The gender pay gap: what’s the problem and how can we solve it?

Would you sign an employment contract that guaranteed you would get a much lower salary than your colleagues?

If you’re shaking your head at the idea of being paid less than someone else doing the same job, you’re not alone. But this is the reality for women all around the country. Yes, the gender pay gap is real and it exists in every single industry around Australia. It affects women of all ages and backgrounds.

What is the gender pay gap?

Australia’s current gender pay gap is 16.2%, as reported by the Workplace Gender Equality Agency, and has generally been between 15% and 19% for the last two decades.

This figure is the difference between women’s and men’s average full-time equivalent earnings, calculated as a percentage of men’s earnings.

This means, if you’re a woman, you need to work an extra 70 days each year to earn the same as your male counterparts. Of course this is impossible, so the difference means you’ll likely end up earning significantly less over your lifetime than the man sitting next to you.

Think this sounds unacceptable? That’s because it is.

Why does the gender pay gap exists?

The pay gap is a multi-layered and complex issue, which is impacted by many factors, including:

  • Female-dominated industries earning less. Roles such as nursing, teaching and childcare traditionally earn less than those in male-dominated industries such as science, engineering and construction.
  • Women more commonly exiting and re-entering the workforce. This impacts their earning capabilities. For many, this means a financial struggle both in the immediate future and in the years to follow as they try to play catch-up.
  • Women being penalised for taking time off. Taking time off to have children results in lower wages for women, with Diversity Council Australia estimating this ‘motherhood penalty’ to be between 4% for the first child and 9% for two or more children.
  • Part-time and flexible working arrangements. Women are more likely to work part time in order to cater for unpaid caring and domestic responsibilities. Employers can see this as a sign of less commitment or a woman working less effectively. These perceptions are shown in performance reviews, the payment of lower bonuses and ultimately in weekly pay packets.
  • Lack of transparency around wages. Organisations can be very secretive about the wages they pay their staff. Many employment contracts we see include clauses that prevent employees discussing remuneration with their colleagues. This lack of transparency hides the issues at play, and puts the responsibility on the individual to identify and prove inequity.
  • Women being less successful in negotiating their pay increase. Another reason often touted for the pay gap is that women are less likely than men to negotiate higher salaries. International research using Australian data has reported this to be untrue: women are just as likely to negotiate, but have less success in achieving a higher wage.
  • Unconscious bias. There are unconscious biases that play a part in the gender pay gap. While many leaders wouldn’t think of men’s and women’s salaries in blatantly discriminatory terms, they are still prone to outdated perceptions that influence the bottom line figure on employment contracts.

How can we close the gap?

It’s hard to imagine the next generations of women facing such inequality, but it might still take 170 years to close the gap, according to the World Economic Forum.

While this is great news for our descendants, it will be a shame if our daughters and granddaughters aren’t able to reap the benefits of our knowledge and efforts towards wage equality.

Change needs to start now. Here are some positive steps organisations can take that will start to bridge the gap:

  • Create greater transparency in pay levels. This would encourage employers to take responsibility for providing equal pay.
  • Offer unconscious bias training. It’s important to increase awareness of these issues at all levels of the organisation. This education can also spur on positive changes, like promotions for women and acceptance of the need for salary transparency.
  • Increase the number of women in senior management roles. Organisations with women in senior management roles are less likely to subscribe to the gender pay gap issue. This is improving steadily; for example, in 2009, women represented 8.3% of ASX 200 board positions, while this year the figure has reached 23.4%, an upwards trend that needs to continue.
  • Offer access to high-quality, affordable childcare. This will have a positive impact on pay equality, making it possible for women to return to work in ways which suit their families, career ambitions and circumstances.

To really address the pay gap, organisations need to lead positive, systemic change that is driven by the top levels of management and puts much of the responsibility on employers to create equality.

In the meantime, communication and conversation will be the keys to change. Hopefully our daughters can reap the benefits.

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Emma Starkey

Maurice Blackburn Melbourne
Emma Starkey is a Senior Associate in Maurice Blackburn's Melbourne employment team. She is a senior member of the only first tier law practice listed by the prestigious Doyles Guide 2017 for employee representation. Emma has successfully: obtained a 7-figure compensation package for a ...

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