Seven years on from a landmark review examining the economic implications of the gender pay gap in Australia an update report, released today by KPMG Australia, has found that sex discrimination continues to be the single largest factor contributing to the gender pay gap. And disturbingly, it’s on the increase.
The gender pay gap has remained stubbornly flat for the past 20 years – currently sitting at around 16.2 percent.
Understanding the drivers of the gender pay gap is critical to designing interventions which will enable organisations to close the gap. The KPMG Australia report – She’s Price(d)less: The Economics of the Gender Pay Gap – prepared for Diversity Council Australia (DCA) and the Workplace Gender Equality Agency (WGEA), aims to do just that.
The report uses structured econometric modelling to determine the factors that underpin the gender pay gap, and to what extent they contribute. The report is partnered with an Executive Companion document highlighting a range of tactical improvement opportunities for every size of business in Australia, and supported by case studies from some of Australia’s leading companies.
“The drivers of the gender pay gap are complex. They include a broad range of factors including human capital and educational qualifications, on-the-job training and accreditation, work experience and tenure,” said Susan Ferrier, National Managing Partner for People, Performance and Culture at KPMG Australia.
“Critically, they also include labour market discrimination – where skilled individuals may face different earning potential and employment opportunities due to discrimination by gender, values and culture,” she said.
Libby Lyons, Director, Workplace Gender Equality Agency said: “The gender pay gap is a powerful symbol of lost potential for individuals, businesses and the economy. Understanding the factors that lead to women being consistently undervalued in the workforce is critical to creating change.”
“Clearly we need to redouble our efforts to address the gender pay gap. And while organisations can do a lot to close the gap in their individual workplaces, there are structural inequities between industries and in the wider economy which must also be addressed. Business, government and the wider community all have a role to play,” commented Lisa Annese, CEO of Diversity Council Australia.
KPMG has identified the following relative contribution of factors in driving the gender pay gap:
The Executive Companion identifies six areas with supporting actions to help businesses mature their position on addressing the gender pay gap:
“While the research reveals outcomes which are disappointing, we need to keep talking about this challenging issue. It would be easy to stop talking because it seems too hard. Many Australian businesses are showing great commitment to diversity and inclusion programs and we have seen some fantastic examples of innovative programs and strong leadership addressing the gap,” said Susan Ferrier.
“We are confident that this research will be a valuable contribution to keeping this conversation relevant by understanding the true factors that influence the gap. We need more purposeful, impactful action,” she concluded.
In 2009, KPMG Australia undertook a major study – Understanding the Economic Implications of the Gender Pay Gap in Australia for the Diversity Council Australia (DCA) – to develop a more rigorous evidence base around the structural factors underlying the gender pay gap, the contribution of these factors to the gap, and the potential economic implications in terms of women’s participation in the labour force, and broader economic productivity and growth.
KPMG’s 2009 analysis was based on data from the 2007 Household Income and Labour Dynamics in Australia (HILDA) survey, and built on research undertaken in the United Kingdom (UK) by Walby and Olsen (2002). KPMG’s 2009 Report found that in 2007, of the hourly pay gap of $1.29 ($1.70 in today’s dollars), approximately 35 percent was potentially attributable to gender.
Within the context of the significant public debate since 2009 around gender equity, diversity, and pay-equality, KPMG has updated its 2009 analysis with the benefit of the most recent HILDA data, from the 2014 wave of the survey. This update is intended to further contribute to the current public discussion, and drive a deeper and more holistic understanding of the social and economic factors that may contribute to the gender pay gap in Australia.
KPMG’s analysis builds on the knowledge and the econometric model developed through the 2009 Report, and reflects the most recent data and information available, as well as the key developments in the research and literature since 2009.
Head of Communications, KPMG
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A detailed economic analysis of the factors driving the gender pay gap.