Reality of the work gender pay gap

The reality of the work Gender Pay Gap

2017 was a landmark year for equality in Australia. We legalised same sex marriage and took a triumphant step towards a better future for a huge number of gay Australians. Although as witnessnessed by voters, challenging the status quo is not an easy task, nor is it one without heated debate.

The victory wasn’t just significant for the gay community, as it delivered hope to many groups that are still battling for equality in Australia and around the world today.

One of these areas is the gender pay gap which was catapulted into the Australian spotlight late 2017 with Lisa Wilkinson abruptly leaving the Today Show on Channel 9 due to pay disparity with co-host Karl Stefanovic. Elsewhere around the globe, especially in the UK and USA, the gender pay gap between professionals in the entertainment and sports industries has surfaced and has since populating our news feeds for some time now.

It’s positive that as a society we’re talking about and acting on the gender pay gap more and more. With Australian women still earning between an average of 15% less than men (July 2018) on average weekly full-time base salary basis, there’s never been a better time for everyone to understand the issue, respect the history of immense struggle for professional women in Australia, and move towards gender equality far faster than we’ve been able to in the past.

The Gender Pay Gap - The Key Facts

Let’s kick off with the most important fact of all - the gender pay gap is real.

Here are some numbers from the Australian Government’s Workplace Gender Equality Agencc (WGEA) as at February 2018:

  • For full time employees, women earned an average of 15.3% less than men. This equates to about $253.70 less a week
  • Australia’s national gender pay gap has hovered between 15% and 19% for the past two decades
  • Between 1997 and 2017 the gender pay gap was: lowest in November 2004, at 14.9% highest in November 2014 at 18.5%
  • The full-time total remuneration gender pay gap based on WGEA data is 22.4%, meaning men working full-time earn nearly $26,527 a year more than women working full-time
  • In November 2017, the gender pay gap was 19.2% in the private sector and 10.8% in the public sector
  • The average gender pay gap is smallest for employees aged 20 years and under, and increases for those aged between 21 and 34 years and remains consistent for those in the 35 to 44 working age group
  • The average gender pay gap increases to 20.0% for the 45 to 54 age group. Women in this age group are more likely than men to have spent time out of the workforce to care for children
  • The gender pay gap for managers was 28.8% with an average total remuneration dollar difference of $53,081 the gender pay gap for non-managers was 20.9% with an average total remuneration dollar difference of $20,388
  • The highest gender pay gap by occupation was for Technicians and Trade, at 26.7% full-time total remuneration  the lowest gender pay gap by occupation was for Clerical and Administrative, at 8.4% full-time remuneration

Australia’s Gender Pay Gap By State

As you’d imagine, occupational dominance by a gender will influence these numbers when that occupation is prevalent in that state. For example, mining is a large industry in Western Australia and has a workforce that’s 90% male.

Australia Vs. The World

How did we do? Well, in the 2017 World Economic Forum Global Gender Gap Report Australia was ranked 35th overall based on economic participation and opportunity, educational attainment, health and survival, and political empowerment.

The top 10 countries were:

  1. Iceland
  2. Norway
  3. Finland
  4. Rwanda
  5. Sweden
  6. Nicaragua
  7. Slovenia
  8. Ireland
  9. New Zealand
  10. Philippines

The United Kingdom came in at number 15, and the USA all the way back at number 49.

What Causes The Gender Pay Gap?

Unfortunately there’s no single cause for the gender pay gap but a KPMG Australia report in 2016, and reports from the Workplace Gender Equality Agency (WGEA) summarise the challenge very well: it’s a combination of gender roles and occupational segregation, sexism and discrimination, and conscious and unconscious bias are the primary drivers.

Sexism and Discrimination

Wow, this is an enormous topic, and something we can’t completely cover here, but it’s important to acknowledge its existence and its effect on the work gender gap. The KPMG report states that the highest contributing factor (38%) to the gender pay gap was sex discrimination. This percentage increased from the 35% that was cited the previous report that was published in 2009. At that time, it was also the highest contributing factor.

KPMG defined sex discrimination as the situation that “occurs when equally skilled workers employed in the same job earn different incomes and have different employment opportunities”.

The Australian Human Rights Commission (AHRC) published this detailed infographic in 2018 and it displays many of the challenges faced by women at work - all of which are still prevalent today.

Gender equality

Despite this, it’s important to note that sexism and discrimination is not just about money. As you can see from the data above, 50 percent of women have experienced workplace discrimination surrounding pregnancy, with 20 percent having their employment terminated shortly after becoming a mother. You’d think this couldn’t possibly happen - but it does.

