Closing the ‘gender pay gap’ is not the same as ‘equal pay’

If I had a dollar for every time someone told me their company had closed the gender pay gap – I’d be well on my way to closing it myself. 

“I definitely get paid the same as my male colleagues,” friends assure me.

“I’ve checked payroll. We finally eradicated our pay gap this year,” COOs declare confidently. 

There’s a beat practically every time the conversation starts.

‘Are you sure?’ I press.

I never want to dampen the celebration, but time and time again, I find that businesses and the media often confuse the gender pay gap with equal pay.

I can’t really blame them. The language is confusing. So, let’s break it down.

What is equal pay?

Equal pay is the idea that women and men should be paid the same amount for work of ‘equal or comparable value’. 

Think of it as like-for-like pay. Two people. The same work. The same pay.

Paying someone less for the same work because of their gender is unlawful in Australia and has been for over forty years. 

It’s a long-established, legal requirement covered under the Fair Work Act, with equal remuneration claims being made to the Fair Work Commission.

Don’t get me wrong, addressing instances of unequal pay is a critical first step towards closing an organisation’s gender pay gap. 

But meeting decades-old legislation is hardly worth public praise.

Okay… so what’s the gender pay gap then?

The gender pay gap is an average figure. It measures the difference in average earnings between women and men across an entire workforce – be it a country, industry, organisation, or even internal position bands.

Data shows Australia’s current national gender pay gap is 13%. That means that full-time working men take home, on average, $264 more than women each week (or $13k a year).

Factor in overtime and part-time work, and the gap more than doubles to 30%.

Meanwhile, Workplace Gender Equality Agency (WGEA) data shows that every industry in Australia has a pay gap favouring full-time working men, even in female-dominated industries like healthcare (21% gap) and education (11% gap). 

Pay gaps also worsen with seniority. For non-managers, the gap is 19% while for managers it climbs to 23% – in part due to discretionary payments, like bonuses.  

If we keep honing in on the data, we see pay gaps are rife within organisations. Even when a company has met its legal requirements for equal pay, they are often surprised to learn that they still have a company-wide gender pay gap. 

In fact, seven in ten Australian companies have a significant pay gap favouring men.  

Wait… How is that possible?

A company’s gender pay gap may be caused by a range of factors.

• Workforce composition. Put simply, the top jobs in Australian companies tend to be held by men, and these attract the highest salaries. Despite women making up around half of the total workforce, they only account for 19% of CEOs, and 32% of heads of business. So, if we look at the average earnings of all employees in a company – from graduate to C-suite – a pay gap is inevitable if men hold more of the higher paying roles.
• Unpaid labour. We see less women at the top thanks to the division of domestic and caring responsibilities at home. Women take on the lion’s share of this unpaid labour. The result? Women are three times more likely to work part-time than men and make up the majority of flexible working requests. This means they often miss out on pay rises and promotions to higher paying roles.
• Gender segregation. Most Australians work in an industry or occupation that is dominated by one gender. Women dominate healthcare and teaching, while men dominate mining and construction. We see the same pattern within organisations. Women make up the majority of admin workers, while men dominate IT roles. Throughout history, male-dominated fields have tended to be higher paid, while women’s work is continuously undervalued.
• Discrimination and bias. Data has shown for years that discrimination is the largest single contributor to the gender pay gap in Australia. It underpins every factor outlined above. Be it indirect or overt, discrimination influences who companies hire, what they pay them, and how they review performance – with women penalised every step of the way.

Why are there so many ways to measure pay gaps?!

Different government agencies calculate pay gaps based on different data, producing varying results. It’s no wonder we’re confused!

The most widely used national gender pay gap figure is based on weekly earnings data collected by the Australian Bureau of Statistics every six months. 

WGEA collects data from Australian companies with at least 100 employees, revealing a slightly different national figure each year. 

Then there’s international bodies, the public sector, industry and individual organisations running their own numbers. 

Some use hourly wages while others use weekly earnings. Some focus on base salary, while others include discretionary payments like bonuses and superannuation. It’s a lot…

But it doesn’t matter how you cut the cloth. The gender pay gap favours men — across all national figures, industries, occupations, and age groups.

Well, that’s disheartening. Thanks?

Yes, sorry to be the bearer of bad news. Now you know why I’m cynical when someone tells me they’ve closed their gender pay gap.

It’s crucial that we all – employers and businesses included – understand the difference between equal pay and pay gaps. 

Otherwise, we risk leaving the ongoing drivers of gender inequality to pervade our efforts, while we celebrate having ‘solved’ the problem. 

And with the majority of working women bearing the brunt of the gender pay gap, we can’t afford to pat ourselves on the back for a job not yet done. 

I’ll save my celebration for when we actually, finally – close it.