Opinion
For the rest of the year, half of us will work for ‘free’. Here’s why
Victoria Devine
Money columnistA dark day on Australian calendars came around recently. It’s not officially marked down, and no alerts are issued. But for 48.7 per cent of the workforce who happen to be female, November 18 marked a significant moment in 2024.
It was the day in which the gender pay gap officially kicked in, and women began working essentially for free until the end of the year.
Even with new efforts from the government, the gender pay gay remains stark in many industries.Credit: Dionne Gain
Though a vocal minority of society loves to pretend the gender pay gap is a myth that women, economists, statisticians and policy experts dreamed up one day, mountains of evidence shows otherwise, both here in Australia and around the world.
Overall, 2024 has been a profound year for discussing and coming to terms with the gender pay gap. In February, laws came into effect that triggered the Workplace Gender Equality Agency (WGEA) to publish specific gender pay gaps data for specific industries concerning Australian companies with more than 100 employees.
This meant that, for the first time, workers had a clear picture of how their employer and industry were performing. It also meant that companies and sectors dragging their feet could no longer avoid the subject.
At the time, Finance Minister and Minister for Women Katy Gallagher said this brave new world of transparency was “not about shaming” and “not about naming”. Instead, the sunlight approach aimed to provide everybody with a clear understanding of the problem.
Between now and the end of the year, gentlemen, if you see your female colleagues taking it a little easier than usual, let them.
To be clear, the gender pay gap is not about equal pay (which has been enshrined in law for decades). Rather, it’s about quantifying the difference in earnings between men and women in the workforce, and it is done by comparing the average pay for both genders.
Another positive result was the rate at which the average gap appears to be closing, with data showing not only that it is shrinking, but that it’s shrinking faster than expected. A recent report from the Australian Council of Trade Unions found the gap is now closing at 1.3 per cent a year under the Albanese government, compared with 0.4 per cent a year under the Morrison government.
But with all this sunlight has come a lot of confusion. For example, the government proudly said in August that the pay gap was just 11.5 per cent, based on data from the Australian Bureau of Statistics that measures the average weekly ordinary time earnings of full-time employees aged over 18. In dollar terms, that’s women earning 0.89 cents for every $1 men earn, equating to $231.50 less in a woman’s pay-cheque each week.
The problem with the ABS estimation is that it excludes part-time workers, as well as overtime rates and bonuses.
This is important for two reasons: first, because Australia has among the highest rates of part-time workers across all OECD countries; and second, because penalty rates, bonuses and other incentives comprise a substantial portion of many peoples’ take-home salaries.
At investment bank Morgan Stanley, for example, the average pay gap when looking at base salaries was found to be 25 per cent (still far too high), but grew astronomically to almost 50 per cent (48.2, to be exact) after bonuses were factored in.
Unsurprisingly, when the WGEA calculated the gender pay gap based on these factors, it found the average pay gap across the 2023-24 year was 21.8 per cent, and the median was 18.3 per cent.
In its Equality Scorecard, published earlier this month, the WGEA put it clearly: “For every $1 a man earns, a woman earns 0.78 cents, on average. This adds up to a yearly difference of $28,425.”
One of the major reasons for such a substantial and persistent divide is where women sit in the workplace structure. For example, 25 per cent of Australian companies still have no female board members, while 78.1 per cent of chief executives are male, and less than half of all managers are women (42.2 per cent).
As the Scorecard notes, “men are 1.9 times more likely to be in the highest earning remuneration quartile than women and women are 1.5 times more likely to be in the lowest earning quartile than men”.
Of course, the reasons for this enduring gap are many. Some experts believe the most common factors at play are women being more likely to take time out of their careers to have children, and being more likely to work part-time.
But research published by economic institute e61 in May challenged this, showing that women were likely to be paid 15 per cent less than their male colleagues, even when their levels of education, age and family life are the same.
Still, there are some positives. In most female-dominated industries such as education and healthcare, the median pay gap is just 2.4 per cent, and the average is 5.5 per cent. And in gender-balanced industries such as retail, real estate, travel and hospitality, the median is 9.1 per cent.
Even in female-dominated industries, the pay gap is significant.Credit: iStock
But even where it is smaller, major room for improvement exists. In midwifery, for example, where the workforce is 99 per cent female, women are still paid 19 per cent less than their male colleagues.
Similarly, female-focused retail companies such as Lorna Jane and Pandora recorded gender pay gaps of 37 per cent and 52 per cent respectively – citing the predominance of men in higher-earning management and executive roles as the reason for such substantial gaps. Feel like screaming after reading that? Me too.
If there’s a silver lining, it’s that despite how dire the picture may seem, things are getting better. Next year, the data, reports and scorecards will be a little more normal to us all.
But between now and the end of the year, gentlemen, if you see your female colleagues taking it a little easier than usual, let them. God knows you’ve earned it and, for deeply flawed reasons, they haven’t.
Victoria Devine is an award-winning retired financial adviser, bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. Victoria is also founder and co-director of Zella Money.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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