Here’s the big reason men are being paid more than women

Australia’s 16.2% gender pay gap can be attributed back to many factors, but outright sex discrimination is still the leading cause.

That’s according to a new study by KPMG Australia that looks at a range of factors contributing to the gap including educational attainment, experience and tenure, skills and time out of the workforce.  

Gender based discrimination is not only the leading cause of the pay gap, but one that’s contribution is actually increasing over time, rising from accounting for 35% of the gap in 2009 to 38% in 2016.

Another factor on the increase is career breaks (identified as being “years not in work”) which has increased from accounting for 9% of the gap in 2009 to 21% in 2016, marking a significant concern for the earnings potential of women who leave the workforce to have children.

However there’s some good news for those who work flexibly, with the proportion of the gap that can be attributed to part time work decreasing from 14% to 4%. The report authors say this reflects the fact the proportion of women falling into higher income brackets is on the rise – and this may reflect successful efforts by employers to ‘normalise’ flexible work. 

The second biggest contributor to the pay gap is industrial and occupational segmentation, which accounts for 30% of the gap and covers the influence of ‘traditional’ roles and industries for women and men. The proportion of men in higher paid sectors like mining and construction has grown, as has the proportion of women in lower paid sectors like healthcare and social assistance.

The report, She’s Price(d)less: The Economics of the Gender Pay Gap was prepared for the Diversity Council Australia (DCA) and the Workplace Gender Equality Agency (WGEA). It also includes a range of “tactical improvement opportunities” businesses of all sizes can use to address the problem (see below). It builds on a 2009 study by KPMG based on 2007 Household Income and Labour Dynamics in Australia (HILDA) survey, by using 2014 HILDA data.

The report shows just how complex the reasons behind the pay gap actually are – while also demonstrating some of the easy wins that can be identified for making progress in the short term. Addressing sex discrimination is one such area that doesn’t require major industrial or demographic shifts in order to promote change.

But no matter what its cause, WGEA director Libby Lyon’s says the pay gap is a reminder of the wasted potential occurring in Australia, while DCA CEO Lisa Annese says the report demonstrates the role business, government and the wide community have to play in tackling the problem.

Below are the eight factors identified by KPMG, and their % effect on the Pay Gap in 2016

1. Sex Discrimination: 38%
2. Years not working (interruptions): 21%
3. Industry segregation  index: 19%
4. Occupational segregation: 11%
5. Share in part time employment: 4%
6. Age (experience, proxied by age, years): 6%
7. Tenure with current employer (years): 1%
8. Share working in government or NGOs: 0.4%

So what can be done? The report authors share six possible steps

Know the numbers. It is crucial to first understand the quantum of the pay gap in the context of a particular business and industry, including an honest assessment of the cultural, environment and business behaviours and processes which may be contributing.

Leverage the lifecycle. Key phases of the employee lifecycle (e.g. recruiting, performance review, remuneration setting and reporting) provide an opportunity to consider how current business processes could be amended to drive great equality in pay outcomes.

The ‘caring conundrum’. A key focus area for workforce participation is the early to mid 30s period which often coincides with child bearing and rearing years. This is a critical juncture at which many women opt out of fulltime work, moving to part time roles. Businesses need a focus on how they can retain employees who take time out and ensure their return is sustainable. 


Train the team. The availability of on-the-job training initiatives provide critical access to skill development and the building of professional networks which can drive women’s greater participation and career progression.

Deal with the dollars. While remedying the processes going forward is critical to achieving pay equity, steps to redress remuneration-related gender bias which women have encountered in the past must be taken.

Change the culture. The right organisational culture is absolutely essential to driving out the behaviours that lead to the pay gap. It is critical to realise that intervention will be required to address the pay gap problem in a timely manner at an organisational and macro-economic level.