Indigenous workers earn 16% less: What can HR do?

With findings from a recent and landmark study revealing the extent to which Indigenous workers face pay disparity, employers are being urged to consider the cultural and structural barriers that contribute.

Indigenous workers earn approximately 84¢ for every dollar earned by non-Indigenous workers, according to the landmark and Indigenous-led report conducted by the UTS Centre for Indigenous People and Work (CIPW).

As revealed in Toward Indigenous Pay Parity report, this averages to approximately $15,000 less in savings for an individual, and according to CIPW director Professor Nareen Young, the disparity is costing Aboriginal Torres Strait Islander workers billions in wages every year.

She said: “For individual workers, it’s comparable to losing a lifetime of super payments, or working two months of each year for free.

“Lower average wages mean lower lifetime earnings, weaker super outcomes, and less intergenerational economic security for Aboriginal and Torres Strait Islander people. The repercussions flow onto families, communities and the wider community.”

The gaps are particularly noticeable within certain groups, with Aboriginal and Torres Strait Islander women facing up to a 21 per cent pay gap and high-ranking workers also seeing gaps between 15 to 19 per cent.

Young noted that the findings disprove previous justifications, such as age, education, hours and experience.

“What remains is the structural racism that keeps Indigenous workers’ wages low, limits their career progression, and compounds disadvantage across their working lives.”

IBA chief economist Dr Siddharth Shirodkar said: “The report’s findings will come as no surprise to many Indigenous Australians but critically provide an initial benchmark that quantifies the lived experience of many.

“The Aboriginal and Torres Strait Islander population is younger and growing faster than the rest of the country so, if nothing is done now, a growing share of Australia’s future workforce will walk into a labour market that underpays it.”

According to Young, structural racism remains pervasive and entrenched within the “ordinary machinery of an organisation”.

She said: “Our research traces four pathways, starting with racial bias in recruitment, which lowers starting salaries, the impacts of which compound across a working life. As careers go on, bias in performance assessment limits pay increases, and bias in promotion processes limits progression into higher paid roles.

“This bias extends to discretionary decisions, affecting bonuses, pay review and salary negotiations too.”

Exercising positive duty, Young said, plays a critical role in mitigating the factors that impact disparity and inequality by shifting the legal responsibility from responding to complaints to preventing harm.

She said: “Under racial discrimination law as it stands, the onus sits with the person who has been discriminated against. They have to notice it, name it and make a complaint, usually against an employer with far more power and resources than they have.

“But employers do not need to wait for our government to act.

“You can start today by finding where discretion enters your pay decisions and putting structure around it. You can audit starting salaries by Indigenous status and review performance and promotion outcomes for patterns. Set out clearly what behaviour is unacceptable and act on it rather than leaving Aboriginal and Torres Strait Islander staff to raise it themselves and carry the consequences.”

HR professionals themselves exhibit a strong Indigenous pay gap of 18 per cent and low levels of racial literacy, revealing that the issue starts in the position designed to administer Australian pay systems.

In this way, Young encouraged employers to consider racial literacy the same way as any other professional competency that can be built and qualified over time.

However, she urged employers against putting the onus on Indigenous staff, as this only translates to more unpaid and exhausting work. She referenced evidence-based resources, such as that of the Victorian Equal Opportunity and Human Rights Commission's racial literacy guide and the Australian Public Service Cultural Capability Framework.

As highlighted by Shirodkar, the report also recommended that Indigenous employment data be part of that already sent to the Workplace Gender Equality Agency.

He said: “Ideally it would begin with workforce profile data and broaden over time to remuneration, intersectional profile data and workforce management statistics.”

Noting positive duty as proscribed in the Sex Discrimination Act, which requires employers to take reasonable measures to eliminate sex discrimination and harassment, Young said the centre recommended the Racial Discrimination Act be reformed in the same way.

She said: “Racism at work deserves the same seriousness the law now gives sexism.”

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