Reporting gender pay gap is not enough to close it

Andreea Papuc, Tribune News Service

Is the home stretch to pay parity the hardest? It’s starting to look that way. Australia has become the latest country to make individual companies reveal their gender wage gaps. Firms with more than 100 employees will have to report the difference between what men and women earn as part of new equality legislation adopted by the federal parliament. The government’s Workplace Gender Equality Agency currently publishes aggregate pay gaps by industry.

This is good news. It joins a growing number of nations endeavoring to improve transparency in the hope it will accelerate pay parity. The law is long overdue Down Under, where the pay gap is one of the widest in the world. Last year, women, on average, earned 22.8% less than men as progress stalled during the pandemic. The nation ranks 43rd on the Global Gender Pay Gap Index, which is topped by Iceland, Finland, Norway and New Zealand.

Globally, women are paid about 20% less than men, according to the International Labour Organization. It’s worse for women of color: Black females earned 63% as much as White men and Hispanic females earned only 58% as much in the US. For their part, women have ticked the boxes: They’ve become more educated, have increased their participation in the workplace and taken on more senior, higher-paying jobs. They are sitting on more boards, holding more executive positions, and going for promotions.

But the reality is that while more and more jurisdictions — including the UK, Japan, the European Union and parts of the US — are forcing companies into wage transparency, the gap is stuck. In the US, for example, it has remained relatively stable over the past 20 years, with women earning on average 82% of what men do. Getting to the finish line may be the hardest part.

Knowing who gets paid what is not the panacea that will takes us there. Instead? Companies have to reshape attitudes around long working hours, flexibility and penalties for time out to look after dependents that are the enduring hurdles to overcome for women to get paid as much as men.

Reporting discrepancies is easy because, ultimately, it comes down to numbers. Changing entrenched mindsets is much harder. As is acknowledging that gender stereotypes and discrimination are the wedges in the gap.

“Greater transparency in pay is associated with a narrower gender pay gap. But it is not the one silver bullet that will lead to pay equity,” said Rae Cooper, professor of gender, work and employment relations at the University of Sydney Business School, and director of the Gender Equality in Working Life Research Initiative. “We can’t stop at disclosure; it is one simple step for exposing inequalities, but strong and strategic action is needed to really make a difference.”

It’s a rallying call for organizations to dismantle what Cooper calls “segmentation and segregation.” This is where men still dominate in the most lucrative occupations and the most senior hierarchical roles, while women prevail in lower-paid and undervalued sectors and in less senior jobs — and to get rid of the so-called “motherhood penalty” for females who take a step back due to carer demands. Companies need to make it acceptable for both males and females to take a backseat as they share duties outside of work to narrow the difference in what they earn.

“This will stop women opting out, or being forced out, of the career path and will allow men to avoid hyper long hours and facing barriers to family life,” Cooper said.

The good news is that may be starting happen. In the US, high-earning males are reducing their hours, which in theory should make way for women to move into better paying roles, especially if men shift to more home and childcare duties. It is early days, but the norm could be upended if punishing hours are no longer a prerequisite for demanding, high-paying jobs.

Reporting the pay gap is vital. A legislation change in Denmark that required firms to provide gender statistics found the gap declined by approximately two percentage points, or a 7% reduction compared to before the law was passed. But there was a rub: The improvement was achieved primarily by slowing the wage growth for males, while there were no significant differences in female wage growth. That in itself is problematic and underscores the complexity of the debate.

We still have more than 100 years before the pay gap is eliminated globally. Wage transparency is just one factor that will get women fair pay — and treatment. But as an increasing number of countries report on it, companies must now tackle head on cultural and entrenched practices to squeeze it shut. The ball is in their court. Women have done their bit.