Greater gender balance across industries key to closing pay gap

The seventh edition of the BCEC|WGEA Gender Equity Insights series released today by the Bankwest Curtin Economics Centre (BCEC) and the Workplace Gender Equality Agency (WGEA) has found Australia’s gender pay gap could narrow by a third if a more balanced gender concentration was achieved across all industries and occupations.

Drawing on new WGEA data, voluntarily reported for the first time in 2020-21, the analysis finds Australia’s gender pay gap would fall from an estimated 23.3 per cent to 15.6 per cent if a 40:40:20 gender concentration ­–  40 per cent women, 40 per cent men and 20 per cent any gender –  was achieved across all industries and occupations.

The BCEC|WGEA Gender Equity Insights 2022 report uses the new WGEA location data to compare pay metrics, gender pay gaps and organisational practices across Australia’s states and territories as well as regional areas.

The analysis reveals the extent to which the overall gender pay gap is driven by higher concentrations of men in high salary industries and jobs, and higher shares of women working in lower salary sectors.

The report found that for Western Australia – the state with the nation’s highest gender pay gap – the gap in total remuneration would halve from 32.1 per cent to 16.5 per cent if a 40:40:20 gender balance was achieved across all industries. In the Northern Territory, the gender pay gap would reduce by two thirds, while New South Wales and Victoria would see gender pay gaps fall by 7.4 and 6.5 percentage points respectively. Queensland recorded a larger margin of 8.8 percentage points.

Report author and BCEC Director and John Curtin Distinguished Professor, Alan Duncan, said the report created a better understanding of how the different concentrations of women and men working in individual states and across industry sectors affects the overall gender pay gap.

The report also identifies actions to address it.

“To achieve a 40:40:20 gender concentration for industries in Australia, gender balance needs to be addressed in both directions. This means increasing the share of women working in male-dominated occupations and industries, and growing the share of men in female-dominated professions,” Professor Duncan said.

“We need to see an increase in the share of women in leadership positions from CEO through to executive manager, in roles in the professional, scientific, technical and trades sectors, and a rise in the share of men working in health, community and social services.

“We also need to reflect on whether the salaries paid to health care, social assistance and community sector workers adequately reflect the true value of their contribution to society.”

Professor Duncan said WA had the largest gender pay gap for total remuneration (32.1 per cent), while Tasmania had the lowest (10.4 per cent).

“We found the gender pay gap was wider in states where more men were employed in higher paying jobs in the highest-paying industries, such as mining and construction,” Professor Duncan said.

“We also found women made up a lesser percentage of the workforce for key industries in those states, including only 16 per cent of the construction sector workforce in WA, compared to 31 per cent in Victoria and 27 per cent in New South Wales.

“On the other hand, we found women made up 80 per cent of the workforce in the health care and social assistance sector, and two thirds of workers in the education and training sector. The evidence indicates that women don’t have the same opportunities to earn higher wages as their male colleagues.”

WGEA Director Mary Wooldridge said that visibility into the location and age data of employees for the first time provided a rich new data source for a deeper analysis of, and insights into, the drivers of the gender pay gap across the country.

“What we can see with this analysis is that without clear and actionable gender strategies and targets for improvement, progress on gender equality will stall,” Ms Wooldridge said.

“Employers who reimagine traditionally gendered roles are reaping the benefits of larger and more diverse recruitment pools, improvements in productivity and profitability and reductions in the gender pay gap.

“Further, Australia has one of the most highly gender-segregated industrial structures in the developed world. We need to actively challenge gender stereotypes, including those that start informing our children from an early age, to realise improved gender balance across industries and occupations.”

The report also found the gender pay gap was higher in remote areas compared to major cities, with men being paid nearly $17,800 more than women in very remote locations. It also delves into how age affects pay. The research finds that the gender pay gap widens for all women as they get older, but that the age of divergence in pay between women and men varies depending on the sector in which they work.

Co-author Dr Silvia Salazar, also from BCEC, said it was concerning women were also impacted depending on what industry they worked in, the region where they worked and what age they were, compared to men.

“The data shows that gender pay gaps increased for older age female workers, as well as for women working in remote and very remote areas across Australia,” Dr Salazar said.

“These findings raise some important questions about the value that businesses put on the work and contributions of women in older age cohorts compared to men at the same age. It also highlights the impact of the gender inequalities for salary caused by the challenges that women face in accessing the same higher paying roles in the same industry sectors as men.

“It is inevitable that gender pay gaps will persist if more women continue to work in lower paid industry sectors and jobs, and men are employed in higher concentrations in sectors that pay high salaries.”

Professor Duncan said the report invited solutions to break down barriers faced by women in the Australian workforce, adding that businesses play a key role in fixing this problem.

“Gender composition differences across different industries and sectors is not a justifiable explanation for high gender pay gaps. Instead, this report shines a spotlight on the impact of gender inequalities in terms of pay and most importantly the challenges women face in accessing the same higher-paying roles in the same industries as men,” Professor Duncan said.

“Businesses can take action to level the playing field for women within their organisations or for those looking to join the workforce by ensuring effective policies and practices related to recruitment, retention and promotion are in place to promote gender equality opportunities for women across all industries.

“These include a positive attitude towards flexible work, support for people with family and care responsibilities, specific targeted policies to eradicate sexual harassment and promote greater respect at work, and support measures to assist people experiencing family and domestic violence.”