Gender pay gap improved by gender balance in leadership

Female managers earn 26.5% less than their male counterparts per year, according to research by Bankwest Curtin Economics Centre (BCEC) and the Workplace Gender Equality Agency (WGEA).

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

Gender Equity Insights 2017: Inside Australia’s Gender Pay Gap, the second in the BCEC|WGEA Gender Equity Insights series, explores how gender pay gaps vary across industries and occupations.

It 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% 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%, the gender pay gap among mangers increases from 8 to 17%.
• The median gender pay gap among graduates is 2.9% on base salary and 2.1% on total remuneration.
• Women are consistently under-represented in the highest graduate salary bands, with some 18% 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%, or around $4000 a year. This pattern reverses at senior levels where part-time female managers earn on average 27.1% 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% for top-tier managers, an annual difference of more than $93,000 in total remuneration.
• 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 said 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 said.

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

Report co-author and BCEC Director Professor Alan Duncan said 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% between 2015 and 2016 recorded a reduction in the organisation-wide gender pay gap of 3 percentage points over the course of a single year,” Duncan said.

WGEA Director Libby Lyons said it was 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,” Lyons said.

“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.”

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