The truth about measuring the gender pay gap

When is the gender pay gap, the correct gender pay gap?

Australia seems to lack consistency when it comes to reporting the difference between what men and women are paid - that is, the gender pay gap.

Often the underlying figures and methodologies are not well explained.

As it stands, the data most often used to reflect the national gender pay gap is based on average weekly full-time earnings data from the Australian Bureau of Statistics.

From this we get a 2016 gender pay gap of 16 per cent.

This figure comes from a sample of about 5700 employers, designed to represent 8 million full-time workers, of which only 2.9 million are women.

While the ABS does not produce its own gender pay gap, it's easy to calculate from its figures. The 16 per cent gap is recognised by the Workplace Gender Equality Agency and is also used in the Financy Women's Index.

But it's not the same figure reported globally by the Organisation for Economic Co-operation and Development, which has Australia's latest gender pay gap at 15.4 per cent, based on 2014 data.

The difference comes from the fact that OECD uses the latest available median data and they take non-managerial adult ordinary times hours from the ABS.

Why? Because the OECD likes medians - the middle point - more than averages. The median tends to be closer to typical, while averages can be distorted by outliers.

However, most management positions in Australia are held by men across most industries. This means the data is skewed by a concentration of women in non-management roles, and the absence of higher earning workers in management or top level roles.

WGEA on the other hand, also promotes another gender pay gap figure on the front page of its website that stands at 23.1 per cent.

This is based on its own research from more than 12,000 organisations and 4 million employees, which is less than half the number of people in the ABS figures.

WGEA says it produces its own gender pay gap figure because the ABS data does not cover total remuneration.

"The agency uses our own data, based on non-public sector organisations with 100 or more employees, to calculate gender pay gaps using base salary data and data for total remuneration," says Andrew McMahon, executive manager of research and analytics at WGEA.

"The advantage of the agency's data is that it allows us to look at the gender pay gap when discretionary pay, such as bonuses and allowances, are included. When these payments are included, we see the gender pay gap in favour of men increase to 23.1 per cent."

For about a decade, Australia's national gender pay gap based on average full-time weekly earnings has been sitting in the range of 16 to 18 per cent in favour of men.

The latest 16 per cent figure is the lowest it's been over this period, but the best result was in 2004, when it fell to 14 per cent.

ABS experts suggest this is because wages took off with the mining boom and the gap expanded as more men took to the industry.

Even today, more than eight out of 10 people working in mining are men.

Mining is Australia's highest paying sector. The average advertised wage for people working in mining is about $115,000, according to 2016 data obtained by jobs website SEEK.

By contrast, health and education, which are female-dominated, pay an average of $88,000 and $78,000, respectively.

Bianca Hartge-Hazelman is the founding editor of women's money website financy.com.au.

The story The truth about measuring the gender pay gap first appeared on The Sydney Morning Herald.

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