Gender Pay Inequity: Causes And Impact In Australia

Current Gender Pay Gap in Australia

The issue of gender pay inequity is one of the management issues that have been constantly in news and media which has also become a matter of consideration for many organisations and countries. In Australia, the general gender pay gap is calculated by organisations Gender Equality agencies (WGEA) in which statistics from Australian Bureau are utilised. Australia’s current gender pay gap is around 15.3% and since last few decades it is been hovering around 15% to 19%. The pay inequity is the distinction between men’s and women’s standard pay for weekly or full time service. The rise in percentage of men’s earning shows women’s overall reputation in paid services and no comparison of position between them. According to survey made by ABS and WGEA, gender pay gap favours full time operational men over women in almost every industry and sectors in Australia (COMMONWEALTH GOVERNMENT OF AUSTRALIA, 2018). There may be various factors that results in gender pay inequity like biasness in recruiting and pay decisions, discrimination, and lack of flexibility in workplace for accommodating care along with time adjustments requiring responsibilities for senior roles. From the time women enters into a job, pay inequity gets started. Women’s higher likeness for caring reasons along with likelihood of part time jobs impacts their lifetime security in jobs. WGEA encourages companies to make analysis of their pay data in various methods so that pay inequity issues are minimised after taking effective actions. The gap between remunerations of men and women across entire organisation reflects hurdles to women for accessing superior and high pay roles in organisations, mainly in specialist roles, technical and leadership position. This issue has been recognised in almost every country in which men are favoured for higher pay than women which result in setback of women’s position in country’s economy.

To gather data for this report, online survey of company reports were done in which current trends were given more emphasis. With the help of media article, quality research was made in which associated industries where the management issue related to gender pay inequity was seen. News and conference reports were also studied to find appropriate reasons behind management issues and which issue is found more prevalent in today’s organisations. TV news videos along with news paper articles added additional support in key findings for this report. Through academic articles and scholarly reviews this article concludes after giving considerable recommendations to the readers and Board of Directors of JP Morgan.

Factors behind Gender Pay Inequity

Increase of women representatives in senior and executive roles are directly associated with lowering of gender pay inequity. Organisations that have low share of women in executive and leadership roles have an average  gap in their pay role double as compared to the ones who have equal share of women in senior roles. That means 20% in contrast with 10%. In between 2015 and 2016 very few companies were found in reducing gender pay gaps by increasing the share of women in leadership roles. Another finding shows that gender pay gap for those participating in graduate programs are nominal but men are found to receive more top graduate apprentice salaries. These gaps further widens among them according to different positions of permanent salary earners. Women are underrepresented in constant fashion in graduate salary bonds in spite of having highest graduate qualifications in which few women’s are even paid below subordinates (Manning, 2006).

Figure: Australian genders pay inequity (WEGA, 2018)

Managerial gender pay equity falls whenever the share of women managers increases which can also be one reason for putting behind women in top positions. However, pay gaps are seen rising in organisations where female managers are considered more especially in Social Assistance, Health Care, Education and Training and Retail sector. Gender pay favours women where there are needs for part time worker as men lag in part time jobs. Women have been seen more interested in part time jobs where they out-earn men. While women are favoured for part time roles, the pattern are reversed in senior levels were men are more favoured. In managerial position, women earn an average 27.1% less than men according to a recent survey (WEGA, 2017).

The gender gap between men and women are also due to industry demands. According to another survey, the pay gap of full time workers in both public and private firms seems to be increasing in financial and insurance industries (Son, 2018). Following it were Hiring and real estate business with other services related to mining.

Figure: Gender pay inequity by industry (WEGA, 2018)

The average pay gap between men and women working for full time normally increases with age, (up to 50) after which it starts decreasing until the age of retirement. The average gender pay equity is minimal for employees under 20 years of age and the gap increases between 21 to 34 years after which it remains relatively constant.  The pay gap again increases for 45 to 54 age groups in which women are seen to take more time out of workforce for taking care of children and other responsibilities. Another findings show that gender gap is more in higher posts than in junior levels. This may be due to lesser discretionary pay and depending more upon rewards and collective agreements in junior levels.

Why should Organisations Care?

