In Australia, where the gender pay gap among full-time employees currently stands at a little under 15 percent, the opposition Labor Party wants to push this number downward by requiring large companies to publish their gender pay gaps, as the UK and some other European countries already do. In a statement issued on Sunday, deputy opposition leader Tanya Plibersek and Labor’s employment spokesman Brendan O’Connor noted that Australian women working full-time earn about $27,000 per year less than their male colleagues on average, the Guardian reported:
“We must do better,” it said, adding that a Labor government under Bill Shorten would “act to shine a light on the gender pay gap in Australian companies”. Labor would also change the Fair Work Act to prohibit pay secrecy clauses and require the Workplace Gender Equality Agency to publish a list showing whether large companies had undertaken and reported a gender pay gap audit.
Companies already report their gender pay data to the Workplace Gender Equality Agency but Labor would make it public, the statement said. “People will be able to search a gender pay equity portal to find out a company’s overall pay gap, and the pay gaps for managerial and non-managerial staff.”
The Australian Council of Trade Unions backed the proposal, saying it would improve employees’ bargaining power and prevent employers from retaliating against employees for discussing their pay with each other. Prime Minister Scott Morrison, however, pushed back on the proposal, arguing that it might generate problems in the workplace and not actually help close the pay gap.
“You’d want to be confident you’re not setting up conflict in the workplace,” he said. “I don’t want to set one set of employees against another set of employees.” Morrison also pointed out that the country’s gender pay gap had decreased from 17.2 percent to 14.5 percent under his Liberal Party–National Party coalition government, whereas it had grown the last time Labor was in power. Nonetheless, Morrison said in a press conference that he was “open-minded” about the proposal.
UK companies with at least 250 employees are required to publish their gender pay gaps annually under a law first proposed in 2016 and effective as of last year. The first round of reports came out in April, showing that more than three-quarters of companies paid men more than women overall, with large gaps in industries like law and finance illustrating the relative scarcity of women in leadership positions at these firms. It was already illegal in the UK to pay women less than men for the same work, so the gender pay gaps uncovered in these reports pointed to the underrepresentation of women in high-earning roles, not outright pay discrimination. Germany also enacted a new gender pay gap transparency law this year, but it puts the burden on workers to ask their employers about wage disparities, which critics say will dampen its potential effect.
The rationale behind these reporting mandates is to bring transparency and clarity to the issue of gender pay gaps and motivate employers to find ways of closing them. The gender pay gap is a sticky problem involving compensation practices, performance evaluation, employee development, leave policies, and many other components that organizations can’t fix overnight. However, our research at Gartner shows that some gender gaps can’t be explained by differences in factors like occupation, geography, industry, education, or experience, so HR actually does have the power to solve a critical component of this problem.
Whether or not Australia or any other given country enacts a mandatory disclosure law, public scrutiny and pressure is coming to bear on organizations around the world, employees are asking more questions, and perceptions of pay inequality are even worse than the reality. Achieving role-to-role pay equity and taking steps toward closing group-to-group gender gaps are increasingly high priorities for organizations as the impact of these negative perceptions becomes stronger on talent attraction, retention, engagement, and morale. Fortunately, there are numerous actions available to HR leaders who want to achieve pay equity at their organization—which will never be cheaper than it is today.
Our latest research also points to pay transparency as an important focus for organizations today, especially as more compensation information becomes available to employees and candidates through external sources like Glassdoor and PayScale. Organizations that embrace pay transparency and effectively communicate their pay processes can significantly improve employee engagement by improving their understanding of how pay decisions are made and their trust in the fairness of that process. Again, whether or not governments decide to enact mandates (and more probably will in the coming years), there’s a clear upside for employers who get ahead of the trend, embrace transparency voluntarily, and communicate this information intelligently.
CEB Total Rewards Leadership Council members can read last year’s study on pay equity here, view our pay transparency benchmarking report, and sign up for one of our upcoming meetings on Creating Effective Benefits Communication and Communicating Pay in the Age of Transparency.
This post is published for informational purposes only and does not constitute legal advice or an opinion on the legal matters discussed within. Employers should consult their general counsel whenever they have questions pertaining to laws, regulations, or potential liabilities.