What is the Gender Pay Gap?

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The gender pay gap remains a significant issue in workplaces worldwide, including Australia, the UK, and other OECD countries. Despite progress, women continue to earn less than men on average. This disparity affects not only individual livelihoods but also company performance and broader economic outcomes.
 

What Is the Gender Pay Gap, and How Does It Impact Company Performance?

The gender pay gap refers to the difference in average earnings between men and women. In Australia, for instance, the total remuneration gender pay gap in the private sector stands at 21.8%, meaning women earn 78 cents for every dollar earned by men (more information can be found on wgea.gov.au).
 

This gap isn't just a fairness issue; it also affects business performance. Companies with more women in senior management roles, at least 30%, have been found to achieve 15% higher profits . Conversely, firms that fail to address pay disparities may struggle with talent retention, employee morale, and innovation.
 

Why Does It Matter? The Long-Term Impact on Retirement

The gender pay gap contributes to a significant gender pension gap. Lower lifetime earnings mean women often have smaller retirement savings. In the UK, the gender pension gap stands at approximately 40.3% . Factors such as career breaks for caregiving and part-time work further exacerbate this issue, leading to financial insecurity for women in retirement.
 

What's Causing the Gender Pay Gap?

Several factors contribute to the gender pay gap:

• Occupational Segregation: Women are overrepresented in lower-paying professions like support, accounting and administrative roles.

• Part-Time and Flexible Work: Women are more likely to work part-time or seek flexible arrangements due to caregiving responsibilities, which can limit career progression.

• Unconscious Bias and Discrimination: Biases in hiring, promotion, and pay decisions can disadvantage women, even when they have similar qualifications and experience as men.

• Motherhood Penalty: Women often face reduced earnings and slower career advancement after having children, while men may experience a "fatherhood bonus".

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EvenBetter created a unique way to analyse and understand the different pay gap drivers that imp[act different companies differently.

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Government Actions in Australia, the UK, and OECD Countries

 

Australia: The Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Act 2023 mandates that, from early 2024, employers with 100 or more employees must publish their gender pay gaps. This reform aims to drive transparency and action towards closing the gender pay gap.

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United Kingdom: Since 2017, UK employers with 250 or more employees are required to report their gender pay gap data annually. This includes differences in hourly pay and bonuses, as well as the distribution of men and women across pay quartiles.

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Over half of OECD countries have implemented pay transparency policies, requiring private sector firms to report gender pay gap statistics. These measures help advance gender equality by providing up-to-date information on pay disparities and encouraging employers to offer equal pay for work of equal value.
 

What Should Companies Do to Address It?

Companies can take several steps to close the gender pay gap:

• Conduct Regular Pay Audits: Assess compensation data to identify and address disparities.

• Promote Pay Transparency: Share salary ranges and criteria for raises and promotions to ensure fairness.

• Implement Inclusive Policies: Offer flexible working arrangements and support for caregivers to accommodate diverse employee needs.

• Invest in Leadership Development: Provide mentorship and training programs to prepare women for advancement into higher-paying roles.

• Address Unconscious Bias: Train managers to recognise and mitigate biases in hiring and promotion decisions.

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EvenBetter help companies ensure they understand what drives their gender pay gap and tale the right action to address it. EvenBetter research study found that many companies fail to identify the right steps to take.

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