As we all return to work for a new year, there’s a change in the air when it comes to the gender pay gap and wage transparency.
That’s because from February 2024, Australian companies with 100 or more employees will be required to publish their median gender pay gap between male and female employees. The change comes on the back of salary secrecy clauses in employment contracts being abolished (meaning employees can discuss their earnings openly without the threat of being reprimanded or fired).
Though these changes seem small or perhaps insignificant in the grand scheme of things to care about in the year ahead, they’re likely to usher in real and meaningful change.
In Australia, the gender pay gap currently sits at 13 per cent. Over the past five years, according to data from Workplace Gender Equality Agency, the gap has closed by just 1.1 percentage points compared with the January 2019 figure of 14.1 per cent. When you think about how much debate and awareness has been brought to this issue over the same period, it’s hard not to feel disheartened by such little progress. But this is where legislation comes into play.
Last year, a number of states in the US, including California and New York, introduced changes to improve salary transparency. Changes included companies with more than 15 employees being legally required to publicly disclose salaries on job advertisements. Across Europe, where the gender pay gap tends to be much lower, a similar pay transparency directive is set to come into effect from 2026 that will entitle employees to know a position’s salary range ahead of a job interview. The directive will also allow for transparency among colleagues on pay levels, and enable conversations about progressions, information on individual pay levels and the average pay levels of different genders.
As a business owner with a company based in Los Angeles, I can say that these changes aren’t just good for employees – they’re also good for employers, offering invaluable insight into a competitive job market and ensuring we are remunerating roles fairly.
Often, discrimination of any kind is at the hands of individuals in positions of power and the bias can be unconscious. So what else can we do to continue closing the gender pay gap? To start with, ensuring women can ascertain if they are being underpaid compared to their male peers, as opposed to simply knowing the median gap for an entire company, would be a good start.
Employers need to recognise that more and more, workers are becoming comfortable disclosing their salaries. If the thought of this makes you uncomfortable, the follow-up question is why? Yes, these conversations can create a negative ripple effect and cause temporary disharmony in a workplace (particularly with employees who have an inflated view of their own contributions). They’re not always clear-cut issues, either. But that still comes back to management.
Imagine this: a group of your employees go out after work and during the evening, it’s revealed that one or several male employees, who do the same jobs or hold lower positions than the females, are out-earning them by a noticeable amount. It would be concerning if that revelation didn’t cause problems the next day.
If you think this scenario is a hypothetical, I can assure you, it’s not. Every woman I know has experienced it at some point in their careers.
What’s also common is that when a woman flags the discrepancy with management, the response is almost always the same: they deny gender bias, citing a difference in experience as the reason for the gap. While experience is a valid reason for pay differences, it’s important to consider what experience really means. To some, it can mean years in the industry, while to others it can mean achievements or capabilities. Using experience as a shorthand before throwing the issue into the too-hard basket isn’t the solution.
Recently, The New York Times revealed there is little debate among researchers that salary transparency reduces wage gaps.
Zoe Potter, an economist from Harvard University affirmed the belief, saying, “It is totally 100 per cent true across all studies that I’ve seen with very few exceptions.”
Research also shows that when salaries are made public a few things occur: productivity can increase, namely because knowing what those above and around you earn provides a context to how to get where you want to be (and what that financial reward will tangibly look like).
Once the disparities are addressed, employees’ bargaining power decreases because pay discrepancies become less consequential. Even in instances where there are a few outliers earning substantially more than the rest, good management will be able to transparently communicate why that is.
So, will wage transparency alone close the gender pay gap, or will it just create a temporary ripple effect? It won’t fix everything, but it will certainly make ignoring the problem that little bit harder. It may also mean those in management and leadership roles confront their unconscious bias and prejudice when it comes to the value of women in the workplace.
Either way, now the new year is here and enforced change is around the corner, it’s worth clarifying what initiatives your business is doing to ensure gender is not of concern when hiring and remunerating employees. Get clear on your answers – because the women of your organisation are going to ask.
Michelle Battersby is the co-founder and chief marketing officer of Sunroom.
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Source: Thanks smh.com