The gender pay gap is a complex issue, and the solutions to close it are equally complex.
The differences in education, the occupations that men and women work in, or the fact that women were more likely to work part-time only explains around 20% of the gender pay gap. The majority (80%) of the gender pay gap is driven by harder to measure factors like conscious and unconscious bias and differences in choices and behaviours.
While some of the drivers can be addressed at a national level, many are best addressed at an organisational and sector level.
Organisation-level drivers of the gender pay gap
- Make up of senior managers: Having more senior managers that are men will increase the gender pay gap.
- Starting salary and pay increase settings: Salary offers may vary due to negotiation differences, manager discretion, or biased hiring practices.
- Performance and promotion: Performance evaluation and promotion practices that are not objective and allow for a high degree of discretion, leading to gender bias.
- Part-time and flexible work arrangements: Higher paying or more senior roles usually offer less part-time or flexible work arrangements. This is more likely to impact people with caring responsibilities, which tend to be women.
- Project assignments: Gender bias when assigning projects, opportunities for growth, or challenging tasks can affect eligibility for bonuses, merit-based raises, or promotions.
- Bonus and incentive structure: Different bonus or incentive structures that only higher paying or more senior roles are eligible for, which can negatively impact women who are more likely to be in lower paying roles.
- Workplace culture: A workplace culture with conscious and unconscious gender bias, impacting decision making in areas such as hiring, performance reviews, and promotions.
- Leave policies: Having unclear, inflexible, or no parental and dependent leave policies, which fosters an environment that doesn’t support to reach employee’s to reach their full earning potential.
Wider drivers of the gender pay gap
- Undervaluing women’s work: Jobs and roles typically held by women, such as caregiving, education, and administrative support are often undervalued and paid less than male-dominated roles that require similar levels of skill, education, or responsibility.
- Occupational segregation: Men and women tend to cluster in separate industries and occupations, and women-dominated occupations are often lower paid than those dominated by men. This segregation is shaped by historic social expectations and bias that steer men and women into different career paths.
- Unpaid work: Women tend to take on more unpaid work, such as caring responsibilities including at home or in their community, which is often not recognised as valuable experience.
- Career gaps: Women tend to take longer breaks in their employment due to unpaid work and responsibilities, such as raising children or caring for elderly or ill relatives. This may lead to slower career and pay progression compared to their colleagues or industry.
- Conscious and unconscious bias: Pay, hiring, and progression practices and policies can be inherently bias if there is manager discretion. This can lead to biased hiring practices, limited access to high-paying roles and promotions, and unequal bonuses and benefits.
- “Motherhood penalty”: Mothers often earn less after having children compared to people who do not have children. Mothers are less likely to be promoted due to their parental status and perceived priorities.
- Negotiating salaries: Women are less likely to negotiate for a higher salary upon entry into a job due to fear of backlash, lower salary expectations, lack of information and confidence, and concerns about relational dynamics.
- Part-time and flexible work: Women are more likely to work part-time and require flexible work options, often to balance unpaid work and responsibilities.
- Behaviours and social norms: Deeply held societal attitudes and beliefs about the types of work that are appropriate for men and women, the relative importance of occupations where men or women dominate, and the allocation of unpaid work, like caring responsibilities, voluntary and community work, sport representation.