The release of Australian gender pay gap data by the Workplace Gender Equality Agency has highlighted the big discrepancies in women’s salaries, the absence of women in traditionally male dominated industries, and the lack of women in senior management of many major businesses. But while the release of this data has sparked a national discussion on why women are often paid less, there’s more nuance to this story than what first appears.
Equity expert Natasha Bradshaw breaks down what the gender pay gap data shows, and what we can expect next in light of these revelations. Hosted by Kat Clay.
Helpful links
Transcript
Kat Clay: The release of gender pay gap data by the Workplace Gender Equality Agency has many employers scrambling to explain why men are paid more than women at their organizations. Let’s face it, who hasn’t logged on to look up their favourite brands to see how they fared?
This data has highlighted the big discrepancies in women’s salaries, the absence of women in traditionally male dominated industries, and the lack of women in senior management of many major businesses. But while the release of this data has sparked a national discussion on why women are often paid less, there’s more nuance to this story than what first appears.
I’m Kat Clay, and I’m excited to have one of Grattan’s most passionate advocates for equity on the podcast today. And that’s Natasha Bradshaw. Welcome, Natasha.
Natasha Bradshaw: Hi Kat.
Kat Clay: So you’ve been, a lot of media this week. One of the things I’d want to talk to you about is just doing a little quick primer for anyone who’s not across the gender pay gap. I know we’ve talked about it on the podcast before, but can you just take us through quickly what it is and how it’s measured in this data?
Natasha Bradshaw: A common misconception is that the gender pay gap is about women being paid less for the exact same job as men. It’s not about this. In fact, equal pay for equal work or work of equal value has been legislated in Australia for more than 50 years. But when it comes to the gender pay gap, there are a few different ways to measure it.
And what it’s really about is how we value women’s contributions in the workplace relative to men’s. Most commonly, you’ll see two measures reported. One of those is the National Gender Pay Gap, using data from the ABS. And this shows a gender pay gap of about 12 percent in favor of men. What this includes is just full time workers, and just their base pay.
The other measure you’ll commonly see reported is the Workplace Gender Equality Agency’s employer census data. They collect information from employers who have more than 100 employees. And the gender pay gap they report, on average is 21. 7%. So much bigger than the 12 percent stat from the ABS. And that’s partly because this gap includes not just full time employees, but all employees, if you aggregated up their salaries to a full time equivalent.
And it also includes not only base salary, but overtime bonuses and other additional payments, which we know typically, men receive more of than women. So that tends to increase the gender pay gap as well.
What the Workplace Gender Equality Agency has just released is the Median Gender Pay Gap overall and at the individual employer level. The Median Gender Pay Gap is essentially if you went to an organization and you lined up all the men in order of how much they get paid and all the women in order of how much they get paid and you took the middle person in each line and you took the percentage difference between their pay.
So that’s what this data is telling us. They’ve published two measures. One is the median for base salaries. And the second is the median for total salaries. So including bonuses and overtime payments. So the median base gender pay gap in organizations is fourteen point five percent and the total is 19 percent.
Kat Clay: And I think this data is clearly important as you’ve said that, are more likely to receive bonuses, but also women are more likely to work part time. So do you think that this is giving a more holistic picture here?
Natasha Bradshaw: That’s right. There are lots of different ways. You can measure the gender pay gap and also other measures of women’s labor force outcomes that should also be considered in context. But I do think including part time employees is important, especially given, so many women in Australia do work part time.
Kat Clay: One of the things I did want to go into as well is the reasoning behind releasing this data because the WGEA have been collecting this data for a decade now, but this is the first time that it has been made publicly available.
Usually they just release a public statement on kind of the data itself. Why has it been made public this year?
Natasha Bradshaw: The power of WGEA to release data and what data it’s able to release is defined by law. Previously, it collected very detailed data, and it was able to privately inform employers of their gender pay gaps, but it was only allowed to publicly release very aggregated data. So at the economy wide level, and split by broad industries and occupations.
What’s changed is that last year, legislation was passed that now allows WGEA to publish the gender pay gaps at the employer level. In terms of why this change happened, Kat, if you’ll indulge me for a minute, I might just talk a little bit about the history of the gender pay gap in Australia to, to give some context.
So, Australia, like many other countries, has a long history of undervaluing women’s work. From the early 1900s, the basic wage for unskilled men was determined not by the market, but rather employers had to pay a basic wage that was sufficient to support a wife and three children in frugal comfort. And up until World War II, the female basic wage was set at about 54 percent of men’s wages.
Because women, were assumed not to need to support a family. And until 1969, employers were allowed to pay women less than men for doing the exact same work.
Kat Clay: What is the reason for that change in 1969?
