Indigenous pay gap persists at 16% as report flags bias across careers

Indigenous workers in Australia earn approximately 84 cents for every dollar earned by non-Indigenous workers, translating into a 16 per cent pay gap that persists across different stages of the employee lifecycle, according to a landmark Indigenous-led study.

The Toward Indigenous Pay Parity report, conducted by the UTS Centre for Indigenous People and Work (CIPW), found that the disparity amounts to approximately $15,000 less in savings for an individual. 

CIPW director Professor Nareen Young said, “For individual workers, it’s comparable to losing a lifetime of super payments, or working two months of each year for free.

“Lower average wages mean lower lifetime earnings, weaker super outcomes, and less intergenerational economic security for Aboriginal and Torres Strait Islander people. The repercussions flow onto families, communities and the wider community,” she added.

Pay gaps widen for some groups

The report found that the disparity is more pronounced among certain groups. Aboriginal and Torres Strait Islander women face a pay gap of up to 21 per cent, while high-ranking Indigenous workers experience gaps ranging between 15 and 19 per cent.

Young said, “What remains is the structural racism that keeps Indigenous workers’ wages low, limits their career progression, and compounds disadvantage across their working lives.”

Bias starts with recruitment

The report identifies multiple points across the employee lifecycle where bias can influence pay and career progression, from recruitment and starting salaries through to performance assessments, promotions and discretionary pay decisions.

Young said, “Our research traces four pathways, starting with racial bias in recruitment, which lowers starting salaries, the impacts of which compound across a working life. As careers go on, bias in performance assessment limits pay increases, and bias in promotion processes limits progression into higher paid roles.

“This bias extends to discretionary decisions, affecting bonuses, pay review and salary negotiations too,” she noted.

The findings also point to an 18 per cent Indigenous pay gap among HR professionals, alongside low levels of racial literacy. This places particular focus on the capability of HR teams and their role in designing and administering workplace pay and progression systems.

HR urged to strengthen racial literacy

Young said structural racism remains embedded within the “ordinary machinery of an organisation”, making it important for employers to examine how workplace decisions are made rather than relying solely on complaint-based processes.

She said, “Under racial discrimination law as it stands, the onus sits with the person who has been discriminated against. They have to notice it, name it and make a complaint, usually against an employer with far more power and resources than they have. But employers do not need to wait for our government to act.”

“You can start today by finding where discretion enters your pay decisions and putting structure around it.

You can audit starting salaries by Indigenous status and review performance and promotion outcomes for patterns. Set out clearly what behaviour is unacceptable and act on it rather than leaving Aboriginal and Torres Strait Islander staff to raise it themselves and carry the consequences.”

Young also urged employers to treat racial literacy as a professional competency that can be developed and qualified over time, rather than placing responsibility for addressing workplace bias on Indigenous employees.

The report points to resources including the Victorian Equal Opportunity and Human Rights Commission’s racial literacy guide and the Australian Public Service Cultural Capability Framework.

Indigenous workforce data

IBA chief economist Dr Siddharth Shirodkar said, “The report’s findings will come as no surprise to many Indigenous Australians but critically provide an initial benchmark that quantifies the lived experience of many.”

“The Aboriginal and Torres Strait Islander population is younger and growing faster than the rest of the country so, if nothing is done now, a growing share of Australia’s future workforce will walk into a labour market that underpays it,” he added.

The report recommends including Indigenous employment data in information already submitted to the Workplace Gender Equality Agency. It proposes beginning with workforce profile data before expanding to remuneration, intersectional workforce data and workforce management statistics.

Call for legal reform

The centre has also recommended reforming the Racial Discrimination Act to introduce a positive duty similar to provisions under the Sex Discrimination Act, which require employers to take reasonable measures to eliminate sex discrimination and harassment.

Young said, “Racism at work deserves the same seriousness the law now gives sexism.”

The recommendations place greater emphasis on identifying and addressing pay disparities through structured workplace processes, stronger workforce data and greater racial literacy, rather than relying primarily on individual employees to identify and report discrimination.