Gender balance in leadership drives reduced pay gaps

by FM Media
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Bankwest Curtin Economics Centre (BCEC), in collaboration with the Workplace Gender Equality Agency (WGEA) have released a report on gender pay gaps, revealing that top tier female managers in Australian organisations earn on average $93,000, or 26.5 percent less per year compared to their male counterparts.

‘Gender Equity Insights 2017: Inside Australia’s Gender Pay Gap’ is the second in the BCEC/WGEA Gender Equity Insights series and it outlines a measurable link between a gender-balanced leadership team and reduced gender pay gaps.

The analysis of WGEA’s world leading data by the BCEC explores gender pay gaps across more than 12,000 reporting organisations that capture more than 4 million Australian employees.

The report explores how gender pay gaps vary across industries and occupations, and also includes special investigations on gender pay gaps for graduate program participants, workforce gender segregation and the impact of changing the gender balance in senior leadership over time.

 Key findings of the report include:

  • Increasing the representation of women in senior leadership positions is associated with lowering gender pay gaps;
  • gender pay gaps for organisations with a balanced representation of women in senior leadership roles, at 10 percent on average, are half the size of those with the least representation of women in leadership;
  • once the management environment becomes heavily dominated by women – beyond 80 percent, the gender pay gap among managers increases from eight to 17 percent;
  • the median gender pay gap among graduates is 2.9 percent on base salary and 2.1 percent on total remuneration;
  • women are consistently under-represented in the highest graduate salary bands, with some 18 percent fewer women paid over $80,000 compared to their share of the graduate workforce;
  • for part-time employees, non-managerial women out-earn men on average by 7.8 percent, or around $4,000 a year. This pattern reverses at senior levels where part-time female managers earn on average 27.1 percent less than their male peers;
  • mining, Australia’s most male-dominated industry, awards the highest average pay to women. Women employed full-time in the industry earned on average $139,053 in total remuneration in 2015-16;
  • the gender pay gap grows with seniority, climbing to 26.5 percent for top-tier managers, an annual difference of more than $93,000 in total remuneration; and
  • pay gaps among managers are exacerbated by the greater share of discretionary pay, including bonuses, awarded to men. For top-tier managers, nearly $40,000 of the annual difference in pay is made up of additional remuneration including bonuses.

Report author and BCEC principal research fellow Associate Professor Rebecca Cassells says the report outcomes were a stark indicator of the different ways women and men engaged with the workforce, and how their respective contributions are valued.

“Not only do female-dominated organisations tend to be lower paid, but this analysis shows that in workplaces with heavily female-dominated management teams there are large gender pay gaps in favour of men,” Cassells says.

“It seems that where the men are few, they are more highly valued.”

Report co-author and BCEC director Professor Alan Duncan says the findings present some of the strongest empirical evidence to date that improved gender pay outcomes are driven by companies promoting greater gender equity in senior leadership roles.

“Organisations that increased the share of women in executive leadership roles by more than 10 percent between 2015 and 2016 recorded a reduction in the organisation-wide gender pay gap of three percentage points over the course of a single year,” says Duncan.

WGEA director Libby Lyons says it is time to challenge the way we think about work. “This report shows that regardless of the industry they choose to work in, women are worse off than men when working full-time,” says Lyons.

“The analysis is clear, gender-balanced workplaces and gender-balanced leadership teams lower the gender pay gap.

“We must address the stereotypes dictating the work women and men ‘should’ do, if Australia is to meet the social and economic challenges in the decades ahead.”

Image copyright: youichi4411 / 123RF Stock Photo

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