Short-change women and you short-change the world: Why we should all care more about the gender pay gap in Australia
Australia, like the rest of the developed world, has a persistent gender pay gap. The size of that gap depends on how you measure it, but it’s safe to say that it is between 15.3% and 22.4%. That means that the average woman working full time receives between 15 to 22 percent less than the average man.
The gender pay gap exists within every industry, and across every role type. Try any excuse you can think of, I’ll wager I can find a study to show that the gender pay gap remains once that excuse is taken into account.
It doesn’t really matter why this gap exists (although there is loads of research that is readily available if you want to dig into this question).
What matters is that this gap is costing Australian women dearly today, and costing all of us in our retirement.
Short-changing women today short-changes their retirement tomorrow
The gender pay gap means that working women earn less than working men.
That problem is amplified because our superannuation system is structured so that we contribute a portion of our earnings to our retirement. When women earn less over their working lives, they have less to retire with. An average 47% less to be precise.
Women also live longer than men. Less money, but with more time to make it last, is a disastrous combination. When you put these two things together it should come as no surprise that 40% of single retired women in Australia are living in poverty.
Short-changing women short-changes us all
If a generation of poverty-stricken grandmas isn’t enough to make us stop and think, then maybe we should care about the impact that the gender pay gap is having on OUR retirement.
Companies with more gender diverse workforces generally outperform those with less. McKinsey & Co found that companies in the top quartile of gender diversity were 15 percent more likely to have financial returns above their national industry median.
**Companies in the top quartile of gender diversity are 15 percent more likely to have financial returns above their national industry median. **
The take home message is companies with less diverse workforces make less money, and companies with persistent gender pay gaps have less diverse workforces. Makes sense – no one wants to feel that their work isn’t valued properly.
Who owns these companies that don’t have gender diverse workforces and perform more poorly? Everyday Australians, through super.
Superannuation funds own just under half of Australia’s stock market, and a fair whack of unlisted companies as well. By failing to address their gender pay gap, Australian companies are leaving money on the table that would otherwise go to their investors – including your super fund.
It’s time for change
Future Super has supported research into gender pay equity by corporate responsibility analysts at the Centre for Australian Ethical Research (CAER) and shareholder advocacy NGO, the Australasian Centre for Corporate Responsibility (ACCR).
Released today, the report ‘Gender pay equity and Australian listed companies’ ranks ASX 100 companies on how they identify and address gender-based pay discrimination.
While Australian companies are starting to take steps in the right direction, Australia lags well behind other jurisdictions which have strict requirements for companies to report and address gender pay inequities.
The report’s lead researcher, Nina Haysler of CAER, observed:
“__The bar for reporting requirements related to Australian employees and gender pay equity is minimal...companies are not even required to publicly publish a quantitative figure demonstrating their gender pay gap. In contrast, under the UK reporting requirement companies must disclose quantitative gender pay gap figures in six different formats.”
Given the impact on investment returns that flow from lack of diversity, this research equips Australian institutional investors with a solid basis upon which to ramp up efforts to eliminate the gender pay gap.
How does the Future Super portfolio stack up on gender pay equity?
We were happy to see that two of the companies we invest in – ASX Ltd and Bank of Queensland – are featured as leaders in addressing their gender pay gap among the ASX 100.
We were also pleased that our rigorous ethical screening process has limited our portfolio’s exposure to gender pay equity laggards. We tend to find that companies that are good on environmental and social issues often also consider metrics like gender pay equity.
Despite this work, the report has uncovered companies in our portfolio that could do better on gender pay equity.
Of the 13 companies that undertook a gender pay gap analysis but then took no actions afterward, 5 of these are within the Future Super portfolio: Ansell, Brambles, CSL, Medibank, and Xero.
Of the 24 companies that have remuneration policies that don’t include specific gender pay equity objectives, 5 are in the Future Super portfolio: Cochlear, CSL, Orora, Ramsay Healthcare, and Xero.
Cochlear is an interesting case – despite not having a remuneration policy that addresses gender equity, they are the only ASX 100 company that has disclosed its gender pay gap. At just 2%, Cochlear is well ahead of the industry average.
Future Super has successfully used our status as a shareholder to lobby for companies to address diversity at the leadership level in the past, and earlier this year we announced our decision to divest from large Australian listed companies with all male boards. This research will enable us to take the next step as an advocate for our members – as investors and employees of these companies.
Showcasing “what good looks like”
At Future Super, we strive to be a model employer for our own incredible team – for example, our superannuation policies are designed to close the superannuation gap for women on our team by the time that they retire.
Despite being well shy of the 100 employee threshold for mandatory reporting, we have also undertaken our own gender pay gap analysis (overall and by-level) and shared the results with our team.
Our Board and Management Team have committed to targets to reduce our pay gap, including:
Clarifying our internal staffing levels and the salary bands within each (not easy to do in a small team!) and making several immediate adjustments where necessary;
Addressing the gender composition of our leadership team and obliterate our gender pay gap within two years;
Reviewing our policies and recruitment approach to encourage a diverse pool of candidates to apply for the great opportunities we have to work in finance and technology; and
Providing training and mentoring to our emerging leaders to support them on their leadership journey.
We are excited to be at the forefront of addressing gender-related workplace discrimination – by supporting the ‘Gender pay equity and Australian listed companies’ report, as an employer, as an advocate for our members, and as an investor.