Factors behind gender pay inequity

In spite of positive trends, the increase of women entering into job fields can be traced back to 1950’s pattern when they were only treated as subordinates to male leaders.  Along with it various factors hold back women from inflowing into workforce, especially in full time jobs, which impacts their advancements in organizations.

Barriers related to culture and society: Due to domestic and household work, many women opt for part time or flexible jobs. They remain out of job market for enabling flexibility those results in low hourly costs and weak long term career prospects. Women facing motherhood have to pay more and the difference between women with child and without child can be quantified. The penalty they have to pay is by balancing work and family responsibilities that even results in career breaks. In many organisations, evidence of premium for men highlights a positive relationship between number of children and men’s wages (Nymoen, 2009).

Occupational segregation: When girls become older, academic sorting in qualification leads to pay segregation in occupation. Although the ratio of female graduates as compared to men are more but they stay behind receiving degrees in technical, scientific, mathematical and engineering fields those are related to higher pay scale. This means that women are more entitled to lesser pay fields in their career. Occupational choices are even affected by social norms like stereotyping, lack of information about opportunity and pay distinction. Surprisingly, there are female dominated industries like Health care, Education, Social assistance and Retail services but the fundamental issue lies the same where women forms cluster in comparatively minor positions even in these industries (Daczo, 2012).

Source: (Gould, 2016)

Lower level position employment: Women are always considered to be placed in lower positions in workplaces which ultimately results in gender pay inequity. According to a survey made by Fortune, 500 companies in 2011 stated that women contribute nearly half of the managerial posts in which only 14.3% were executive officers, in CEO’s position only 3.8% were seen and 16.6% occupied Board of Directors seat (Smith, 2017). Occupation along with industry sector contributes in accounting for gender pay inequality of about 50% in which higher paying white collars job are the largest in making gender pay gaps. ‘Glass ceiling” effect can also be one of the reasons behind women’s lagging behind in senior levels (Whawell, 2018). Women representatives in higher levels are seen less may be because of limited talent or barriers that prevent them from showing their talent. These barriers include work-family conflicts, discrimination and low interest in higher positions. White collar jobs demands longer and nonflexible work hours that results in family conflicts. Along with it, favouritism in workgroups also prevents women in climbing up higher positions in organisations where not many women are seen in leadership roles.

Figure: Management level gender pay inequity in Australia (WEGA, 2017)

Psychological and personal traits: Gender pay inequity can also be contributed by psychological traits where men give higher value to money along with superior self esteem. They believe that they can control their own destiny, be more competitive and more disagreeable as compared to women. These traits contribute towards pay inequities. For example, in work environments where increased competitiveness lies, women may not like to opt for such positions as they are less attracted to such scenarios. These traits reduce their wage structures in which they are already present. Along with it, women have been seen less negotiable for themselves as compared to men (Tower, 2006).

Why should organisations care?

Attaining equal pay at senior levels will give more opportunities to females for representing higher levels in the organisations. Recent evidences related to success in business shows that gender diverse teams under women leadership make sense for their encroachment. According to present survey, diverse teams are more effective, smarter and creative and perform better financially (Zhou, 2016). Companies that have made women participate in execute levels outperforms those who do not have any women in senior level. According to Fortune, total return to stakeholders was 34% higher than companies with low female representatives. Even IMF stated that women in corporate boards proved to give more profits to the firm while being in senior levels. Companies that share larger female in higher positions have given more return on assets even when the industries were found in bottom line. Along with it, many countries government are considering taking strict actions against gender pay inequity in firms that makes necessary for firms making changes accordingly (Guilbert, 2018).

There are several factors that support the elimination of pay gap and giving superior roles to women in executive areas by giving equal pay for full time working women at different organisational level. Many factors promotes accountability and unconscious biasness while making pay assessment through robust payment process thus empowering managers with information about market.

Figure: Factors that supports equity in pay between men and women (Smith, 2017)

Representing women in executive roles and providing them with equal pay show better organisational ranks. Women comprises of 75% of employees at worldwide that ensures well-built female pipeline. Study shows that women also prove to be great mentors and supporters which is another factor that cannot be underestimated. Adding on to mentorship, female sponsorship can be admitted to promote more women and develop the strong pipeline of women. Company’s sponsor managers are the ones who frequently give decisions on promotional and strategic issues and they are even allowed to act independently while taking risks. Women who are appointed in leadership position also provide guide and sponsorships to other women along with bringing affects to policies and cultural changes inside the companies (PayScale, Inc., 2018).

