Senior Partnerships Adviser
A disparity in the way bonuses are allocated to women and men is a significant contributor to the gender pay gap, Australian and UK data shows.
The gender pay gap for bonuses is nearly double the gap between women’s and men’s salaries, according to new research into UK pay gap data published by PWC.
In the UK, the law now requires organisations with 250 or more employees to report their gender pay gaps, including bonuses. PwC analysed the data and found that 75% of companies have a bonus gap in favour of men.
The research revealed that 55% of organisations have a bonus gap higher than 30% and 10% of organisations have a bonus gap above 70%.
Similarly, in Australia, there is a strong correlation between bonus pay and the gender pay gap. The Workplace Gender Equality Agency (WGEA) explored the ‘male bonus premium’ in our Gender Pay Equity Insights papers with Bankwest Curtin Economics Centre in 2016 and 2018.
The ‘male bonus premium’ measures the difference between how much extra men and women receive beyond their base salary. We can see from our research that men consistently earn more additional remuneration than women do. In our 2016 paper, women working full-time are paid an average 18% in addition to their base salary in extras – men on the other hand, receive an additional 25% of their base salary.
In Australia, some of the largest bonus premiums were in ‘Rental, Hiring and Real Estate Services’ at 37% above base salaries and ‘Financial and Insurance Services’ at almost 50%. In our 2018 paper, the research indicated that most industries that have large ‘male bonus premiums’ also have significant full-time gender pay gaps at base salary for managers.
An analysis by Mercer of Australian pay data showed that men were getting higher bonuses than women and it wasn’t due to superior performance. In fact, their 2015 Gender Equity Report showed that men were earning performance bonuses of up to 35% more than women even when they received the same performance rating.
The issue highlights the role of employer discretion in setting pay, including bonuses, and the need for clear remuneration policies that embed pay equity principles. WGEA encourages all employers to conduct a gender pay gap analysis and to include total remuneration, including bonus pay and other additional entitlements.
Laura Hinton, chief people office at PwC UK, said: “Having a clear sense of what fair pay means in your organisation, stating these principles clearly and supporting them with transparent action plans and pay governance could help win back trust and bring about change.”