Industries

What is happening? On February 27th, 2024, the Workplace Gender Equality Agency (WGEA) will publicly disclose the gender pay gaps for Australian employers with 100 or more employees. Since 2012, private-sector employers with 100 or more employees have been required to report data about the gender gap among their employees. Until now, the WGEA has only published anonymised information about industry sectors. February 27 will mark the first time comprehensive data will be made available, shedding light on pay disparities and encouraging organisations to act toward gender equality. Australia’s gender pay gap narrowed 110 basis points from 22.8% in 2022, to 21.7% in 2023 meaning for every $1 men earn, on average, in Australia, women earn 78 cents. It is hoped that transparency will lead to greater accountability and a bias to action. For context, Australia currently lags behind many developed economies including Iceland, Norway, Finland and our nearest neighbour, New Zealand. What is the difference between pay equality and the gender pay gap? Equal pay and the gender pay gap are related but distinct concepts: Equal Pay Equal pay ensures that men and women in the same employment, performing equal work, receive the same pay. This principle is enshrined in the Equality Act 2010. Binary Measure: It’s straightforward—you either pay people performing equal work equally, or you do not. Gender Pay Gap The gender pay gap measures the difference between men’s and women’s average earnings across an organisation or the labour market. It’s expressed as a percentage of male earnings. Comparative View: Unlike equal pay, which focuses on specific roles, the gender pay gap considers overall average earnings, irrespective of roles or seniority. The gender pay gap persists due to a combination of factors: Limiting stereotypes Traditionally both men and women have tended to believe that women’s lack of negotiation contributes to the pay gap, but this stereotype has been largely debunked by recent research (Academy of Management Discoveries (Kray, Kennedy, and Lee, 2023) Unconscious bias Even when employers believe they are making fair decisions, unconscious bias can influence outcomes Can affect performance evaluations, salary negotiations and career advancement opportunities Household Responsibilities and Career Breaks Women often shoulder greater household duties, impacting their career progression. Taking time off for childbirth and child-rearing can disrupt career continuity. Career Choices and Industry Segregation Women may opt for less lucrative career paths, such as education or healthcare, which tend to have lower pay. Industry and job segregation play a role—female-dominated sectors often offer lower wages. Leadership Stereotypes Leadership roles are still associated with stereotypically masculine qualities (assertiveness, competitiveness, dominance). The prototypical leader is often envisioned as male, perpetuating gender bias. While various factors contribute to the gender pay gap, discrimination and unintended and unconscious bias remain significant drivers . How does the WGEA calculate the gender pay gap? The formula is: (Average male remuneration - average female remuneration) * 100 Average male remuneration What pay data does WGEA use? The WGEA uses data provided by employers. Under the Workplace Gender Equality Act 2012, private sector employers with ≥100 employees must report to WGEA, including employee remuneration. WGEA's annual gender pay gap data, comes from this annual Employer Census What does the WGEA pay data include? The WGEA gender pay gap calculation uses total remuneration, including superannuation, overtime, bonuses, and other additional payments. WGEA uses full-time equivalent remuneration, so we convert part-time and casual employee remuneration into annualised full time equivalent earnings. What does the WGEA pay data exclude? WGEA gender pay gap calculation excludes remuneration for CEOs and heads of business (HOBs) and casual managers. From 2023-24, WGEA’s dataset will also include the remuneration of CEOs, heads of business and casual managers following the passing of the Workplace Gender Equality Amendment Bill 2023. Why doesn’t WGEA have a base pay gender pay gap, like the ABS? Total remuneration is more representative of the actual gender pay gap because it includes all earnings. Why is the WGEA gender pay gap data higher than many other gender pay gaps? WGEA’s gender pay gap includes a broader scope of data than other gender pay gap calculations. By including part-time and casual employees, the WGEA reports will contain a greater proportion of the workforce. 