It gets worse before it gets better: in 2017, Australia’s sex discrimination commissioner, Kate Jenkins, authored a reportfollowing an interview of over one thousand women around the country. Jenkins concluded that the three primary areas of gender discrimination were economic security, leadership roles, and violence against women.

Published in 2017, her report concurs with the 2014 AHRC report indicating little progress has been made. It’s the perception of progress however that Jenkins believes is working the hardest against equality: “They’re not actively working against equality but there is a sense in the broader community that gender equality has been achieved, which means there is no real motivation for people to do things differently or to promote women or highlight their stories.”

Shockingly, Jenkins reports that for many women repercussions of reporting harassment to a senior manager is worse the actual harassment. She goes on to say that many women are also frightened of physical repercussions if they speak up.

Jenkin’s 2017 report also details key statistics on discrimination and violence against women:

There’s more to the pay gap than sexism and discrimination though. Potentially its greatest foe is bias.

Conscious and Unconscious Bias

The issue of gender bias is incredibly complex. Not due to any difficulty in understanding the concept, more so in the ability to prove or disprove its existence. Freud, thought to be the founding father of the conscious and the unconscious, had a good go at explaining the difference and we’ll have a simple stab at it now.

Conscious bias is when you’re aware that you’re making a choice based out of preference for one option over another.

Unconscious bias is when you’re making a choice based out of preference, but you’re not necessarily aware of that preference. It’s like proving you meant/didn’t mean to have a certain dream while you were asleep - were your thoughts really from the unconscious or actually firmly rooted in the conscious mind?

However, it’s obviously not that simple, and there’s plenty of debate and discussion about how what we do consciously can be affected by the unconscious - and vice versa.

In terms of modern day gender bias: “Where there is bias (conscious or unconscious) in the workplace, we continue to recruit, promote, allocate work, and manage performance with filters on our thinking”.

The below are a few good-to-know statistics from the WGEA report that many believe to be strong indications of systemic bias in Australia’s corporate world:

  • Female board members in the ASX200 represent just 27.9% (30 June 2018). That means that 73% of boards are males (many boards made up of just males), that are making decisions on businesses, including senior staffing.
  • 16.5% (November 2017) of CEO/Head of Businesses, 28.5% (February 2018) of key management personnel, 30.4% (November 2017) of executives/general managers, 34.9% (November 2017) of senior managers, and 41.9% (November 2017) of other managers are women.
  • This proves that men dominate managerial positions at every level of a business. We could also surmise then that men are more likely to be hired by other men and themselves hire men when they’re in a higher position of authority.
  • Only 55.7% of organisations (November 2017) reported taking action on the results of a pay gap analysis in their own business.

Traditional Gender Roles (Occupational Segregation)

If you go way back in time, many of us would accept that traditional gender roles were for the man to venture out as the provider (whether that be hunting for food, or hunting for the best stock prices) while the woman cares for the home and offspring.

We can see that while professions have evolved from the times when these roles were created, gender segregation is still heavily skewed towards those gendered core skills. For example, WGEA director Libby Lyons said “around 80 percent of employees in health care and social assistance are female... and 90 percent of graduates going into the industry are women”.

On the other hand, industries including construction, mining display a high male workforce with low representation of female workers.

Gender Composition by Industry

What to see how your industry stacks up? 

Flexible Working Arrangements and Pregnancies

Without doubt one of the most cited reasons for women’s small percentage in senior managerial roles and halted career progression is pregnancy and the necessity to take time off work.

While there are many types of family situation, we’ll focus on a hetrosexual partnership for this section as we’re discussing the gender pay gap.

As of November 2017, only 45.9% of organisations offer paid parental leave in addition to the government scheme.

  • Women made up 95.3% of primary carer leave while
  • Men made up 94.8% of secondary carer’s leave

While there’s a stereotype that women will depart a business following the birth of a child, thus posing a risk to businesses with women in senior positions, it’s actually only 8.6% of women that depart their jobs during parental leave.

While this is seven times more frequent than men, it’s not indicative in any way that women should have their career progression halted based on the potential of pregnancy.

Child Care Assistance and Incentives

When considering the impact a child has on your life, there’s a significant lack of assistance provided to parents, regardless of gender, by employers. Only 3.4% of organisations offer subsidised childcare.

Essentially, the ease of returning to work and the support systems in place have to incentivise the mother to return to work. Childcare, for example, is incredibly expensive, with the average price range for a child care centre in Australia totaling $70-$192 per day.

