What recruiters need to know about the WGEA pay gap data

The Australian Workplace Gender Equality Agency (WGEA) last week published base salary and total remuneration median gender pay gaps for private sector employers in Australia with 100 or more employees.

This release caused an enormous amount of commentary.

Here’s a summary of what I have read (in Q&A form.):

How big is the gender pay gap? Australia’s total remuneration average gender pay gap is 21.7%. For every $1 on average a man makes, women earn 78c. Over a year, that difference adds up to, on average, $26,393. The 21.7% gender pay gap includes base salary, overtime, bonuses and additional payments. It also includes the annualised full time equivalent salaries of casual and part time workers. All this salary data comes directly from employers as part of WGEA’s annual Employer Census. The national median base salary gap is 14.5%, but when bonuses are factored in, it rises to 19%.

Isn’t this figure substantially higher than the ABS-generated gender pay gap? Yes. Using the ABS methodology the base salary gender pay gap is 12%.

Why are the two figures different? The ABS data is calculated using base salary for full-time workers. This means it excludes overtime, bonuses and additional payments. It also excludes the salaries of part-time and casual workers.

What are the key metrics from the recent WGEA data?

• 30% of employers have a median gender pay gap between the target range of -5% and +5%.
• 62% of median employer gender pay gaps are over 5% in favour of men.
• The rest (8%) are less than -5% and favour of women.
• Across all employers, 50% have a gender pay gap of over 9.1%.

Does it matter whether an industry’s employment is dominated by one gender? Yes. Male-dominated sectors reported a 24.1% pay gap. For gender-balanced industries the gap dropped to 11.9% although female-dominated industries still saw a 10.8% gap suggesting that the most highly paid roles in those sectors are male-dominated.

Was there anything else significant in the overall data? Yes. Men are twice as likely to be in the highest earning group than women, and women are 50 per cent more likely to be in the lowest earning group than men. In simple terms, high-earning roles are dominated by men and lower-earning roles are dominated by women.

Which big Australian companies came out of the results looking good? Leading the way for retailers are Woolworths (5.7%), Coles (5.6%), and Wesfarmers (3.5%). Amongst the major legal firms Gilbert + Tobin (7.9%) and Allens (9.8%) did best. Grant Thornton was easily the best performer of the big consultancies, recording the only pay gap in favour of women (-8.1%) followed by PWC (3.9%) – none of the other big consulting firms got into single figures.

And who didn’t look so good? Banks were generally terrible with both the CBA (29.9%) and Westpac (28.5%) much worse than ANZ (23.1%), Macquarie (22.1%) and NAB (18.1%). The elite consulting firms also had significant gaps with McKinsey (33.4%), BCG (27.2%) and Bain (29.7%) reporting the biggest gaps. Energy companies also did poorly – Woodside (30.2%) and BHP (20.3%) were the worst with Fortescue (14.6%) and Rio Tinto (13.5%) slightly better.

Any unexpected results? Yes. Of the ASX Top 20 companies, there is at least one good news story when it comes to workplace gender equality. Despite making large profits from the controversial gambling industry, Aristocrat, a gaming and technology company has a gender pay gap that favours women (-8.7%) . According to the Aristocrat WGEA submission, the company has set targets to increase the representation of women, has a pay equity strategy in place and reports pay equity metrics to the executive.

What about the recruitment industry? Industry news service Shortlist (subscriber $ link) has compiled a list.  The recruitment industry is required to include its PAYG on-hire workers in its data so drawing robust conclusions about the gender disparity in the remuneration of internal employees, predominantly recruiters, is not able to be done from the WGEA data.

Did any companies not report? Yes, approximately 5% of companies required to report their gender pay gap did not do so.

Were these non-compliant companies “named-and-shamed”?  Yes. WGEA has the power to name non-compliant companies. They “named-and-shamed” around 250 companies. Not all non-compliant companies were on the list as WGEA has a discretion to not name them “….if the employer has made a reasonable attempt to comply, if the employer is a first-time reporter, the size of the employer, prior history of compliance and, any written representations from the employer.”

Are there any other consequences for a company not complying? Yes. Non-compliant companies are not able to tender for government contracts above a certain threshold.

Did companies have an opportunity to explain their pay gap? Yes, but so far only about 800 of the nearly 5000 companies have done so.

Will the pay gap reduce faster now that companies have to report every year? Emerging international research shows that increased transparency of wage differentials between men and women can lead to reductions in gender pay gaps. However, this research shows the mechanism through which this occurs is complex and varies by country. Governments adopting a public disclosure policy as the primary accountability mechanism are effectively relying on public and employee pressure to reduce the gender pay gap.

Is the Federal Government intending to legislate to accelerate the reduction in the pay gap? No, although the minister responsible (Senator Katy Gallagher) at the press conference to release the 2024 WGEA data, hinted at potential changes to the supplier criteria for government contracts. “…I get a lot of feedback from suppliers and others that they want to be treated fairly and they want good…ethical and social behaviour to be rewarded. So, that is something that I’m looking at.”

What should recruitment agency owners do now? Compile and review your gender pay data at least quarterly. Visibility of the data creates greater accountability and the likelihood of corrective action (if required).

What is the best outcome as a result of the annual release of the WGEA pay gap data? I hope more employers prioritise the development and retention of women. If so, this will (hopefully) assist the flow-on effect to total remuneration.

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