Family friend policies like maternity leave have high influence in organisations while lagging behind female representatives in top levels. Organisations’ having flexible work arrangements at workplace shows more progressive actions and policies while engaging more employees. Women who works flexibly proves stronger advocates in company’s than women who have rigid time schedules. Flexibility can be necessary for many women but research shows that selecting flexibility can result in wage penalties when it comes to low wage sectors and occupations. As far as success is recognised by them, such companies do not bother whether their employees work for part time or full time. Family friend policies vary in different countries based on local requirements and laws (Frantz Ward LLP. , 2018). One common approach in every country’s law is to support the culture of new parents under which having babies shall not be treated as unfair policy by companies. Many companies even support new parents by providing support mechanisms for child and elderly care.

Recommendations for eliminating gender inequities focuses on implementing equal pay within organisations. From the above research made it can be said that gender equity pay laws are not sufficient for closing gender pay gaps. Changes in legislation and creation of general awareness can change people perspectives that lead to pay inequity. Research shows that women make choices of work and careers but the reasons behind their choices are not specific (Smithson et al., 2004). JP Morgan’s workplace is evenly split between women and men where women remains underrepresented at superior rank; changing pay equities policy in the firm is highly recommendable. The men of the company make up to 70% in executive level and 83% in Board of Directors place which has also been revealed by ‘Bloomberg Financial Services Equality Index’ (Bloomberg News, 2018). Making changes in pay equalities within the company can be revised according to following manner.

Providing paid maternity leave or on-site childcare: Many organisations are nowadays implementing childcare areas in their workplaces to retain their qualified employees from leaving organisation. This contribution will allow children be more with their parents as well as allow entire family for being a part of JP Morgan’s culture.

Flexibility in work policies: Many organisations offers pay leave but employees many times are uncertain to take benefit of it. In financial organisations where long working time are norms, fear of being penalised stops employees from taking longer leaves. They even start assuming of being less loyal in front of employer. Implementing flexible work timing will retain employees while gaining qualified employees as far as they do not take advantage of it (Dixon, 2017).

Feedbacks and work performance reviews: Making bias decisions are uncertain in organisations especially at the times when performance reviews are made. Many times women and men’s performances receive distinguished evaluation. Here implementing strategies to enhance accountability in performance assessment can provide great help. Third parties can be involved for making such evaluation which will make employees experience impartial nature of the company (Koukiadaki, 2016).

Transparency in work payment: This strategy will allow both men and women get an insight about their peer’s wages and making unjust discrimination can also be avoided through it. This method will not only boost employees in workplace but even help in forming competitive nature between both men and women thereby increasing work efficiency.

Recruitment practice valuation: These efforts can be made before recruiting new staff in the company according to the job description. Names itself suggests whether it is a male or female applicant. Therefore a code can be allotted to all the applicants and pay scale can be made after reviewing their qualification and job specification rather than looking upon their gender (Brozena, 2018).

Conclusion

After making a thorough research on the management issue regarding gender pay inequity, it can be said that this issue requires consideration by organisations to get sustainable success in future. JP Morgan’s latest news and reviews shows a need of change in its perspective towards women employees for getting better reputation in financial industry in Australia. For achieving gender pay equity, recommendations have been suggested above that be considered by Board of Directors which will surely rise company’s reputation in front of public. For achieving equity, it is expected that women needs to match with men in regards to work potentials. This will also prove as a constructive result for women and also help them financially in bringing up their children and helping spouses. Increase in women’s wage may result in counter decrease of men’s wages but, after all the share must be divided equally to all the participants of organisation. The above report has been made after making exclusive research on the topic while taking suggestion from academic reviews to make this statement more specific. Since JP Morgan has been many times found guilty for gender pay inequity decisions, it becomes the responsibility of the management and Board of Directors to look into the matter with consideration and do the necessary changes in its administrative departments. On concluding note it can be said that women shall be given a fair chance to prove themselves and their capabilities not only by making close comparisons with men but taking it as an individual rights.

References

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