Australia ranks last in an international gender pay gap survey — here are 3 ways to do it better

Australia ranks last on the gender pay gap scorecard in six countries, according to a important report released today.

It examined reporting frameworks for the gender pay gap in Australia, France, South Africa, Spain, Sweden and the United Kingdom. Based on 11 indicators, Australia was given a score of 4 out of 11, which is equivalent to last place with the UK. Spain was the top-ranked nation, scoring an 8.5.

The good news is the research, detailed in our Australia Focused Guidance Report, shows how making a small number of changes can give Australia a chance to make more progress in closing the gender pay gap.

What the study looked at

In a global study aimed at identifying best practices in gender pay gap reporting systems, six countries were selected based on unique design features with potentially high impact. Australia was selected based on its industry-leading gender equality dataset.

The survey identified 11 indicators for reporting best practices, including accountability, reporting, enforcement and sanctions, intersectional elements (such as race and ethnicity), transparency, and action plans. The six countries were ranked against the indicators in a pay gap reporting scorecard.

The findings were based on interviews with key government stakeholders, gender equality advocates and experts, and employers and trade unions. The report also used evidence from academic literature, reports and publications from international and country-specific organizations, and cross-country comparisons to identify the strengths and weaknesses of each reporting system.

We were a world leader

Australia was one of the pioneers of equal pay legislation in 1969 and 1972, and then reporting on gender equality since 1986.

Introduced in 2012, the Gender Equality in the Workplace Act requires employers to report data by gender on pay, workforce composition, and the hiring, promotion, and dismissal of their employees. This data goes to the Workplace Gender Equality Agency.

The gender pay gap in Australia is over 14%.
Erik Anderson/AAP

The law was an important step towards accountability and delivered promising first results, with the national gender pay gap steadily declining from 18.6% in 2014 to 14.1% in 2018. This means that the average weekly wage for full-time working women was 14.1% lower than their male counterparts.

Since then, progress has stalled. Due to the COVID pandemic, the pay gap between men and women has even increased slightly, 14.2%.

This means that by 2021, the average woman who works full-time will have to work an extra 61 days a year to earn the same as the average man.

Why was Australia in last place?

While Australian law has provided a leading dataset on gender equality in the workplace, our research found that data collection and monitoring alone is not enough to drive widespread change.

Australia is lagging behind on aspects of transparency and accountability for corrective action. This means that neither the incentives nor the punishments are strong enough to change the behavior of organizations. This ultimately stifled our progress.

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Australia is also behind other countries in requiring only relatively large non-public sector organizations to report on gender equality (plans to expand into the public sector have been announced by the federal government). Australia also fails to capture other measures of social deprivation, such as race or ethnicity.

To keep up with these stats with other countries, we need to rethink how our pay gap legislation works – this will be essential to drive widespread and inclusive equality in the workplace in the future.

In the short term, we need to make our current legislation work harder to encourage employers to reduce their gender pay gap. The advantage is that accountability and transparency can be improved with minimal change.

This can start with three steps.

Step One: Publish Payment Details for Individual Organizations

Although Australia calculates the wage differentials between men and women, the 2012 law does not allow these differences to be published. Instead, only aggregated data for entire industries and Australia in general can be made public.

Publishing the pay gaps for each organization would require minimal legislative change.

But it can have a big impact. For example, it would allow investors, consumers, workers, trade unions and activist groups to put pressure on employers to improve their gender equality performance by investing in, buying from or working for companies with a smaller pay gap.

Step Two: Set a New Minimum Standard That Matters

Under current law, the minister can prescribe minimum standards for women that large organizations must meet to meet gender equality reporting obligations under the 2012 law.

Currently, the minimum standard is met if a company has only one gender equality policy or strategy. But having a policy does not guarantee that it will be followed or that the goals will be achieved.

With some minor legislative changes, Australia could accelerate progress in closing the gender pay gap.
Lukas Coch/AAP

We need a performance standard that matters. By linking the minimum standard to results, organizations must explicitly correct for wage disparities and narrow their gender pay gap over time.

Step three: use sanctions

There must be consequences if organizations fail to comply with laws that require them to report payment details and meet required minimum standards.

Current legislation does not impose specific sanctions, but does include a stipulation that non-compliant entities “may not” be eligible for government contracts and financial support such as Commonwealth grants.

AN recent check found that 31 non-compliant organizations were still awarded government contracts.

Applying this provision would not be a major burden on government procurement processes and would be a sign of government support for gender equality.

Exploiting the full potential of the legislation

The gender pay gap reporting legislation is just one part of a wider package needed to promote gender equality – and there is always more work to be done. But we believe that these minimal changes would have a significant impact on closing the gap in Australia.

We have an opportunity to step up support for women’s economic security and we must seize it.

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