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Pay gaps close when leaders see the numbers

Media release

Australian employers that measure their gender pay gaps are making positive progress in closing gaps between women’s and men’s pay, with leadership accountability being the key ingredient, a new report shows.

Research released today by the Bankwest Curtin Economics Centre (BCEC) and the Workplace Gender Equality Agency (WGEA) finds that taking action to correct gender pay gaps is three times more effective when combined with reporting pay gap data to the Executive or Board.

The report, Gender Equity Insights 2018: Inside Australia’s Gender Pay Gap, showed organisations that completed a pay gap audit and took action saw the pay packets of female top-tier managers boosted by $24,000 on average, while male top-tier manager salaries decreased by $4,000.

It also found that more Australian employers than ever are taking action to close gender pay gaps, with organisations in the finance and insurance, and mining sectors leading the way.

Key findings:

  • More Australian employers are taking action against gender pay gaps. Employers undertaking a pay gap analysis increased from 24.0 per cent to 37.7 per cent between 2014 and 2017.
  • About half of reporting organisations that conducted a pay gap analysis took some action in light of the results.
  • Only about 1 in 4 organisations that undertook a pay gap analysis reported these results to the Executive.
  • Actions to correct gender pay gaps are three times more effective when combined with reporting to the Executive or Board. These organisations saw an average reduction of 3.3 percentage points in their organisation-wide gender pay gap in one year.
  • Compared with organisations that took no action on pay equity, companies that report pay gaps to their Board and correct their like-for-like pay gaps have lower full-time managerial pay gaps: 9.7 percentage points lower for base salaries; 12.7 percentage points lower for total salaries.
  • Organisations that completed a pay gap audit and took action saw female top-tier managers pay boosted by $24,000 on average, while male top-tier manager salaries decreased by $4,000.
  • Almost two-thirds of organisations in the finance and insurance and mining sectors undertook a pay equity audit. This compares to around 20 per cent in the female-dominated health and education sectors.

The analysis of WGEA’s world-leading data by the BCEC explores gender pay gaps across occupations and industry sectors in over 11,000 organisations covering more than 4 million employees in Australia, providing practical insights into how firms can improve gender equality within their own workplaces.

Report author and BCEC Principal Research Fellow Associate Professor Rebecca Cassells said the report findings re-affirm the positive steps many Australian organisations are taking to reduce gender pay gaps.

“More employers than ever before are taking pay equity seriously, and we are now starting to see this translating into results,” Associate Professor Cassells said.

“The proportion of employers who undertook a pay gap analysis has risen considerably over the past four years. Leading the charge are the mining and finance and insurance sectors, with almost two-thirds of organisations in these sectors undertaking a pay equity audit.

“We are seeing a re-balancing between male and female wages, especially among top-tier managers as a result of these actions.”

Report co-author and BCEC Director Professor Alan Duncan said the findings show introducing a combination of pay equity actions leads to far stronger outcomes than single actions.

“Actions to correct like-for-like gender pay gaps are three times as effective in reducing overall pay inequities when combined with reporting to executives and boards,” Professor Duncan said.

“For managers, the power of combined actions is even more apparent, with the biggest pay gap reductions seen in companies that combined actions to correct like-for-like pay gaps with accountability at Executive and Board level.”

WGEA Director Libby Lyons said the report proved the maxim: ‘what gets measured gets managed’.

“Organisational gender pay gaps do not close themselves. They must be quantified and analysed, shared with boards and executive teams and acted upon,” Ms Lyons said.

“This invaluable report is a call to action for boards and executive teams. They need to ask for their organisation’s pay equity metrics and then be accountable for addressing any pay discrepancies.”

View the full report here: