Closing the gap: How Australia can achieve equal pay for women

Despite showing steady progress, the gender pay gap remains a problem for most women professionals in Australia. The 2024 study by the country’s Workplace Gender Equality Agency showed that the average gender pay gap in Australia is 21.7%, which means that for every dollar a man makes, a woman only earns 78 cents.

The number is slightly lower than the 22.8% recorded in 2023. The number already includes base salary, overtime, bonuses, and additional payments. But even if we’re only talking about base salary, there’s still a 19% average pay gap in favour of men.

The mining industry ranks highest in terms of the gender pay gap in favour of men, followed closely by the sectors of electricity, gas, water and waste, and financial and insurance services.

Wide gender pay gaps in favour of men are also a problem in the construction, professional services, telecommunications, real estate, hiring and rental, manufacturing warehousing, and wholesale trade sectors.

Meanwhile, the food and accommodation services have a more neutral pay gap, followed by the healthcare, arts, and public administration sectors. Meanwhile, the education, healthcare, and administrative support sectors showed a small bias towards women in terms of the pay gap.

According to the study, large employers with 5,000 and more employees generally have smaller, but still huge, pay gaps that favour men.

READ MORE | Gender equality in Australia

The roots of Australia’s gender pay gap

The gender pay gap in Australia isn't a mere statistic, but a symptom of deeply ingrained systemic issues. 

Firstly, the very foundation of our workforce reflects a gendered divide.  Women cluster in sectors traditionally associated with care and service, where compensation has historically lagged behind fields like mining and technology – domains often dominated by men. 

This occupational segregation reinforces the perception that women's work is inherently less valuable, perpetuating pay discrepancies.

Furthermore, the workplace itself isn't immune to biases that disadvantage women. While overt discrimination may be less prevalent, unconscious biases and outdated gender expectations can subtly hinder women's advancement.  

From overlooked promotion opportunities to assumptions about their priorities, these subtle barriers accumulate over a woman's career, widening the earnings gap.

We cannot ignore the pervasive impact of caregiving expectations. In reality, women continue to shoulder the lion's share of unpaid domestic labor and childcare.  

This translates to interrupted careers, transitions to part-time work, and a lifetime of reduced earning potential.  Until we rebalance the scales of caregiving, women will face an inherent disadvantage in the workplace.

READ MORE | Australia mandates gender equality targets for corporates and boards

The ripple effects of inequality

The gender pay gap extends far beyond a woman’s paycheck. It’s a ripple effect that undermines economic security, amplifies societal inequalities, and even casts a shadow on mental well-being.

Perhaps most critically, the pay gap perpetuates a dangerous cycle of financial vulnerability for women, particularly in their retirement years.  Decades of lower earnings translate into drastically reduced superannuation savings, leaving women disproportionately at risk of poverty in old age.

The economic ramifications don't stop there. When half the population is systematically underpaid, the entire economy suffers. Women's limited financial power curtails their choices as consumers, investors, and entrepreneurs.  This stifled potential translates into missed opportunities for innovation and overall economic growth.

On an individual level, the psychological toll cannot be underestimated.  The persistent realization that one's work is valued less based on gender breeds a sense of inequity. This can erode self-esteem, diminish job satisfaction, and negatively impact mental health in the long run.

Can more women in leadership narrow the gap?

The study implies that having more women in leadership positions may narrow the gender pay gap and possibly tip it towards a more neutral space.

“There is also a clear link between more women in leadership and a lower gender pay gap, even when the remuneration of those roles (CEOs and Directors) is not included in the gender pay gap calculation,” WGEA said in the study.

For companies with at least 60% of board seats occupied by women, the pay gap has been more on a neutral spectrum, which is the same for companies that have at least one CEO who is a woman.

In this case, Australia seems to be on the right track, as the number of women occupying board seats has steadily increased in the last few years.

Data from Deloitte’s recent study showed that in 2023, at least 33% of board seats in Australia are taken by women, a four-percentage point increase from 2021’s 29%. The number of board chairmanships taken by women also increased to 11%, while the number of women in CEO positions also went up to 9.2%.

“Despite improvements in board diversity, there is still significant change required to see the percentage of women acting as board chairs mirror the improvement in broader board representation,” said Joanne Gorton, Deloitte Australia’s managing partner for audit & assurance.

The study found that having more regulatory mandates and investor voting policies on gender boosted the campaign for gender parity.