Why it makes sense to close the gender pay gap

'Being able to promote equal pay in an organisation attracts great talent'

Why it makes sense to close the gender pay gap

Women’s salary increases are failing to keep up with those of men, according to a recent report from ADP.

The research found that in Australia, pay rises over the past 12 months averaged 5.7% for men compared to 4.4% for women.

And over the next 12 months, men expect to see their pay jump by an average of 6.3% compared to women expecting only a 5.2% increase.

The report, titled People at Work 2023: A Global Workforce View involved a survey of 32,612 workers in 17 countries around the world include France, USA, Canada, Brazil, Australia and China.

More than one reason for pay disparity

When it comes to pay disparity, Kylie Baullo, managing director ANZ at ADP, explained that it is caused by a range of factors.

“It's not one thing that's causing this situation to occur,” she told HRD Australia.

It could occur because of a particular industry or role. For example, traditionally, more women work in areas such as nursing or teaching. And female-dominated industries and jobs attract lower wages, according to the Workplace Gender Equity Agency.

Another issue that contributes to this gap are “natural biases,” Baullo said.

“These are often unconscious bias in terms of people hiring people into roles and paying salaries based on a perception of a role. As opposed to really looking at policies and ensuring that you have some really good structures in place that take out the individual and look at the roles in quite a generic sense.”

In addition, women often take up the bulk of caring opportunities, which can impact their salary in the long term.

“Many women are mothers, carers for members of their family in aged care and so forth,” she said. “And so there is this situation where they may take some time out of the workforce and then coming back into the workforce. Really, the ability to be able to get back to a level of annual salary or being able to drive that career after maternity leave period or a period of caring can also be a challenge.”

The benefits of providing equal pay

There are a range of benefits for an organisation that come with pay parity, namely attracting talent.

“In today's labour market, everyone you speak to is talking about talent shortage,” Baullo said. “Being able to promote equal pay in an organisation attracts great talent. And I think the whole approach to attracting, developing and retaining talent when you have a pay for performance environment, as opposed to one that is slighted by gender, you have the ability to not only attract but really grow the talent in your organisation.”

Not only is it a baseline legal requirement, “it's the right thing to do,” she said.

“I lead with talent because I think that is a really important part of an organisation becoming competitive in their market,” she said. “The other thing is you want to reflect the market you serve and the market you're serving is diverse. And so therefore you really want to be able to advertise that you're doing the right thing and you have the right policies in place.”

How to reduce the gap

Baullo believes the organisations that do well in addressing the pay gap have compensation policies in place.

“Those that are best in class look at policies and they really look at a framework of compensation that, again, looks to take the bias out of the process. I think that organisations that are [not only] looking at the compensation framework but elements that also go beyond compensation and looking at flexibility of work – whether that be part-time, full time – [and] location. Many organisations now are looking at hybrid [working], the amount of time physically in an office versus outside of an office as well.

“Really bundling up all of the elements in terms of benefits from an employee perspective goes a long way to bringing parity in terms working conditions for men and women,” she said.

 

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