December 2019

In a bid to close the gender pay gap remuneration transparency becomes law

Mandating remuneration transparency isn’t a simple solution to achieving pay equity in the workplace, writes Bartier Perry CEO Riana Steyn.

Data out this week from The Workplace Gender Equality Agency confirms the gender pay gap in Australia is still very real and awfully wide.

Men still out-earn women by an average of $25,679 a year and that compensation chasm only grows the further up the ladder you go.

In seeking to change that and counter equality “fatigue”, the NSW Women Lawyers Association are among those driving the debate about Australia adopting the UK model of remuneration transparency.

Since 2017 it has been mandatory for UK companies with 250 plus employees to publish and report on pay equity or their ‘pay gap’ each year. Any gap is calculated by comparing the remuneration of male and female employees within an organisation to the median and mean pay of all the employees in that organisation.

Data from 10,000 UK firms to date shows 75% pay men more.

Both the pros and the cons of taking on the UK model should be closely examined in this debate.

Especially given the UK experience is already highlighting the challenges of a data driven, shame and blame approach.

In the financial services sector, some UK banks have reported a pay gap of 61 percent.

Dig into that data however and you’ll find that’s skewed by women making up 70 percent of the lowest-paid jobs but just 33 percent of the highest-paid.

Changing that inequitable job balance requires both strong leadership along with significant cultural and structural change in an organisation.

Yet somewhat perversely, pay gap reporting, may undermine that change process.

Talented women, be they at the outset of their career or breaking through to senior ranks, won’t want to go to workplaces that have published poor pay gap stats.

That will only exacerbate the challenges of hiring and promoting more women into higher paid jobs. Secondly it may encourage organisations to massage their statistics to get the best possible outcome.

That may already be happening, with Sheila Wild, a former head of age and earnings inequality at the UK Human Rights Commission, reported as saying: "Basically, the statistics on the gender pay gap are so various and so nuanced that almost anyone can take anything out of it and say what they want."

In Australia WGEA are doing a good job in driving cultural change while holding organisations accountable.

Even the WGEA though, like the UK approach, has its weaknesses.

The reality is that, by one way of example, all things being equal, graduates typically start their careers off on the same pay level. This though can very quickly change due to differing performance levels, different strengths or personal choices such as flexible working conditions.

Again, it is cultural and structural change that promotes complete transparency in those benchmarks, while ensuring that women are not prevented from reaching them, that will deliver better and fairer outcomes for pay equity.

This is not about adopting a behind closed doors approach to pay equity. Rather it is ensuring we do not elevate filling out forms over the far tougher task of tearing down entrenched workplace barriers to equity.

As someone who has been on the wrong end of the pay gap earlier in their career, no one is more invested in or committed to making change in this area.

Yet in doing so we need to be wary of blindly adopting blunt statistical tools that, while well-intentioned, risk achieving little. Or worse detract from the focus on progressing the cultural and structural change that is required to ensure true equality in our workplaces.

Riana Steyn is the CEO of law firm Bartier Perry.

 

Author: Riana Steyn