Addressing the Gender Pay Gap: A Business Priority

Addressing the Gender Pay Gap: A Business Priority

Pre-existing inequalities faced by women have been amplified during the pandemic, with experts warning that without concerted action, advances in gender equality and the limited gains to the gender pay gap risk being rolled back.

Globally, women are typically paid less than their male counterparts. According to the Australian Bureau of Statistics, Australian women who work full-time are, on average, paid 14 per cent less, or around $254 less than men per week. At these rates, a woman on the average pay must work an extra 59 days a year to earn as much as her male counterpart.

Chief executive officer of the Diversity Council Australia (DCA) Lisa Annese, says: “The cessation of free child care and the increase in caring responsibilities at home combined with job losses are all seriously affecting women’s employment participation

I’m really worried about the impact all this is having on women and on the gender pay gap – now and in the years ahead. If we don’t act to address these issues they will continue to be entrenched in future generations.”

One reason the pandemic has had a greater impact on women is that it has significantly increased the burden of unpaid care work. Women were already doing most of the unpaid care work prior to the onset of COVID-19 and research suggests the crisis and its subsequent shutdown response have dramatically increased this burden.

In Australia, pre-virus estimations by the Workplace Gender Equality Agency revealed that for every hour of unpaid care work performed by men, women do one hour and 46 minutes.

Why it matters

The gender pay gap is a measure of women’s overall position in the paid workforce and does not compare like roles. It is the difference between women’s and men’s average weekly full-time equivalent earnings, expressed as a percentage of men’s earnings.

Addressing workplace gender pay equality can reduce staff turnover, improve morale and productivity and boost an organisation’s reputation as a great place to work. In addition, recent research by McKinsey and Co. found that what is good for gender equality is great for the economy and society as well.

Gender pay gaps have a compounding effect that reduces a woman’s earning capacity over her lifetime. The gap is influenced by a number of factors including:

  • Conscious and unconscious discrimination and bias in hiring and pay decisions
  • Women and men working in different industries and different jobs, with female-dominated industries and jobs attracting lower wages
  • Lack of workplace flexibility to accommodate caring and other responsibilities, especially in senior roles
  • High rates of part-time work for women
  • Women’s greater time out of the workforce for caring responsibilities impacting career progression and opportunities.
  • Women’s disproportionate share of unpaid caring and domestic work

What can businesses do to help close the gap?

There is no single solution to reducing the gender pay gap but taking action on contributing factors and helping women thrive can reduce inequalities in the workplace, and stop the gender pay gap backsliding.

Here are five proven strategies for reducing the gender pay gap in your business:

Conduct a gender pay gap analysis

An audit will help you address and improve pay equity by collecting and reviewing relevant data, identifying any instances of unequal pay, and understanding what is driving any gender pay gaps.

Areas of investigation could include, asking if women are disadvantaged on intake? In ongoing raises? Are there large gender disparities in representation in different parts of your firm? Is there a high rate of attrition in female employees?

To assist with the audit process, WGEA has an online Gender Equality Strategy Guide and a Gender Equality Diagnostic Tool.

Address unconscious bias

Unconscious bias can have a big impact on people-related decisions at work, especially when it comes to recruitment, promotion, performance management and ideas generation. When bias is prevalent, your business will have less diversity in teams and fewer opportunities for development and career progression.

Gender pay gaps can be a sign of both conscious and unconscious biases, with clear evidence, that between a male and female employee, unconscious bias often results in higher pay for the male employee.

Include audits and structured monitoring policies to identify biases against women and ensure your business is not systematically rating men more highly and promoting them more quickly than women.

Train managers to understand the impact of gender bias on their decision-making and put clear and consistent criteria in place to reduce bias in staffing decisions and performance reviews.

Reset norms around flexibility

Allowing employees to work flexibly to better accommodate employee commitments outside work is a simple and effective way to reduce the gender pay gap.

By building a workplace culture that supports flexible arrangements and avoids the “motherhood penalty” you will promote higher return-to-work rates, increased employee engagement and greater loyalty.

In addition, you can support the growth and development of all employees by establishing progressive, gender-neutral paid parental leave policies that go above and beyond legal requirements.

Commit to gender balance in leadership

Recognise the importance of gender balance in leadership as a means for increasing profitability and innovation. Setting targets and making public commitments to improve gender balance can boost workplace performance while simultaneously acting to correct gendered pay inequities.

A study by Bankwest Curtin Economics Centre (BCEC) in partnership with the WGEA found female representation in senior leadership roles significantly reduced the gender pay gap and, improved company profitability and productivity.

End pay secrecy

To close the gender pay gap we need to end pay secrecy. In Australia, it is not uncommon for employers to prohibit employees from openly discussing or sharing details about their pay.

Don’t bar employees from discussing wages and be open about salary ranges and how compensation is decided. This will make your workplace a fairer place to work – not only for women but for all your employees. When employees believe they are rewarded fairly for their work, they are more likely to put in extra effort and help co-workers.

Finally, an additional area to consider is making sure women have equal opportunities for advancement. This could include introducing a mentoring program or offering training for women to learn concrete steps to negotiate for a raise or increased flexibility. Research has shown that when pay is negotiated men tend to benefit more than women. Supporting women to develop negotiating skills is therefore important for supporting women to achieve better outcomes.

References and further resources:

Forbes Unequal pay, unconscious bias, and what to do about it

Women’s Agenda Why we’re at risk of losing a decade or more on equal pay

WGEA Australia’s gender pay statistics