Natasha Bradshaw: In 1969, there was a legal decision, which was the equal pay for equal work. And then in 1972, we had another legislative change, which was equal pay for work of equal value.
So I think that context is important that actually in historically the gender pay gap was something that was enforced by government legislation. Now, since the equal pay decisions, in the early 1970s, we’ve seen enormous improvements in women’s labor market outcomes. Women are now getting educated at incredible rates.
Workforce participation has grown rapidly. Women are working and earning more than ever before, but we have seen this stubborn persistence in the gender pay gap. So while it’s come down over time, it’s still persisting and it’s not. It’s really stalled in, in recent years. Now, the Albanese government has made clear that gender equity is a priority.
And as we’ve discussed on the podcast before, they’ve already made changes to paid parental leave and the childcare subsidy that are intended to help women to balance. their caring roles and participation in the labor force, but when it comes to the gender pay gap, many levers are not in the government’s control.
What we need is a full societal effort to bring down the gender pay gap. And a lot of those levers, sit with businesses,as the ultimate hirers and people who pay workers. Essentially what the government’s done here is allow WGEA to publish this information at the employer level, which essentially means employers can be named and shamed for having big gender pay gaps.
And this creates,a big incentive for employers to do something about it.not only, can they experience reputational damage if,they have huge gender pay gaps relative to their competitors, but it can also prevent women from wanting to work in their companies. And at a time with labor force shortages and companies competing for the best talent,you know, if you can’t hire really talented women, that’s a huge problem.
Kat Clay: So, Tash, let’s dig into this data. What did it reveal?
Natasha Bradshaw: Well, unsurprisingly, Kat, the data does reveal that many Australian companies are paying women much less than they’re paying men. About 60 percent of companies pay the typical woman at least 5 percent less than the typical man. And around a quarter pay women more than 20 percent less than men. There are also companies with gender pay gaps up above 50%.
So a lot of work still to be done across many organizations. You can also see from the data how much bonuses and overtime matter. So overall, the pay gap is larger once you include bonuses and overtime, but for some companies, it really makes a huge difference. So one Example is a company called Optiver, which is a large private company in the finance sector.
Now they have a median gender pay gap of zero when you look at their base pay, but one of more than 50%, when you include other aspects of pay, like bonuses and overtime.
Kat Clay: That’s huge. That’s so big.
Natasha Bradshaw: Yeah, exactly. So it shows just how much of a difference this can make. And this is very common in male dominated industries like transport, mining, construction, and financial services.
Kat Clay: None of us were particularly surprised to see that kind of pay gap in those, those industries, the male dominated industries. Were there any other major outliers here where you felt like, was unexpected or you didn’t expect to see that?
Natasha Bradshaw: I don’t think there’s much that’s particularly unexpected, but what we can see here for the first time is you can look at companies in very similar industries of similar sizes and see where some have made great progress towards gender equity and have very small gender pay gaps and others have very large ones.
So often, companies will blame industry and occupational segregation or economy wide differences for their gender pay gap. But in these cases, it seems like there’s more companies could do. So one example I thought was interesting was to look at AFL clubs. And what I found when I looked into the AFL clubs is that there’s a huge difference in gender pay gaps.
So my team, the Sydney Swans have the smallest of any club. They actually have a pay gap in favor of women, but the pay gaps range all the way up to the biggest, which is Collingwood football club at 42%. As you can see, just within, different football clubs, you have these very different, gender pay gaps.
Kat Clay: Yes, and you’ll be very pleased obviously as a Sydney Swans supporter and also as a Sydney Swans household to see that that’s the lowest gap. But obviously the Collingwood fans at Grattan will not be pleased I imagine.
Natasha Bradshaw: Absolutely.
Kat Clay: Yeah, I did look at the AFL clubs because I think that’s actually quite a nice little set of comparison data. I find that really interesting that you could dig into any kind of niche of businesses with over a hundred employees. So you could even look at data from, you know, say large churches or clubs or, you know, AFL club.
All sorts of businesses are on there. One thing that I was interested in too is that there was some businesses that didn’t report. What happens to them?
Natasha Bradshaw: Often the Workplace Gender Equality Agency does have businesses who don’t report in a given year or even consistently. There’s limits on what they can do about this, but typically what they’ll do is they have the power to publish the names of companies who don’t cooperate. Often this is kind of a last step for them.
So they’ll make quite a big effort to help companies to report, to follow up with them if they don’t, to help them gather the information they need to report. And if they fail to do all of those things, then they will be listed on the website as non compliant. Those companies might also be excluded, for example, from government contracts or different government grants and financial assistance payments as a result of their non compliance with the act because they are required under the act to provide this information.
