The Australian Government’s latest gender pay gap report revealed an uncomfortable truth: progress in closing the gap is painfully slow.
With only a 0.2% year-on-year improvement and three out of four employers still displaying a significant gap in favour of men, companies are now racing to understand the issue and determine how to address it before the deadline for next year’s Workplace Gender Equality Agency (WGEA) reporting at the end of May.
Publishing the data is a vital first step, but it has introduced a different kind of pressure – the pressure to take action. And here’s the challenge: highlighting the gap is one thing, but closing it is quite another.
Currently, businesses are confronted with what I refer to as the ‘gender-pay-action gap’ – the divide between recognising there’s a problem and genuinely addressing it.
Mary Wooldridge, the CEO of the WGEA, has made it clear that companies cannot take action without first understanding the factors behind their gender pay gaps. Too often, businesses resort to knee-jerk reactions, such as blanket pay rises for women, hiring quotas, or superficial diversity pledges, which don’t tackle the root cause. Without a structured approach, businesses risk making hasty decisions that fail to resolve the issue or, worse, exacerbate it.
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What Should Companies Be Doing Now?
With the reporting deadline approaching in May, companies must act strategically and quickly. Before making changes, they must conduct a clinical, fact-based analysis of their gender pay data. In some cases, doing nothing may be the right move if the data shows that external factors, rather than internal bias, are driving the gap.
A company’s gender pay gap isn’t a straightforward metric; it arises from various overlapping factors. Businesses recruit from diverse professional talent pools, including tech, marketing, and finance, with different forces affecting salary levels in each domain. These forces, termed ‘gender-pay-gap drivers,’ can be categorised into four groups:
1. Market Drivers – The Factors Beyond Your Control
Some disparities in pay arise from wider market realities. Salary rates vary according to supply and demand, and certain professions are significantly influenced by gender. For instance, the Australian Bureau of Statistics reports that 92% of pilots are male, whereas 77% of flight attendants are female.
Even if an airline hires fairly based on experience and merit, it will likely show a gender pay gap because of these structural industry imbalances. The key for companies is to determine their ‘market gender pay gap’ – the gap created by external market forces, and separate it from their ‘effective gender pay gap,’ which reflects internal biases.
Action to take now: Calculate your market gender pay gap. If your effective gap is close to zero, your company may not need to take further action on this front.
2. Diversity Drivers – Are You Hiring Fairly?
Hiring bias can distort gender representation in various roles, contributing to a broader pay gap. For instance, if a department’s talent pool typically reflects a 60-40 male-female split, but your business has appointed at an 80-20 ratio, it indicates a hiring bias that exacerbates the pay gap.
Action to take now: Compare your company’s hiring ratios within each job function to industry benchmarks. If there’s a significant gap, work with hiring managers to adjust recruitment strategies and attract a more balanced talent pool.
3. Seniority Drivers – Are Promotions Equitable?
Promotion bias is a major contributor to the gender pay gap. If men are consistently promoted to higher-paying leadership roles while women remain at lower levels, your company will inevitably experience a pay disparity.
The best way to assess this is to analyse pay quartiles within each department. If your tech team is 75% male, but its top pay quartile is 95% male, and the lowest pay quartile is 60% male, there’s a promotion bias.
Action to take now: Perform a seniority analysis across all departments. If a considerable gap is identified, implement succession planning and mentorship programs to enhance female representation in leadership roles.
4. Pay Equality Drivers – Are Salaries Fair for Equal Work?
Pay discrepancies can sometimes happen even among individuals in the same role and level of seniority. A single instance of a female employee earning less than her male counterpart might not indicate a systemic issue, but if this pattern is widespread across a pay quartile, it signals a red flag that requires attention.
Action to take now: Conduct a pay audit, analyse recent pay raises across genders, and work with department heads to adjust compensation structures where necessary.
Businesses can no longer afford to treat gender pay gap reporting as a compliance exercise. The data is available, and both employees and customers expect companies to take meaningful action. But action doesn’t mean reacting blindly – it means diagnosing the right problems and implementing targeted, data-driven solutions.
With just a few months left before the WGEA deadline, companies need to act quickly but also smartly. Companies that embrace this challenge and develop structured, fact-based strategies will not only reduce their gender pay gap but also build more equitable, high-performing workplaces.
Those who don’t? They’ll soon realise that inaction is no longer an option.
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