What is the gender pay gap?

The gender pay gap is a measure of how we value the contribution of men and women in the workforce. 

The percentage or dollar figure represents the difference in pay between women and men. Closing the gender pay gap is important for Australia's economic future and reflects our aspiration to be an equal and fair society for all.

It's important to note that the gender pay gap is not the same as equal pay. Equal pay is where employees are paid the same for performing the same work or different work of equal or comparable value. In Australia, this has been a legal requirement since 1969.

Gender pay gaps are different. Instead of comparing like-for-like roles, a gender pay gap shows you the difference between the typical pay for women and men across organisations, industries and the nation as a whole. In doing so, it highlights structural inequality, and advantages or disadvantages for each gender. 

WGEA publishes both average and median gender pay gaps. 

• An average gender pay gap is the difference between the average earnings for men and women, expressed as a percentage of men's average earnings.
• A median gender pay gap is the difference between the median of what men are paid and the median of what women are paid, expressed as a percentage of the median man's earnings. 

Measuring gender pay gaps by median allows us to understand the experience of the typical employee at a workplace, as it is not skewed by exceptionally high or low salaries. The average gender pay gap is a good measure of the collective pay for a group. As the average is skewed by exceptionally high or low salaries, it will show if earnings are particularly concentrated for one gender, for example, more men in higher earning positions.

Australia has two key data sets with different information on employee pay (remuneration)- The ABS and WGEA. 

Both organisations use the same calculation to determine the gender pay gap. The reason why the numbers differ is because they use different measures and sources for 'pay'.   

The annual Workplace Gender Equality Employer Census

WGEA's annual gender pay gap data, released in November, comes from the annual Employer Census. Under the Workplace Gender Equality Act 2012, private and Commonwealth public sector employers with 100 or more employees to report to WGEA on a range of indicators, including employee remuneration. 

The data set: 

• includes the remuneration of employees working for employers with 100 or more employees
• uses total remuneration, including superannuation, overtime, bonuses and other additional payments
• Includes full-time, part-time and casual employees (converted into annualised full time equivalent earnings).

Australian Bureau of Statistics' survey of Average Weekly Earnings 

WGEA calculates the national gender pay gap using the Australian Bureau of Statistics (ABS) data released in February and August. This data comes from a sample of employers selected from the Australian Business Register, with a slightly different sample taken each time. 

This data set: 

• estimates full-time weekly base salary employees in public and private sector
• excludes overtime, pay that is salary sacrificed and superannuation
• excludes junior and part-time employees.

The difference in these two data sets means the ABS gender pay gap is often lower than WGEA's gender pay gap. 

The gap between women and men's average earnings is the result of social and economic factors that combine to reduce women’s earning capacity over their lifetime.

Watch the video below to understand some of the most gender pay gap common causes. 

These factors include: 

• conscious and unconscious discrimination and bias in hiring and pay decisions
• women and men working in different industries and different jobs, with female-dominated industries and jobs attracting lower wages
• lack of workplace flexibility to accommodate caring and other responsibilities, especially in senior roles
• high rates of part-time work for women
• women’s greater time out of the workforce for caring responsibilities impacting career progression and opportunities
• women’s disproportionate share of unpaid caring and domestic work

Closing the gender pay gap requires cultural change to remove the barriers to the full and equal participation of women in the workforce. 

Some of the ways that business can reduce the gender pay gap include:

• conducting an audit to understand the size of the gender pay gap
• reporting the findings to management and employees
• setting KPIs for leadership to reduce the gender pay gap
• taking action to increase the number of women in leadership positions
• encouraging men to access flexible work arrangements and leave entitlements.

To find out more ways to improve workplace gender equality in your business, click on the Take Action button bellow.