Kat Clay: One of the things I want to get into because we’ve talked a bit about this in the office and, and you recently wrote, piece for the Conversation, which goes into depth on this is that, you know, the the high level, the easy take on this information is that, oh, we’re going to name and shame businesses. And, you know, that that’s, you know, the first thing you kind of see when you see this data, but, there’s actually more nuance to this than at the first glance, isn’t there?
Natasha Bradshaw: Naming and shaming is a pretty big part of what will make this policy effective because it’s partly what provides the encouragement for employers to make change. But we should be a little bit careful about how we interpret the data. It’s very possible that an employer can be making quite a big effort towards improving its gender pay gap and making its organization,a great place for women to work, but their pay gap still remains large.
There can also be cases where in the short term actions that an organization takes to try and improve its pay gap, will actually worsen it in the short term.a good example of that is if you try and recruit a lot of women at junior roles, that actually can worsen your pay gap in the short term because you’re then employing more women in lower paid roles.
But over time, if the company follows that up by ensuring those women, get all the opportunities to progress in the company, then their pay gap will narrow over time and they’ll have more women employed. We should just look at these things in context and think about, especially where companies have provided a statement about the actions that they’re taking to narrow their gender pay gap.
Kat Clay: We should really look at those actions and look over time at whether they actually follow through with those and whether their figures improve. Well it’ll be interesting to see year on year because this data will be released publicly every year from now on, won’t it?
Natasha Bradshaw: That’s right. We’ll be able to follow up and make sure companies are following through with what they’ve said and that their figures are improving over the longer term.
Kat Clay: What else is there to this, the surface?
Natasha Bradshaw: The other thing we should remember is that, Some employers might have a very small gender pay gap just because they pay all their workers really badly. So, you can see this often, in industries that have quite compressed wage distributions, because most of the employees are on award wages, or the minimum wage.
So if you hop onto the WGEA website to have a look at the data and you can look up if your company employs more than a hundred people, you can have a look at your own information or at information about a company that you’re interested in working at and see how they stack up and what’s great on there is there’s a lot of context provided.
So as well as the gender pay gap, you can see the distribution of men and women in different occupations within the business, as well as, the distribution of men and women in higher and lower paid roles. and on there as well, you can see the company statement, which, hopefully will outline the steps that they’re taking towards improving their gender pay gap over time.
Kat Clay: While we can’t predict the future, we can talk about what’s happened overseas.
And I mean in 2018, the UK released data on the gender pay gap there. And, and this was a massive story. It was a story that rivaled Harry and Meghan’s wedding coverage in terms of news coverage that it got. But what I’m really interested in is actually what happened next after that data was released.
Natasha Bradshaw: Yes so the release of the UK’s data was a big news story that year. And that’s certainly part of what makes policy like this effective. Since the UK reforms were introduced in 2018, the gender pay gap there has narrowed, quite significantly. So we can causally say that the reforms reduce the gender pay gap by almost one fifth with the biggest improvements coming from the worst offending employers, which does tell us something about how this naming and shaming has an effect. Now, as well as this, the UK’s reforms have begun to kind of shape employers hiring practice. So research has shown that firms affected by the policy there are now more likely to post on their job ads, the salary for the job that they’re advertising. We know that this helps narrow the gender pay gap because it starts men and women applying for the job when they negotiate their salary, they’re starting from the same base. What they’ve shown in the UK is that companies that post these advertisements tend to have smaller pay gaps. So that’s a big step in terms of changing employers behavior. One concerning thing that came up in the UK is that for existing employees the narrowing of the gender pay gap was actually caused by slower growth in men’s wages rather than faster growth in women’s wages, and that’s really not a great outcome for anyone looking for a pay rise,and especially at a time when we have a government that’s promised real wage growth.
Kat Clay: Is there any way that governments or businesses can kind of prevent this from happening?
Natasha Bradshaw: It’s probably a tricky one for government. you know, for businesses, they make choices about who they give a pay rise to and, and who they don’t. And so, you know, in an ideal world, they would be giving pay rises to women rather than cutting back on growth in men’s pay rises, but ultimately that’s a decision for businesses to make and to negotiate with their employees.
I think what we saw in the UK was that when senior men went to negotiate a pay rise, the employer would say, Oh, well, we can’t give you a big pay rise this year because it’ll make our pay gap statistics look worse. So that’s not the outcome that we’re looking for here, obviously, so it’s just something we’ll have to keep an eye on.
Kat Clay: So Tash the UK reforms are only a few years old. Do you see anything particular happening in the longer term?
Natasha Bradshaw: That’s right, Kat. We won’t see the full effects of these reforms for quite some time. It’s likely that making high paid jobs more accessible to women, will allow employers to tap into this great talent pool, by encouraging more women to work and raising their earnings and our sluggish productivity growth. Women are rational when they make decisions about whether to work or whether to go for a promotion. if they think they’re going to be paid fairly, they’re more likely to join the workforce and go for those promotions. and so we won’t see the effects of that for a long time. There’s also the incentive if you’re likely to work more that you make bigger investments in your education and training, and really commit to that high paid career.