58% of women in our dataset work part-time or on a casual basis. If WGEA did not include their remuneration in our calculation, the gender pay gap would only reflect the position of 42% of women in the workforce who work full time. The calculations also includes overtime, superannuation and bonuses, rather than just base salary. By including all earnings, the gender pay gap more accurately represents the real position of men and women in the workforce. What data will WGEA include for employer gender pay gaps? Employer gender pay gaps will be calculated in the exact same way as WGEA’s gender pay gap, using the exact same data for full-time, part-time and casual employees. WGEA will publish both total remuneration and base salary gender pay gaps. How can employers measure their gender pay gap? Employers will have access to their gender pay gaps in their annual WGEA Executive Summary. Visibility is the start. What next? The gender pay gap persists due to several factors. One significant driver is that women’s career progression often falls short of their full potential. They tend to remain in junior roles or struggle to ascend to senior positions. Additionally, many women find themselves overqualified for their current roles. Factors such as working part-time contribute to limited pay growth. Structural barriers and biases during recruitment, appointment, and promotion processes further exacerbate the issue. To address this, supporting women’s career advancement is crucial. It not only maximizes their skills and experience but also enhances talent retention, productivity, and overall performance. Research indicates that implementing the following measures can empower women within your organisation, fostering their advancement and contributing to narrowing the gender pay gap: Organisational change needs to be led from the top. Formalising the ambition to develop and maintain a diverse, equitable and inclusive organisation through strategic commitments can be one of the most important drivers of positive change. Representative Leadership Leadership teams can also inspire those in and outside of the organisation. While achieving diversity will have a positive impact at any level, an increased focus on achieving diversity in leadership will have the greatest impact, in both the short and long term. Benchmarking progress on balanced leadership in all its forms, whether achieved through targets and quotas, internal succession planning, or other initiatives can have a massive impact on organisational results Create a more Inclusive Workplace Culture In any organisation, fostering an inclusive culture is essential for the well-being and success of all employees. By creating an environment where everyone feels valued and supported, organisations can enhance outcomes, retain talent, and reduce turnover. This involves removing any social, physical, or mental barriers that may prevent individuals from feeling safe, comfortable, confident, or able to fully contribute to the workplace. It can take many forms: policies related to work attire, personal grooming and acceptable workplace behaviour, initiatives that raise awareness of different cultures and communities, or even the provision of dedicated spaces, like private pumping rooms for working mothers. Support women’s career development Companies cannot to just focus on hiring alone to address the imbalance. It is equally important to nurture and retain the women within the organisation through career development support that builds confidence, skills, networks and direction. Practical Steps to creating an inclusive workforce To foster diversity and inclusivity within your organisation, consider implementing the following strategies Work Allocation Review Networking Opportunities Transparent Sponsorship Programs Manager Training Standardised Performance Management Link Performance and Rewards Supporting Part-Time and Flexible Workers for Career Progression Part-time employees often face challenges in wage progression, and negative perceptions about their abilities and ambition can hinder their advancement. However, it’s essential to recognize that part-time workers can be ambitious, skilled, experienced, proactive, and committed to their careers. To foster progress among part-time and flexible workers, consider the following strategies: Improve recruitment and promotion processes When it comes to creating a diverse, equitable, and inclusive organisation, it is essential that companies provide fair and equal access to opportunities. This invariably starts with the hiring process. The importance of fair and transparent hiring processes that empower women of all backgrounds and experiences to apply and know they will be genuinely considered, is of paramount importance. From inclusive job advertisements and a focus on transferable skills, through to clear selection and shortlisting processes and balanced interview panels. Applicant feedback is invaluable to continuously review and improve. Measure and Evaluate Diversity and Inclusion Policies Effectively assessing diversity and inclusion policies is crucial for progress and problem-solving. Why Chandler Macleod? Chandler Macleod has a strong Diversity, Equity, Inclusion, and Belonging plan across all aspects of the business, and we have been recognised by our industry body, RCSA Australia and New Zealand, as a winner in the Excellence in Diversity, Equity, Inclusion and Belonging category in the 2023 Industry Awards. With our history as Australia’s first business psychology firm, the ability to assess your candidate and employee potential is at the heart of what we do, and we treasure the value this can add to your business over the longer term. Find out more about the services Chandler Macleod offers to clients, or simply fill in our contact form and we will have the right person contact you.