Andreea Papuc
Is the home stretch to pay parity the hardest? It’s starting to look that way.
Australia has become the latest country to make individual companies reveal their gender wage gaps. Firms with more than 100 employees will have to report the difference between what men and women earn as part of new equality legislation adopted by the federal parliament..
This is good news. Australia joins a growing number of nations endeavoring to improve transparency in the hope it will accelerate pay parity. The law is long overdue Down Under, where the pay gap is one of the widest in the world. Last year, women, on average, earned 22.8 percent less than men.
Globally, women are paid about 20 percent less than men, according to the International Labour Organization. It’s worse for women of color: Black females earned 63 percent as much as white men and Hispanic females earned only 58 percent as much in the U.S.
For their part, women have ticked the boxes: They’ve become more educated, increased participation in the workplace, and taken on more senior, higher-paying jobs. They are sitting on more boards, holding more executive positions, and going for promotions.
But the reality is that while more jurisdictions are forcing companies into wage transparency, the gap is stuck. In the U.S., it has remained relatively stable over the past 20 years, with women earning on average 82 percent of what men do. Getting to the finish line may be the hardest part.
Knowing who gets paid what is not the panacea that will take us there. Instead? Companies have to reshape attitudes around long working hours and penalties for time out to look after dependents. These are the enduring hurdles to overcome.
Reporting discrepancies is easy. Changing entrenched mindsets is much harder. As is acknowledging that gender stereotypes and discrimination are the wedges in the gap.
“Greater transparency in pay is associated with a narrower gender pay gap. But it is not the one silver bullet that will lead to pay equity,” said Rae Cooper, professor of gender, work and employment relations at the University of Sydney Business School, and director of the Gender Equality in Working Life Research Initiative. “We can’t stop at disclosure; it is one simple step for exposing inequalities, but strong and strategic action is needed to really make a difference.”
It’s a rallying call for organizations to dismantle what Cooper calls “segmentation and segregation” — where men still dominate in the most lucrative occupations and the most senior hierarchical roles, while women prevail in lower-paid, undervalued sectors and in less senior jobs — and the so-called “motherhood penalty” for females who take a step back due to childcare demands. Companies need to make it acceptable for both males and females to take a backseat as they share duties outside of work to narrow the difference in what they earn.
“This will stop women opting out, or being forced out, of the career path and will allow men to avoid hyper long hours and facing barriers to family life,” Cooper said.
The good news is that may be starting to happen. In the U.S., high-earning males are reducing their hours, which in theory should make way for women to move into better paying roles, especially if men shift to more home and childcare duties. It is early days, but the norm could be upended if punishing hours are no longer a prerequisite for demanding, high-paying jobs.
Reporting the pay gap is vital. A legislation change in Denmark that required firms to provide gender statistics found the gap declined by approximately two percentage points after the law was passed. But, the improvement was achieved primarily by slowing the wage growth for males, while there were no significant differences in female wage growth. That in itself is problematic and underscores the complexity of the debate.
We still have a long way to go. Wage transparency is just one factor in the fight for fair pay; Companies must also tackle entrenched cultural practices. The ball is in their court. Women have done their bit.
Andreea Papuc is a Bloomberg Opinion editor.
