Gender Pay Equity and Australian Listed Companies
ASX100 companies’ commitments and disclosures related to gender pay equity
About the report
Gender pay equity is achieved when women and men receive equal pay for work of equal or comparable value. A disparity between women and men’s pay is often referred to as the ‘gender pay gap’ or ‘gender pay inequity’. The gender pay gap refers to the difference in earnings between men and women, typically recorded as the difference between fulltime workers of different genders. In Australia today, the gender pay gap is 15.3% – more than in the UK (9.4%) but less than in the US (20%).
There are two fundamental causes of an observed gender pay gap: the first is a consequence of discrimination – either unconscious or conscious – leading to gender pay inequity, the second is an artefact of the composition of the workforce. A US Congressional report found that as much as 40 percent of the overall gender pay gap in the US may be due to discrimination. Compositional factors that contributed to the non-discrimination related portion of the gender pay gap highlighted in the report included:
- the under-representation of women in leadership positions
- the greater proportion of women working in lower-paying fields
- women being more likely than men to be the primary caregivers of other family members.
The Australasian Centre for Corporate Responsibility is a long-term investor in Australian listed companies. As an organisation that takes the position of a universal asset owner (one that holds most of the shares on a market) we have an interest in the impact better individual corporate conduct can have on the wider economy.
In our view, Australian company boards can and should act to address the gender pay gap because:
- it is the right thing to do
- discrimination is illegal, and though it can be very difficult to prove at law, allegations of discrimination can readily cause reputational damage
- the gender pay gap is a key indicator of how well a company is performing in terms of building a gender diverse workforce. Encouraging gender diversity is linked to higher financial returns.
Part 1 of the Report explains why gender pay equity is a material issue for Australian companies; it describes international norms and developments, Australian legislation and US shareholder resolutions.
Part 2 uses Australian Workplace Gender Equality Agency (WGEA) disclosures to assess 91 of the ASX Listed top 100 companies (9 companies were not subject to WGEA disclosure requirements). Companies were analysed on the following:
- existence of a formal policy or strategy on remuneration for employees
- existence of Gender Pay Equity Objectives in policy or strategy
- whether a Gender Pay Gap Analysis was conducted
- if a Gender Pay Gap Analysis was conducted, were actions taken as a result
- whether the company has a CEO or board member signed up to the WGEA Pay Equity Pledge
The research relies on the public disclosures made to the WGEA in the 2016-2017 reporting period. Information must be submitted to the WGEA between 1 April and 31 May each year covering the preceding 12 months period. Typically disclosures are made public later in the calendar year (around November/December). At the time of research, disclosures due to WGEA in May 2018 were not yet publicly available.
Key findings include:
- It is rare for a formal policy and/or formal strategy to include transparency around pay scales and/or salary bands. Only 15 companies disclose that their formal remuneration policy and/or strategy covers pay scale transparency.
- Companies have been analysing their payroll to determine if there are any remuneration gaps between women and men. The research found that 87 companies undertook a gender pay gap analysis (95%).
- All up, 80% of companies have been taking actions as a result of their gender remuneration gap analysis. The majority of these actions included identifying the cause/causes of pay gap/s, however, many companies highlighted a wide variety of actions taken.
- Companies that have not taken actions regarding gender pay equity analysis, or actions post-gender pay equity analyses often justify inaction by stating salaries are set by awards/industrial or workplace agreements. Companies also disclosed that no action was taken as ‘non-award employees are paid market rate’. These purported justifications ignore:
- the likely prevalence of discrimination;
- the role of company management in the negotiation of enterprise agreements
- and the significance of ‘by-level’ pay gaps, for example, where women and men progress through employment levels at different rates.
- The majority of companies are not making any public commitments to gender pay equity. Only 24% of the ASX100 listed companies have a CEO or board member signed onto the Gender Pay Equity Pledge.
Cochlear, BT Investment Group, BHP Billiton, ASX Limited and Bank of Queensland all highlighted best practice examples of actions taken to address gender pay equity that went beyond mandatory WGEA disclosures.
James Hardie Industries, Qube Holdings, Ramsay Health Care and TPG Telecom are the only companies out of the 91 disclosing companies that have not conducted a gender pay gap analysis.
For ASX Listed Companies:
- Ensure leadership involvement on gender pay equity issues from senior management and board of directors. This includes making a public commitment to gender pay equity, having a policy or strategy in place that addresses gender pay equity signed by senior management, and annually addressing and reporting on the findings of payroll analyses and other gender related auditing.
- Take tangible actions to reduce the gender pay gap during the employment process including recruitment, promotion and employment conditions.
- Set targets to reduce gender pay gaps at like-for-like and organisation wide levels.
- Conduct annual gender pay roll analyses and take actions as a result.
- Be transparent with staff with regard to gender pay equity issues. Implement pay scale transparency, inform staff of payroll analysis findings, and engage with employees to monitor understanding of policies as well as satisfaction with regards to gender pay equity issues.
- Encourage companies to adopt the outlined recommendations 1-5 above.
- Incorporate gender pay equity issues into investment due diligence practices, screening tools and corporate engagement and monitoring processes.
- Publish information regarding engagements with companies on Gender Pay Equity issues, including voting records on gender pay equity issues, where possible.
- Consider exiting business relationships where companies are failing to address gender pay equity issues within their operations and are unresponsive to engagement.
- Super funds seeking to reduce the gap between women and men’s superannuation by focusing on public policy (on average, women currently retire with 47% less super than men) should ensure their corporate advocacy as a shareholder aligns with their advocacy on policy.
For further information contact Brynn O’Brien 0423 951 316
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