Despite impressive progress over the years, women still face longstanding challenges in their pursuit of equality. While by no means the only issue, the gender pay gap is a key driver of inequality and inequity, profoundly undermining the wellbeing of many Australian women.
ARTICLE
Why the gender pay gap is about more than just money
10 March 2023
3 min read
3 min read
This year the UN Women Australia’s International Women’s Day theme is ‘Cracking the Code: Innovation for a gender equal future’. This theme highlights the part that innovative ideas and new technologies can play in progressing towards gender equity and equality. Let’s look at how gender inequity can affect physical, mental and financial wellbeing, and how we can bring about change.
The gender pay gap
Australia’s gender pay gap in 2022 was 22.8% – the same as in 2021*
*According to the Workplace Gender Equality Agency
Some factors that affect female income:
- Women are more likely to have fragmented work patterns, often due to taking primary responsibility for family care.
- Fewer women occupy senior executive and board level positions.
- Women make up a majority of part-time and casual workers, in generally lower paid positions.
- More women work in administrative roles, community services and sales, which historically pay less than male-dominated occupations.
- Women are more strongly represented in the ‘sandwich’ generation – those people who have families at an older age, who are then tasked with taking care of children while also caring for ageing parents.
How inequality erodes women’s financial wellbeing
The gender pay gap isn’t simply a case of women being paid less than men across the board. Many factors make up this imbalance and create subsequent financial challenges for women.
In the short term, the factors that contribute to the gender pay gap can result in less immediate income. Decreased earnings, when compared with male incomes, can reduce savings, make it harder to meet expenses and, ultimately, mean a less comfortable lifestyle for women and their families.
In the long term, the gender pay gap can arguably have a more devastating financial effect. It can result in less superannuation being saved, potentially creating a delayed or less comfortable retirement. On average, women also typically retire earlier and live longer than men. Less super and a longer retirement can lead to financial burdens in what should be a person’s golden years.
23.1%
The gap in superannuation balances between men and women as they approach retirement*
The gap in superannuation balances between men and women as they approach retirement*
*According to the latest Australian Tax Office figures, Oct 2022
The link between inequality and mental health
The gender pay gap can also have a significant effect on women’s mental health, with many often experiencing:
- Uncertainty about paying bills, covering expenses and supporting a family – all of which can cause immediate stress.
- Long-term anxiety about future finances and retirement – particularly if women feel they aren’t saving or putting away enough super.
- Feelings of lesser worth and injustice – due to earning less than their male peers.
- Pressure to return to work earlier than desired after pregnancy – due to financial necessity, creating separation anxiety and concern for their child’s wellbeing.
How inequality takes its toll physically
The effects of financial inequality can increase the risk of poor physical health in women. As explored in our latest Financial Wellbeing paper, financial stress can lead people to:
- Delay medical treatment due to out-of-pocket costs, even if they are badly injured. This can exacerbate injuries, increasing their severity and the potential for more extensive treatment later in life.
- Return to work sooner than advised after injury, illness or pregnancy. Being unable to fully recover can lead to further injury.
How do we close the gap?
While campaigning can help raise awareness of the gender pay gap, much of the responsibility to close it ultimately falls onto employers.
Employers can play their part by:
- Conducting a pay gap analysis – review, address and improve pay equity within their own organisation.
- Promoting women into leadership – design roles that give more women the opportunity to lead.
- Creating a flexible working environment – change the standard working arrangement to better accommodate employee commitments outside of work, including part-time roles.
- Reviewing their paid parental leave policy – create a gender-neutral policy and encourage more men to take parental leave.
- Reviewing recruitment inclusivity practices – consider whether application processes, interview invitations and styles, and evaluation criteria are excluding individuals based on gender and age (as well as other intersectional biases such as race, ethnicity and disability).
The actions listed above may be the most effective way to close the gender pay gap, but there are also steps women can take to manage and improve their own financial position. While gender-based discrepancies need to be addressed, they do highlight the importance of women having a plan in place to strengthen and protect their future.
Some steps that women can take to help make a difference include:
Some steps that women can take to help make a difference include:
- Carrying out research – check your salary against the industry standard to ensure you are being paid fairly. You can also check the WGEA website for employer gender pay gap reports.
- Sorting super – can you afford to make additional contributions? Do you have multiple funds? Also check to see how much you are paying in fees and if this can be reduced.
- Speaking to an expert for help – advice from a financial planner can help identify areas where you can strengthen your financial position. This can protect your future and give you greater peace of mind.
Check out our financial planning tips for women at every age here.
Talking to a financial planner can help you understand your situation and make confident financial decisions (big or small) so you can get the most out of life.
Disclaimer:
Copyright © 2023 AIA Financial Services Pty Limited (ABN 68 008 540 252, AFSL 231109), trading as AIA Financial Wellbeing. All rights reserved. This information is current at the date of this publication and is subject to change. This provides general information only, without taking into account factors like the objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, health, medical, nutritional or other advice. Before acting on the information in this publication, individuals should consider its appropriateness having regard to such factors.
Copyright © 2023 AIA Financial Services Pty Limited (ABN 68 008 540 252, AFSL 231109), trading as AIA Financial Wellbeing. All rights reserved. This information is current at the date of this publication and is subject to change. This provides general information only, without taking into account factors like the objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, health, medical, nutritional or other advice. Before acting on the information in this publication, individuals should consider its appropriateness having regard to such factors.
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