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1.1% gender pay gap drop is ‘nothing to celebrate’

WGEA has released its annual Gender Equality Scorecard for 2023, which comes before the release of specific gender pay gap data within law firms early next year.

user iconLauren Croft 05 December 2023 Big Law
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Last week, the Workplace Gender Equality Agency (WGEA) released its annual update on the state of workplace gender equality, showing that the average total remuneration gender pay gap has dropped to 21.7 per cent in 2023. That’s a decrease of 1.1 percentage points (from 22.8 per cent in 2022) – the second largest single year drop since WGEA started collecting employer data in 2014 – and means that on average, for every $1 men earn in Australia, women earn 78 cents.

The Gender Equality Scorecard 202223 is based on the results of WGEA’s largest ever employer census, covering 4.82 million Australian employees.

WGEA CEO Mary Wooldridge said the results show that while slow, there is momentum for change in Australian workplaces – the proportion of women managers is now at 42 per cent (up from 41 per cent last year).

 
 

“Increased discussion and debate around gender equality, a tight labour market and impending legislative reform have helped drive action on workplace gender equality over the last year,” she said.

“We see an increase in the proportion of women in management and at the upper pay quartiles, and we also see the proportion of women being promoted and appointed at manager level is higher than the proportion of women managers overall. As this trend continues, we can expect to see the gender pay gap continue to fall.”

This comes after data published by WGEA in July this year showed that women in Australia work for 56 days after the end of the financial year to earn the same as men, with WGEA making 25 August Equal Pay Day for 2023.

However, the Gender Equality Scorecard also revealed that, for the first time, the proportion of employees working in a predominantly single-gender industry has reduced to half the workforce, with the proportion of employees in mixed-gender industries reaching 50 per cent, something the agency said is an important milestone for workplace gender equality.

Despite this, Ms Wooldridge said there is still much, much more work to be done.

“The management opportunities for part-time employees are negligible; the number of men taking paid primary carer parental leave has barely shifted; and the number of women in CEO roles and on boards has stagnated,” she said.

“If we want real change, we need employers to take bold action. We need employers to look across the drivers of gender inequality and be imaginative in their solutions. Publishing gender pay gaps requires employers to understand their unique challenges, develop a purpose-built approach to gender equality and then take intentional and sustained action.”

Despite female solicitors continuing to outnumber their male counterparts and dominating in every area of the legal profession, the gender pay gap still exists in law, with many indications that women are leaving the profession earlier than men, who make up the majority of leaders within the profession.

Female lawyers are also more likely to face the “motherhood penalty” and be disproportionately impacted by inflation, with some saying the traditional nine-to-five is “redundant” and “sexist”. Research from Diversity Council Australia (DCA) this year also pointed to a “gender flex gap” of 15 per cent.

Samantha Mangwana, byrne·dean strategy lead, said the 21.7 per cent pay gap is “nothing to celebrate” and a “colossal earnings gap”.

“Many large law firms are included in this cohort – and we know that most continue to have huge challenges with the gender pay gap, not least because most are still majority male dominated at senior (and highest earning) levels, with only very rare exceptions,” she told Lawyers Weekly.

“Apart from the hierarchical issue, another feature of law firm working we often still see is gender imbalance in work types, with lower paid roles (eg in admin and reception) often tending to be female, and senior partners often male. Looking deeper, at bonuses and profit share, there may also be a further imbalance in remuneration as between lawyers, where there continues to be a degree of gender imbalance in practice areas.”

While Victorian Bar president Georgina Schoff noted that the decline in the gap is a “positive development”, the gap remains significant.

“The pay gap remains significant both generally and for professionals, at 18.1 per cent,” she said.

“While the WGEA report does not include figures for barristers (as it is employer-provided data), the figures remind us that the gender pay gap continues for legal professionals including barristers.”

Firms to publish gender pay gap data in 2024

Early next year, WGEA will begin to publish the individual pay gap statistics at different employers, after the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Act 2023 passed this year. Companies have been required to submit their gender pay gap data to WGEA since 2012, but the body has only published anonymous information about industry sectors as opposed to specific individual companies.

Sommer Nisbet, general manager and solutions director at TDC Global, recently told HR Leader that discussion is crucial to influencing change.

“There’s been a longstanding taboo around discussing salaries in the workplace. Cultural norms, assumptions about ‘winners’ and ‘losers’ in pay discussions, and the slow alignment of workplaces with principles of equity and inclusivity have all played a part. However, transparency on this front will be instrumental in reducing gender pay gaps,” she said.

“The impending changes to the Workplace Gender Equality Act signify a significant shift in Australia’s workplace culture. For the first time, pay will be out in the open, ushering in a new dawn of transparency that organisations need to prepare for. While this change may seem daunting, businesses must realise that it’s a chance for them to improve, not merely a challenge to overcome.”

All law firms with 100 staff or more will be required to comply – and staff will then know the size of the gender pay gap, what the firm says is the reason for this and what they’re going to do about it. Global firms with a presence in Australia have already published data in the UK, after similar laws came into effect in 2018.

“When this happened in the UK in 2018, it is no exaggeration to describe it as explosive. For the first time, many individuals knew the pay gap figures at their place of work – and the gender pay gap came as a shock. This was very much the case in law firms, where the perception that pay was relatively closely linked to billings was suddenly cast into doubt,” Ms Mangwana explained.

“Firms were given the opportunity to publish a commentary to explain their pay gap figures and what their plan of action was to address it. This was closely reported on by the legal press. The result of this thought has been seen as a success, and part of the rationale for the introduction of the public reporting regime here. The UK pay gap has not closed by any means. But over this time, it has dropped by approximately 4 per cent.”

WGEA will publish this data in waves over the course of January or February next year – and Ms Mangwana emphasised that Australian law firms will need to be prepared.

“We are expecting the first release to be in January or February 2024 – and these figures will be (i) the median number, (ii) the gender composition of the workforce and (iii) average remuneration per quartile. The mean average number however will not be published until later in the year. The significance of this is that the average may be skewed by the odd very high earning female, but the median is likely to show the more typical reality on the ground. And, in my experience, working in the UK when this hit there, it was the median pay gap figure which caused the most fuss in the UK,” she said.

“Thought should be given by law firms now about how to prepare for the interest this will generate, including communications to staff and the market. However, the real key here is not simply viewing this through a communications lens, but strategically – thought must now be given to each factor impacting the gender pay gap in the legal profession and how to resolve it.”