Recent public debate reveals widespread lack of community understanding about pay equity – what it is, why it exists, and what can be done to address it – as well as a tendency to minimise or explain away the gender pay gap in Australia through reference to ‘women’s choices.’
In mid 2016, in conjunction with the Workplace Gender Equality Agency (WGEA), DCA sought the assistance of KPMG Australia to update work they did in this field back in 2009 and thus help improve understanding of the underlying causes of the gender pay gap.
A new report released on 28 October 2016 entitled She's Price(d)less: The economics of the gender pay gap uses structured econometric modelling to determine the factors that underpin the gender pay gap, and to what extent they contribute.
The report demonstrates that pay inequity isn’t just a social justice issue – it’s an economic imperative. Case studies in the Executive Companion highlight the excellent work that Australian organisations are already doing to tackle pay inequality in their own teams, organisations and industry sectors.
DCA is proud to be part of this conversation and hopes that this report will be the impetus to closing the gap as soon as possible.
What is driving the gender pay gap?
The drivers of the gender pay gap are complex. However disturbingly the report found the single largest factor contributing to the gender pay gap is sex discrimination and it is on the rise.
Other significant factors include human capital and educational qualifications, on-the-job training and accreditation, work experience and tenure.
Factors driving the gender pay gap
- Sex discrimination continues to be the single largest factor contributing to the gender pay gap – increasing from 35 per cent in 2007 to 38 per cent in 2014. This includes direct discrimination as well as indirect factors such as unconscious bias.
- Industrial and occupational segregation continue to be significant contributing factors to the gender pay gap – However, between 2007 and 2014, there appears to have been more success in addressing the gap attributable to occupational segregation (i.e more women in senior roles) than that for industry segmentation (i.e. men working in higher paying industries such as mining and women in industries with lower rates of pay) esp. health and social services), and this may provide guidance when attempting to address the gender pay gap.
- There has been a significant decrease in the impact of part-time employment – One possible explanation for this is that between 2007 and 2014, across both genders, the largest increase in share of part-time employees was in women within higher income quintiles.
- The impact of tenure with current employer on the gender pay gap has reduced – The 2014 results indicate that women have worked with their current employer for six and a half years, which is half a year longer than was found in 2007. The impact of tenure with an employer on the gender pay gap has reduced from 4 per cent in 2007 to 1 per cent in 2014.
- There has been a decrease in the impact of employer type on the gender pay gap – The impact of employer type on the gender pay gap has reduced from 3 per cent in 2007 to 0.4 per cent in 2014. However, in both the public and private sectors, men occupy a significantly larger proportion of higher income earning groups.
- The largest changing factor having a significant impact on the gender pay gap is years not working – career and work interruptions are responsible for 21 per cent of the proportion of the gender pay gap in 2014 compared to 9 per cent in 2007. However, this result must be interpreted with caution, noting that the 2014 wave of the HILDA survey excluded ‘access to unpaid maternity leave’ as a factor, which was present in the 2007 survey but omitted in 2014 as a result of the introduction of a Government funded Paid Parental Leave scheme. Having said this, in both reports it is clear that interruptions in work history continue to play a role in explaining the gender pay gap.
This research project is a follow on from Pay equity research DCA commissioned KPMG to commence in 2009.
With EOWA, DCA also commissioned polling on pay equity, released in 2010.