The gender pay gap in Australia has – for the first time, stagnated at 22.8%, despite modest but consistent reductions over the previous eight years.
This was the finding from the Workplace Gender Equality Agency (WGEA) and Bankwest Curtain Economics Centre (BCEC) 2023 Gender Equity Insights report released late last year.
Gender pay gap vs equal pay
The gender pay gap is a significant statistical (versus observational) indication that our society has not yet achieved equality. Critics of gender pay gap reporting claim it is misleading because it gives the impression that organisations do not offer equal pay for equal work, but that was never the intent of this measurement. Instead, this metric tells us about organisational structures and talent disbursement within organisations. Companies with high gender pay gaps generally have proportionally more men working in senior (and therefore high paying) positions than women.
Top 5 reasons for the gender pay gap
There is plenty of research into why women earn less than men throughout their careers, but for me, these are the top 5 reasons and the areas where organisations should place more time and effort:
- Women traditionally take time away from work to raise families. While their male counterparts are building skills, increasing salary through promotions, role changes, or additional qualifications, many women are taking longer periods of (mostly unpaid) leave which reduces consideration for education opportunities and promotions. Many women also find themselves taking a career break, shifting to part time work, or finding a less demanding role (for which they are generally overqualified) during their children’s early years. Re-launching a career from this position is challenging.
- Women are more likely to step into caregiving roles for ageing parents and relatives, which happens as they are re-establishing their careers and/or approaching retirement. Another time essential for building wealth and ensuring a financially stable retirement.
- Women traditionally don’t advocate for themselves in the same way or as frequently as their male peers, known as the gender self-advocacy gap. Self-advocacy is essential for closing the gender pay gap, however studies show that when women do speak up, they are likely to be met with challenges about ‘rocking the boat’ and damaging their personal brand.
- Women are less likely to apply for promotions than their male peers. Research into this “proof versus potential divide” has shown that men apply for roles when they meet 60% of the qualifications but women only apply when they meet 100% of the qualifications.
- Women are mentored differently than men. Many mentor relationships between men have a stronger sponsorship component versus self-improvement focus, meaning that men are more likely to be encouraged and advocated for by their mentors to receive a promotion.
So, what are the real-world implications of the gender pay gap?
- According to the WGEA, as of Feb 2023 Australian men earn on average $13,183 more than women per year. This does not include bonuses, overtime, or superannuation which men are more likely to earn.
- At every age, less than 50% of women in the workforce work full time. While it is every person’s individual decision how and when/if to work, we know that in the corporate world part-time workers are generally offered fewer opportunities for promotion or leadership.
- The Housing for the Aged Action Group (HAAG) estimates that the number of women aged 55 and over at risk of homelessness is close to 240,000 in Australia. This is among the fastest growing group of homeless people in the country.
It is hard to look at these figures and not wonder about the root cause – and while correlation is not causation it is challenging to believe the gender pay gap and the underlying structures that metric exposes are entirely separate or even coincidental. While the statistics show that we do need to pay women more as a starting point, the real intervention to address the gender pay gap requires both organisational and societal change.
The talent pipeline and Gender Proportionality
Ensuring balanced talent pools for leadership and senior level roles needs to start early within our talent pipeline and include a strong focus on promotion, talent identification, and retention.
It is common for entry level roles to have near gender parity, only to see the percentage of women decrease at each subsequent level within an organisation. Depending on the organisation this could be attributed to retention, but research shows it is frequently due to lack of promotion and development opportunities.
To better address this disparity, the concept of Gender Proportionality has been developed, which states that the gender composition of any level in an organisation should reflect the gender composition of the level immediately below it. For example, if you have 60% female representation in an entry level Analyst role then the Senior Analyst role should also have 60% female representation. This ensures that the talent pool from which organisations develop and choose future people managers and key decision makers is balanced, inclusive, skilled, and reflective of the diversity in our organisations and the communities in which we work/serve.
How this is implemented will look different for every organisation, but it always starts with a conversation, a commitment and a shared vision amongst leaders to build an inclusive and representative organisation. This may mean promoting someone to a leadership role who works part-time, challenging each other when decisions are taken based on assumptions or stereo types, using real world outcomes rather than traditional traits to define success in leadership, strategy, and people management, and managers encouraging their high performing female talent to apply for a stretch opportunity/promotion.
Sex discrimination and traditional stereotypes
We need to normalise and remove the societal and structural barriers that prevent men from taking a more active role in caring, parenting, and household responsibilities (including the mental load).
The late Ruth Bader Ginsburg, former Justice on the US Supreme Court and a well-known activist for gender equality pointed out that sex discrimination hurts men as well as women. Redefining and removing traditional stereotypes is not only necessary for women but for all of society to thrive regardless of their gender.
Offering more and equal opportunities to women will result in better life outcomes for everyone – men and women alike.
“Women will have achieved true equality when men share with them the responsibility of bringing up the next generation.” – Ruth Bader Ginsburg, New York City Bar Association, 2001
So, why are women more likely to step into carer roles?
I speculate that the obvious answer is the most likely reason: someone needs to. Few of us can rely on extended family for daily support, and even fewer of us can afford a nanny or other in-home help with children, aging relatives, laundry, cooking, life admin, etc. Based on personal experience and observation the decision generally comes down to finances, and if women continue to earn less on average, have fewer leadership opportunities, fewer opportunities for promotion, etc. this will continue to be the decision taken and the cycle repeats.
Moving forward together
So how can we generate change? The only way forward is together.
Increasingly we are seeing workplaces introduce gender neutral parental leave policies, more men are taking advantage of hybrid working to share family commitments and more women are demanding a bigger share of what’s on offer. But it’s still incremental and not yet systemic or structural.
We need men and women to be more vocal in the workplace about equal access to parental leave and respectfully but actively challenge outdated stereotypes that they encounter. Women could challenge themselves more and feel empowered to apply for that promotion and advocate for a salary adjustment. Men could challenge themselves more to ask about part-time or compressed work weeks so they can be present for their children’s small and big moments.
Importantly we need managers and organisations to challenge their thinking around “best fit” for promotions, hiring, and other opportunities to ensure qualified candidates are not overlooked simply because they are not identical to the person who performed the role previously.
Harry Chapin’s “Cat’s in the Cradle” never struck me as particularly meaningful until I became a parent myself. It is a poignant reminder of how our actions influence the next generation. These are once-in-a-lifetime opportunities and few of us arrive at the end of our journey wishing we had worked more.
“I’ve long since retired, my son’s moved away
I called him up just the other day
I said, I’d like to see you if you don’t mind
He said, I’d love to, dad, if I can find the time…
And as I hung up the phone, it occurred to me
He’d grown up just like me
My boy was just like me”.
Allison Monahan | Ombpoint Adviser
1300 709 389
hello@ombpoint.com
