that we did have a difference. So we set about addressing that.”

KPMG has also set gender targets for its partner group. “When we started, our partner ratio was about 16 per cent and as of 1 July we’ve just gone past 20 per cent. We’re progressing. It’s hard work and I’d like our progress to be a bit quicker but, nonetheless, there is progress.”

Closing the gap

Since first identifying its gender pay gap, TAL has come a long way. A year-and-a-half ago, women at TAL were paid around 82 per cent of the men’s salary. Today, they are paid the same. “One of our values is equity,” says Moffat. “It didn’t sit well when we couldn’t justify why there was a pay gap across key roles in the business.”

Moffat says that while there was no silver bullet for closing the gap, a small number of individuals who were identified as not being paid adequately received a one-off increase. He adds that pay equity is one component of a larger strategy around gender equality. Results of TAL’s annual engagement survey indicate that the message is getting through. When asked, ‘Do you think TAL takes gender equity seriously?’, the positive response back from staff was the highest outcome of any question in the survey in the past two years. “It’s up at around 94 per cent,” says Moffat. “People are attending our coaching programs for women and our working fathers and working mothers’ programs. We’re addressing gender equity on many fronts.”

Moffat says TAL will continue to measure remuneration to ensure the pay gap remains closed. “Gender equity is what it says on the tin. It’s about pay equity – regardless of gender. So, if we had a situation in the future where women were getting paid more than men for no discernible reason, we would challenge that too.”

This article is an edited version. The full article was first published in the November 2015 issue of HRMonthly magazine as ‘Money talks’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here

Don’t miss out on more great content like this.

Comment

To comment on this article please provide your name and email address. Your email address will not be available publicly.

*