What you can do to reduce the gender pay gap

It sailed quietly under the radar, but earlier this year, the small Nordic nation of Iceland became the best place in the world for working women.


And the reason should make every Australian business leader and workplace stand up and take notice.

In a world-first, Iceland’s mandated wage parity policy came into effect in January – a measure that was initially announced on International Women’s Day last year.

In simple terms, the landmark policy means that any business in the country employing more than 25 staff needs to pay men and women equally. And if they don’t, they’ll be fined.

The move firmly establishes Iceland as the world’s most gender equal country.

In fact, Iceland was the first country to have a directly elected female President; nearly half its parliamentary members or company directors are females; and it has enacted childcare, maternity and parental leave policies that ensure more women have jobs, and fewer leave the workforce.

So how does Australia fare?

Switch to Australia, and it’s a very different story.

There’s the high-profile cases of women such as Lisa Wilkinson, a television host on Channel 9 who was reportedly denied a pay raise that would have put her on-par with her male co-host, Karl Stefanovic. Or former Queensland Senator Larissa Walters, who brought attention to a similar case of discrimination she faced early on in her career. But a look at Australia’s wage gap statistics paints an even more grim picture.

Even though, since 1969, Australian Industrial Law has stated that men and women should be paid equally for the doing same work, figures would indicate this hasn’t happened. In fact, Australia’s gender pay gap has been extraordinarily stubborn, despite significant changes in the social and economic fabric of the nation.

A study conducted by Workplace Gender Equality Agency showed that Australia’s full-time gender pay gap is 15.3 per cent – that is, women earn on average about $251 per week less than men. Even though the wage gap is narrowing, men continue to out-earn women by an average of $26,527 per year in every industry and occupation.

Some consolation for Australia is that it fares favourably against other OECD counterparts – with its wage gap less than the United States (18.9 per cent), Canada and Britain. However, its wage gap is almost double that of New Zealand (6 per cent).

So why do women still get paid less?

There are various factors that dictate the skewed wage gap, with some of them including:

1. Being a woman

Shockingly, one of the primary reasons for wage disparity is simply being a woman. A study conducted by National Centre for Social and Economic Modelling showed that the gender of the employee played a significant role in the determination of their pay. It further noted that, if gender were removed from the equation, the average wage of an Australian woman would increase by $1.87 per hour.

2. Industrial segregation

Sectors such as health, education, and social assistance have always seen an over-representation of women, leading to the lesser payment of wages. These undervalued and underpaid sectors employ almost one-third of all women in the labour market (30.6 per cent).

Similarly, a huge section of part-time workers are made up of women – 75 per cent of part-time workers are female and are employed in low paying jobs.

3. Being primary caregivers

Societal expectations also play a role in women earning less than men.

Traditionally, women have been viewed as primary caregivers, with their jobs being considered supplementary. Due to these expectations, women are more likely to take parental leave, which considerably affects their careers and consequently their wages.

Why is the discussion important?

The landscape of the Australian workforce has changed, and it is more important than ever to have a discussion about overcoming the wage gap.

There has been an influx of women entering the workforce in recent years. About 403,100 jobs were created in Australia in 2017, and the number of women being employed jumped 1.3 percentage points to a record high 60.6 per cent.

One of the consequences of this development is the rise of women as the breadwinners for their families. According to Roy Morgan Research, more than 52 per cent women are now the breadwinners, an increase of 39 per cent in 2006.

An equal wage pay will, therefore, not only incentivise more women to join the workforce, but will also ensure their overall economic wellbeing.

A call to arms

As business leaders, we need to take it as a personal responsibility to create a level playing field – it’s a matter of fairness.

Following Iceland’s landmark ruling, the head of equality at its welfare ministry said equality “won’t come about by itself, from the bottom up alone. Our experience is that you need legislative measures to move things forward. People accept that; we saw it with mandatory quotas for women on company boards. If politicians want to wait until no one opposes it, it will never happen.”

Australia is already a great place to live and work, and we will only enhance that positioning by ending the gender wage gap once and for all.
The starting point – gather the facts and analyse pay data from your own organisation and see how your business fares. The experience may surprise you. The next step? Have a conversation with your leadership team to start a journey on the road to equality.

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