Australia’s gender pay gap currently sits at 15 per cent. But contrary to popular belief, this cannot be sufficiently explained by women working in lower-paying sectors than men, new research by e61 Institute has revealed.
The analysis of tax data demonstrated that while men and women are often segregated by occupation, this factor alone actually accounts for only 20 per cent of the gender pay gap. 80 per cent of the gender pay gap is due to women being paid less than men within the same occupation.
For example, among high-paying occupations such as doctors, dentists and investment managers, women are paid between 10 to 14 per cent less than men.
The report finds that different characteristics and skills, such as job tenure, full-time status and education level, do not explain why women work in different occupations, nor why they are paid less when working in the same occupation than men.
The analysis does however find that marriage and parenthood have a much greater effect on women’s wages than men’s within the same occupation.
“This research busts the outdated myth that the gender pay gap exists because more women are nurses, carers and administrators and while more men are lawyers, bankers, and pilots,” said Silvia Griselda, Research Manager at e61 Institute.
“What the data shows is that most of the gender pay gap is because women are paid less than men within the same occupation. Policies and action, by companies and governments, to increase female representation in high-paying occupations are very important but unlikely to significantly narrow the gender wage gap on their own.
“Australians frequently hear claims that the gender pay gap is driven by women not working full time or not staying with employers for the same periods of time. Our analysis of the data shows these factors are actually quite insignificant.
“When we compare men and women with similar age, employment and marital status, number of children and academic ability, working in the same occupation, women have an hourly wage that is 15 per cent less than men’s.
“The factor that does seem to drive the gap wider is personal – being married and having dependent children imposes a penalty on how much women earn compared to men. This penalty exists for women but not for men.”
How to reduce the gender pay gap
Elyse Dwyer, Research Economist at e61, said the analysis provides an indication for companies on how to best reduce the gender pay gap.
“One potential reason for the pay gap for men and women working in the same occupation is the type of firms that men and women are working for. Men may be more likely to work in high-paying firms, which require less flexibility and longer working hours. e61 Institute is currently undertaking research to understand this.
“Another potential reason is that women may be less able to pursue leadership opportunities or high-paying but demanding specialties within the same occupation,” said Ms Dwyer.
“Our research suggests that the most effective way for companies to narrow the gender pay gap is to foster an inclusive environment where all employees, regardless of gender, are encouraged to take on domestic and parental responsibilities.
“This could include being more flexible as to when or where work tasks are completed, encouraging job-sharing in leadership positions and diversifying hiring practices.
“Simply focussing on encouraging women into higher-paying occupations, such as pilots or lawyers, will not be enough to end the pay gap. The bulk of the gains will more likely come from improved workplace flexibility that allows more women to take on higher-paying positions.”