Kat Clay: Yeah, and there’s a little bit of a shift in thinking as well around those high level jobs because with that comes experience, of, you know, that comes around that period where women are thinking about having children and, just not making assumptions about what women are doing, whether they’re having kids, whether they’re not, whether they want to go for a promotion. do have to leave that up to the person, the individual to decide. I think there’s also a lot of thinking at the moment happening around flexible workplace conditions, that’s an organization that’s demanding everyone comes back to the office full time, or whether people are more flexible in, offering, conditions where parents can work around the school day and things like that. Tash, do you have any other advice or tips for employers? What what can they do to reduce the gender pay gap in their organizations?
Natasha Bradshaw: What we’ve heard from many businesses this week is that there are societal factors that influence their gender pay gap. This includes things like women having to work part time or take time out of the workforce to care for children, as well as women just not wanting to work in the industries or jobs that they employ.
And while societal factors do matter for the gender pay gap, that doesn’t mean that there’s not a lot that businesses can do to improve. Now, all the way across the hiring, promotion, pay setting process, as well as setting work culture and work conditions, there are things businesses can do. And the Workplace Gender Equality Agency provides lots of advice to businesses on what they can do to improve.
And there’s a lot of research out there that businesses can lean on. So I’ll talk through a couple of examples. Gender matters for which candidates get recruited and selected for certain roles. So things as simple as gender coded wording in job advertisements can affect who applies for a job. often what we see is masculine stereotyped words like competitive or dominant being used in job ads, which put women off roles that they might have otherwise applied for.
We also know from research that women have to send out many more applications to get the same amount of interviews as equally qualified men, and this is even worse for racial minorities. Conscious and unconscious bias in job advertisements and hiring matters. And that’s something that businesses can do something about.
Kat Clay: And it especially matters as we’re moving into a period of AI recruitment as well. I mean, there’s been several, cases of, AI, resume revisions, enforcing gender bias. it’s something that businesses should be especially mindful of if they’re looking at employing kind of tools that in theory, save money, but, need to be assessed on on the quality of how they look at resumes and, present, female candidates and, people of color as well.
Natasha Bradshaw: And then once a woman gets hired, there’s the step of actually negotiating a salary. So as we mentioned earlier, just posting the salary range on the job ad helps because it means men and women start negotiations from the same point. We also know that women can be penalized for strongly advocating for themselves or trying to negotiate pay, both when they’re hired or when they’re going for a promotion.
And so we have this challenge where women often won’t negotiate because they think often correctly that they’ll be penalized for doing so and so that’s a big problem. Again, something that employers have power to do something about.
Kat Clay: I mean, I’ve been in that very exact situation where I haven’t negotiated and learned the hard way. I mean, the advice I got given was actually let the employers say the number first. I do really appreciate when job ads have that salary range on there too, because it also gives you a gauge of how appropriate you are for a role, regardless of your gender.
Is there anything else that employers can be doing?
Natasha Bradshaw: So one more thing in the, in the promotion area is that often employers give very different feedback to men and women when they evaluate their performance. So men are more likely, for example, to be described as analytical, whereas women are more often described as compassionate While both of those things are positive descriptors, one of them is probably more correlated with your likelihood of being promoted.
Men are also typically given much more specific feedback than women on their performance and how they can improve. And women are very often told that they need to display more confidence or that they need more experience to be ready for a promotion, much more than men are. In some ways, this is valuing personality traits that, men are more likely to have than women, rather than really thinking about their capacity to perform a job on the other side of things is, actually making jobs available to women.
So we did, a podcast recently Kat about claudia Golden’s, Nobel prize and this concept of greedy jobs. And we talked about, examples of industries where they’ve actually changed their structure to allow more flexibility and how much of a difference that makes for women’s ability to work in those roles and especially to work in those higher paid, management or, you know, these greedy jobs that take up a lot of time. And so it’s on employers really to be creative about how they structure their workplace and how they offer flexibility to make sure they can tap into, the skills of women. We’ve seen during the pandemic, this huge change towards working from home, which, you know, no one thought was possible a few years ago. So it just shows that there are things employers can do if they’re willing. and it will just take action to,get there.
Kat Clay: I think that’s a great place to wrap it up for today. It has been a wonderful conversation on gender pay gaps.
And if you’re anything like me, you’ve been fascinated by the way this story has played out in the news and hopefully the progress that will be made in the years to come from releasing this information. If you’d like to find out more or read Natasha’s article online, you can find it for free at grattan.edu.au. And please do take care and thanks so much for listening.