By Bianca Hartge-Hazelman
On Equal Pay Day, we’re reminded that the average Australian woman will work 62 extra days for the same pay as the average man. I’m exhausted just thinking about it.
If that trend persists, it means women in their 20s will have to work an extra 7 years to achieve equal pay, women in their 30s to 40s will work roughly an extra 3.5 years, and women in their 50s… well when they check in to aged care, they may as well hand their resumes in at the same time.
So what’s it going to take to close the gender pay gap?
It’s not just about addressing pay. It’s a big issue that requires a holistic approach to improve the economic wellbeing of Australian women, and that’s something which requires the help of both genders.
Will it be a slow burn of campaign awareness around financial literacy and behavioural change? Or will it take something more radical from a social and business point of view such as compulsory reporting of employee pay in like-for-like roles, or greater support for men as primary carers of children?
Society doesn’t tend to like radical change but whether we realise it or not, change is afoot and financial educators have an important role to play.
The good news is that the national gender pay gap hit a 20-year low of 14.6% this month, down from 15.3% in November last year, helped by record female employment growth and improved wages.
The bad news is that the gender pay gap continues to remind us of the daily workplace struggles that women face and the social stigmas at play when it comes to caregiving.
Here’s some of them:
- Women earn less than men in many like-for-like jobs in Australia.
- Despite strong educational attainment, women are less likely to engage in the paid workforce.
- Women do significantly more unpaid work than men.
- Women retire with significantly less superannuation than men.
- Elderly women are more likely to be homeless or live in poverty.
- Women are more likely to be discriminated against and harassed at work.
- Women are less likely to get pay rises than men.
- Unconscious biases more often result in men being selected and women being overlooked for senior leadership positions.
- Women remain the default career-sacrifice in relationships particularly after children.
- Women dominate the part-time workforce and opt for jobs that may be lower paid to ensure greater workplace flexibility for caregiving.
- Job selection and segregation penalises women. More women are working in services-type industries such as retail, health and education, which tend to be undervalued and underpaid in comparison to male dominated sectors like mining and IT.
- Indeed after spending many years covering women’s money issues and gender statistics as a journalist, more recently through the Financy Women’s Index, I am firmly of the view that the gender pay gap is one of the biggest economic problems facing Australia today.
It’s critical that in tackling the problem that we are inclusive of men because without a greater social mindset shift on the changing family and workplace dynamics, the task at hand will be more difficult.
What’s the economic cost to women and the economy?
The estimated price tag on the gender pay gap in the global workplace could be as high as $160 trillion in lost earnings, according to a World Bank study.
Another report by KPMG Australia found that if the gender pay gap in Australia were halved and entrenched discrimination against women in the workforce was reduced, then this could result in a massive payoff to the economy valued at $60 billion in gross domestic product (GDP) by 2038.
The economic benefits of closing the gender pay gap look obvious and would provide a significant boost to Australian households.
Yet addressing workplace discrimination and improving gender diversity remains a challenge.
Currently the average Australian woman earns about $1433.60 a week, according to the Australian Bureau of Statistics (ABS).
This is about $244.80 less than the $1678.40 average weekly earnings for men.
Six months earlier, women were taking home an average of $1410.20 a week, while men were collecting $1662.10 at that time.
By contrast the average weekly ordinary time earnings for full-time adults in Australia in May 2018 was $1,585.30.
The gender pay gap is significantly worse in senior management, where women hold about 36% of positions, according to a gender report by the Organisation for Economic Co-operation and Development (OECD).
The Workplace Gender Equality Agency (WGEA) says the largest gender pay gap occurs at key management personnel (KMP) level (28.9%), followed by other executives / general managers (27.5%), then other managers (24.6%) and senior managers (23.5%).
As a consequence of the gender pay gap, women are often at an economic disadvantage throughout their working lives. Here’s how it has played out:
The superannuation savings gap between men and women has marginally improved in recent years.
The most recent data available from the ABS shows that the gender gap narrowed by 6 percentage points in 2016 financial year and means that the average woman has about 27 per cent less in her retirement savings than men.
The gap in superannuation savings is largely affected by time spent out of the workforce caring for children and loved ones, and part-time work.
There are about 2.7 million women working part-time compared to about 3.14 million who are working full-time.
We are starting to see an increasing number of Australian companies change their parental leave polices to ensure that superannuation is paid while a person is on paid and unpaid leave.
This is regardless of a person’s gender and based on primary caregiving.
What should also help boost women’s super in the years ahead is increasing the Super Guarantee (SG) rate.
SG will remain at 9.5 per cent for another 3 years until 30 June 2021, and will gradually increase to 12 per cent from July 2025.
While further initiatives are needed to help women close the retirement savings gap in super, there’s no doubt that increased awareness, financial literacy, and improved understanding of some of the incentives available such as the government's co-contribution, will help women to add to their savings and close the gap.
One of the sad facts of financial inequality is homelessness and poverty.
While this affects the young and old, increased life expectancy also means that if women don’t work, own a home, or indeed have the support of family and friends, then they are likely to experience financial hardship later in life.
According to the latest Census, there are more homeless women, and elderly women living in poverty than men.
Fairfax Media reported that in 2016 the number of older women in Australia living with homelessness increased by 31 per cent to 6866, up from 5234 people in 2011.
While financial security is a big part of this story, so too is domestic violence.
Of the estimated 1.7 million Australian women affected by domestic violence, it’s estimated that most of them are also affected by financial abuse.
This is where their economic wellbeing is controlled to the point of abuse by another person, usually a partner or family member.
While financial abuse also affects men, it is more common in women and leaves victims financially powerless.
As we continue to call out the issues that affect the gender pay gap, it’s important to acknowledge that some progress is being made; all we need now is to speed up that momentum.
Bianca Hartge-Hazelman writes on women’s money matters as the founding editor of Financy and the Financy Women’s Index