On 8 February 2023, the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 (the Bill) was introduced into Federal Parliament. This is a continuation of the Federal Government's efforts to formalise into law commitments made at 2022’s Jobs and Skills Summit to address the Gender Pay Gap (GPG).
What changes are being proposed?
The Bill proposes to extend the requirement for all organisations with more than 100 employees, to report their overall GPG data (calculated as the difference between women and men's average weekly, full time equivalent earnings, expressed as a percentage of men's earnings) to the Workplace Gender Equality Agency (WGEA). As it stands, reporting this information was only mandatory for ASX 100 organisations.
In another change, the Bill proposes that, for the first time, GPG information will be publicly disclosed on the WGEA website. This follows legislative changes made last October, when the Government introduced their Secure Jobs, Better Pay Bill into the Lower House, which included provisions to promote pay transparency and outlaw pay secrecy clauses.
Together, these legislative changes aim to create more transparency about the gender pay gap, marking a positive step towards closing Australia’s GPG which currently stands at 13.3%.1
How might your organisation be impacted?
PwC published guidance late last year on how employers might prepare for these proposed changes, and the value of understanding and addressing their gender pay gaps. Key impacts to consider include:
- Winning the war for talent - PwC’s Future of Work Outlook 2023 highlights the increasing pressure on employers by their employees to play a role in addressing ESG concerns such as equity and inclusion. Previous PwC research also tells us that brand (including ESG reputation) and experience (including diversity and inclusion) rank among the top six things that workers value from their employers. Organisations who don’t get this right risk losing out on key talent.
- Meeting mounting public pressure and community expectations - the public reporting of GPG information would empower stakeholders such as investors, customers, service users, prospective employees and others to easily access an organisation’s pay gap position and compare this to industry competitors. This would likely place additional pressure on organisations to take meaningful action to minimise pay gaps to ensure they continue to meet growing community expectations.
- Managing reputational risks - organisations who failed to comply with these proposed reporting requirements risk being named publicly and placed on WGEA’s Non-compliant organisations list, which lists employers who have not met their obligations, or have not met WGEA’s minimum standards to show commitment to gender equality.
What further can be done to foster pay equality?
Increased GPG transparency requirements are a welcome change and, beyond gender, it presents further opportunities to assess pay gaps from a holistic perspective, including conducting analyses across additional diversity dimensions such as those from diverse racial and cultural backgrounds, members of the LGBTIQ+ community and people with disability.
Lessons from the UK highlight that pay gaps exist for these groups too, and that women who are also members of these groups often experience exacerbated pay gaps.2 Adequate and consistent data collection across different diversity demographics remains a key challenge in Australia, however investing in these processes is critical for organisations seeking to reduce their pay gaps and demonstrate their commitment to pay equality.
As part of the PwC Australia Transparency Report FY22, PwC Australia began reporting its pay gap amongst employees of a non-European diverse cultural background (DCB), identifying a pay gap of 18% amongst employees, and a gap of 21% amongst the partnership, which is higher than the gaps existing between men and women (7.5% amongst employees and 16% for Partners), highlighting the crucial need to consider intersectionality when assessing pay gap data and D&I initiatives.
So, what next?
Given the proposed new reporting requirements, all employers should consider whether they have a firm grasp of the WGEA reporting requirements, and whether they currently have the right systems/ reporting in place to accurately calculate and understand their pay gap to satisfy these requirements.
Taking a holistic approach is key to identifying and taking meaningful action to minimise the GPG. Leadership should commit to working together with enabling functions (such as HR and Payroll) and their wider staff to understand the factors that exacerbate the gap (such as unequal sharing of caregiving responsibilities, discrimination, bias, and occupational segregation) and take steps to address these factors through inclusion initiatives informed by robust reporting and data-driven insights.
