Gender pay equity is achieved when women and men receive equal pay for work of equal or comparable value. A disparity between women and men’s pay is often referred to as the ‘gender pay gap’ or ‘gender pay inequity’. The gender pay gap refers to the difference in earnings between men and women, typically recorded as the difference between fulltime workers of different genders. In Australia today, the gender pay gap is 15.3% – more than in the UK (9.4%) but less than in the US (20%).
There are two fundamental causes of an observed gender pay gap: the first is a consequence of discrimination – either unconscious or conscious – leading to gender pay inequity, the second is an artefact of the composition of the workforce. A US Congressional report found that as much as 40 percent of the overall gender pay gap in the US may be due to discrimination. Compositional factors that contributed to the non-discrimination related portion of the gender pay gap highlighted in the report included:
- the under-representation of women in leadership positions
- the greater proportion of women working in lower-paying fields
- women being more likely than men to be the primary caregivers of other family members.
The Australasian Centre for Corporate Responsibility is a long-term investor in Australian listed companies. As an organisation that takes the position of a universal asset owner (one that holds most of the shares on a market) we have an interest in the impact better individual corporate conduct can have on the wider economy.
In our view, Australian company boards can and should act to address the gender pay gap because:
- it is the right thing to do
- discrimination is illegal, and though it can be very difficult to prove at law, allegations of discrimination can readily cause reputational damage
- the gender pay gap is a key indicator of how well a company is performing in terms of building a gender diverse workforce. Encouraging gender diversity is linked to higher financial returns.