Why the move towards transparency will help shrink the gender pay gap

Why the move towards transparency will help shrink the pay gap

A shift is underway when it comes to the gender pay gap in Australia: opaque is on the out and transparency is creeping in.

This week two leading professional services firms, Ernst & Young and PwC, disclosed the pay gaps that exist between men and women in their respective organisations, for the first time.

“People have rightly been calling for professional services firms to disclose their partnership pay gap and we are proud to be the first Australian firm to do so today,” PwC chief executive Luke Sayers said on Tuesday. “Transparency around diversity is one of the key ways we can address the challenges we face and hold ourselves accountable to real change.”

PwC’s gender pay gap at a partnership level is 16 percent overall, which reflects the fact that there are more men holding more senior partnership roles than women.

The firm wide gender pay gap, including partners, is 12.3 percent and on a like for like role basis amongst PwC’s employees, the gender pay gap is 0.3 percent.

Ernst & Young was the second firm to reveal its pay gap on Tuesday, which is 14.9 percent at partner level and 10 percent firm wide.  

EY’s chief executive Tony Johnson told the Financial Review the pay gap at the partner level reflects the fact men hold more senior partner positions.  

“To continue to address this, we have a target of 30 per cent female partners by 2020 as well as a target of 30 per cent of our female leaders being in the top 30 per cent of highest earning partners, also by 2020,” Johnson said. “We are committed to equal pay for equal work and to driving change in this area.  We know we have more men as partners and as leaders, and we are continuously working to improve the representation of women across all levels of our business.”

At PwC among the policies introduced in the past three years to close the pay gap, is a 40/40/20 gender target for new partner admissions which has resulted in an increase in female partners from 17 per cent to 24 per cent.

There is also an ‘all roles flex policy’, which is why 85 percent of staff now working flexibly in some way and changes to the 18 week parental leave policy to enable all  parents, including foster parents, to take this leave in the way that best suits them: whether it’s in one block or working part time for an extended period of time.

The shift towards transparency follows the British government’s introduction, in 2017, of mandatory reporting of the pay gap in organisations that employ more than 250 people last year. The deadline for disclosure is the 4th April this year and around two-thirds of relevant employers have already complied.

It is a significant change because the historic lack of transparency around remuneration has long allowed the pay gap to flourish unchallenged. It has allowed the nebulous theory that the pay gap is myth to continue. The clarity that actual numbers deliver nips that in the bud and brings accountability to the table.

What gets counted gets counted: it is only once the pay gap is measured that it can be closed. (As Energy Australia showed last week, and Australia Post last year, it can be closed quickly.)

As more organisations move towards disclosure and not just reveal their gender pay gaps but introduce mechanisms to close it, it will become less tenable for other organisations to hide. On what grounds can leaders credibly deny the market, their employees, their clients, their stakeholders, information their competitors are openly releasing?

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