Discretionary payments, leadership disparity widen gender pay gap

The gender pay gap is down 0.7 percentage points (21.1 per cent) – for every $1 that men earn, women earn 78.9¢, a $28,356 annual difference.

New findings revealed that the gender pay gap has tightened by 0.7 percentage points. In addition to these findings, all states and territories in Australia have been found to have reduced their gender pay gaps, with Western Australia having the highest gender pay gap (28.8 per cent) and Tasmania having the smallest gender pay gap (10.6 per cent).

For its report, Australia’s Gender Equality Scorecard for 2024–2025, the Workplace Gender Equality Agency (WGEA) explored gender equality, revealing the factors that surrounded the reduction of the gender pay gap from 21.8 per cent last year to 21.1 per cent this year.

Pay disparities

Despite this drop, the report found that one in two (50 per cent) of employers have a gender pay gap above 11.2 per cent, while only 22.5 per cent of employers have a gender pay gap in the “target range” (-5 per cent to +5 per cent). Its findings showed that although 68 per cent of employers conducted a gender pay gap analysis, 75 per cent took action on its results.

Men are 1.8 times more likely to be in the highest-earning quartile compared to women, while women are 1.4 times more likely to be in the lowest-earning quartile compared to men, WGEA data found.

Its data also revealed that only 6.7 per cent of employers have a gender pay gap that is in favour of women, while a whopping 70.8 per cent of employers have a gender pay gap that is in favour of men; while 55 per cent of employers reduced their average total remuneration gender pay gap.

Leadership roles

In terms of senior roles, women only make up 22 per cent of chief executives (unchanged over 12 months). Additionally, the data revealed that 39 per cent of key management personnel (2 percentage point increase) and 43 per cent of managers are women (1 percentage point increase).

Further, nearly one in four (24 per cent) of boards have no women. Additionally, one in three (33 per cent) women hold board seats (1 percentage point increase), and 21 per cent of chair roles (1 percentage point increase).

“Organisations with gender-balanced leadership are more likely to outperform their peers in terms of company value and productivity and will reduce their gender pay gap,” the report said.

Discretionary payments

The gender pay gap in chief executive salaries has increased by 1.2 percentage points, to 26.2 per cent in the past 12 months, the data revealed.

Regarding discretionary payments (bonuses, allowances, and overtime payments), men earned 60 per cent more on average, the report revealed. These payments make up a “considerably larger percentage of total remuneration” for men (12 per cent) compared to for women (6 per cent).

Revealingly, over the year, women chief executives earned $83,493 less on average annually than men – when superannuation and discretionary payments are considered, this difference increased to $185,335.

“WGEA encourages all employers to undertake a comprehensive gender pay gap analysis and as part of that review performance pay structures and access to overtime, to ensure they are fair and accessible for everyone,” said Mary Wooldridge (pictured), chief executive at WGEA.

“This should be an annual process, even if salaries are set by awards or market rates.”

Key opportunities

The report unveiled key opportunities for employers to ensure workplace safety, improve gender balance in the organisation and on boards, and dismantle stereotypes about leadership, work and caring.

Wooldridge said that policies and actions taken by employers to break down gender norms about leadership and caring responsibilities, and employee safety, can lead to reductions in the pay gap and “modest improvements towards gender balance in leadership roles”.

“Employers are shifting the dial towards fairness, which is helping to close the gender pay gap,” she added.