With women still considered by both businesses and the government to be the primary caregiver, there has to be a shift in the status quo to ensure that women are provided equal opportunity to continue their career without severe penalties to their income via childcare, reliance on a partner, or through discrimination via an assumption they will retire/quit after having a child.

What’s Being Done About The Gender Pay Gap?

Considering that the gender pay gap was at its lowest in 2004 at 14.9%  and highest in 2014 at 18.5%- we clearly have plenty to do. According to the WGEA however, we’re moving in the right direction, albeit slowly with the gap sitting currently 15.3% (2018).

Gender Equity KPIs

The past year has shown a minor increase in employers setting gender equity key performance indicators (KPIs) in their organisations to encourage equality. A key issue in this is that it challenges the average male managers concept of a meritocracy.

By creating these KPIs, are you saying that some men will be denied a promotion or a role at a business because the company needs to hire a woman?

That’s a simple way of looking at it, as the man in this case is likely assuming that they were more qualified/had better experience and were overlooked simply because of gender.

Why? Because that’s the easiest pill to swallow, is the most contradictory to his core beliefs, and cuts off the privilege he’s become accustomed to (whether that’s conscious or not).

The irony of these KPIs is that it emboldens a meritocracy that’s actually based on merit, not bias, and therefore gives equal weight to both genders. So when men argue that hiring and promotion decisions need to be governed by a meritocratic system - this is it what that system could look like.

Recruitment Processes

Numerous trials have been run to see the impact on recruitment when the gender is removed from an applicant's resume. Known as “blind-hiring”, the idea is to remove gender, ethnicity, and disability information from job applications to encourage hiring based on merit.

In 2016, the Australian Bureau of Statistics decided to omit names, genders, and other identifying details of the hundred of applicants applying for 19 senior roles within the business after learning that only 21% of their senior roles were held by women.

Of the 19 roles advertised and blindly recruited, 15 of the roles were awarded to women.

While this is a positive result, it’s important to note that bias still exists even if names are omitted as there are still stereotypically gendered jobs that will display in the experience and may tip off a hiring manager to the gender of the applicant.

Regardless, many experts consider blind-hiring to have a positive impact of equality, including the Harvard Business Review.

How Does The Gender Pay Gap Affect Your Superannuation?

If you’ve stuck with us this far, then this question is likely a lot easier to answer at the moment. If women are earning an average of 15.3% less than men, then it follows that their superannuation contributions from their employer are also lowerand are therefore working the same jobs towards a retirement nest egg that’s considerably smaller than their male counterparts.

In fact, a 2017 report from the Association of Superannuation Funds of Australia (ASFA) states that super balances for women averages at $68,000, while men’s total an average of $112,000. Another example shows women who retired in 2016 had an average of $157,000 to look forward to, while men enjoyed an average of $271,000.

It doesn’t matter how you spin that, it’s a huge difference and one that can really negatively affect women later in life.

What Contributes To That Reduction?

If you factor in the gender pay gap statistics, then assume that a women will take some time of work to have children, then her earning potential is stalled for a period of time, more so depending on the amount of children she wishes to have.

If we venture back to traditional gender roles, and a woman chooses to take a significant break from employment, say 10 years, while her children grow up, then that’s 10 years of missed superannuation payments.

Should her husband or male partner become ill, pass away or separate, then her economic situation gets more dire.

How Is Virgin Money Working To Correct The Gap?

Virgin Money Super was the first fund in Australia to take into account the gender disparity with parental leave and how it affects your super contributions and do something about it.

With ‘Baby Break’, your asset based administration fee is reduced from 0.394% to 0.044% for up to 12 months while you’re taking parental leave. It’s available for both women and men and you can apply when you sign up, or if you’re an existing member when you’re ready using the application form.

Virgin Money Australia also offers one of the lowest fees in the market helping more of your super go towards your future, general advice to help you manage everything from investment strategy and contributions to insurance as your needs change.

What Can You Do To Close The Gender Pay Gap

Closing the gender pay gap is a multifaceted problem that requires a societal shift in thinking along with policy creation and implementation. On a personal level, we’d recommend that you factor in the following considerations when looking for your next role.

Look for a company that has beneficialforward thinking superannuation and maternity leave options. Do they pay super while you’re on maternity leave, are you able to work remotely after you return to work, and what are the limitations of these options.

This advice is to not to put the onus on you instead of the business, but by being as selective as you can be with your role, you’re identifying that there is a demand for changed conditions, which could prompt a faster change throughout the business world.

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