Closing Australia's gender gap adds billions to economy
Analysis from Big Four accounting and advisory firm KPMG has revealed that the economic value of a more balanced workforce in Australia could unfold an annual economic benefit to GDP of up to $60 billion. Household consumption is likely to benefit in a similar manner from an improved gender balance.
At present, the Australian market suffers from discrepancies that are consistent with markets across the globe, namely imbalanced workforce participation, glass ceilings and unequal pay. KPMG reports that the average annual salary for women in Australia falls short of the men’s average by as much as $26,000, with few indications of the gap closing in the near future given that real wage growth in the country is considerably slow already.
Between 2006 and 2016, workforce participation in Australia amongst men steadily hovered between 80% and 85%, while the participation amongst women has peaked at less than 75%, although participation amongst women has been increasing steadily. Those in senior positions, however, are predominantly male.
Women still comprise less than 25% of private company boards in the country, while less than 17% of CEOs across the country are female. Although the overall scenario appears to be changing for the better in Australia, the rate of change remains moderate, and Australia lags behind countries such as New Zealand and Canada in terms of workforce participation.
According to KPMG, various stakeholders must take initiative towards accelerating change, if not for social equilibrium then for the substantial economic value that gender balance has to offer. Currently, more than 50% of university graduates in Australia are women, meaning that the major portion of Australia’s skilled population is female.
Those women who enter the workforce are then either subject to discrimination, or fall out of the workforce due to family or maternity pressures, translating into a substantial loss of economic value. KPMG paints this scenario as a loss on investment in the education and development of a skilled workforce.
Moreover, unequal pay for women pushes them to rely more on social welfare infrastructure and pension funds, which is a further strain on economic resources. Provided that a degree of balance is attained in terms of workforce participation and compensation, the economic benefit to Australia could be tremendous.
‘If the gap between Australia’s male and female workforce participation rates were halved, households would be better off by an estimated $140 billion over 20 years,’ reads the KPMG report. This translates to an additional $38 billion in household consumption each year over this period.
Meanwhile, the GDP would also stand to benefit from such a scenario. Australia’s GDP stands to grow an additional $60 billion each year if the discrepancy in participation rates is halved. The question then emerges of how to close this gap, to which KPMG responds with a list of recommendations that were made by a multi-party Senate report from 2016 that was resealed to promote economic security for women.
Quoting the report, some of these recommendations include: “Paying the superannuation guarantee on Commonwealth Paid Parental Leave and applying it to workers’ compensation payments; amending the Sex Discrimination Act to ensure employers are able to make higher superannuation payments for their female employees if they wish to do so; and reviewing the Fair Work Act to determine the effectiveness of Equal Remuneration orders in addressing gender pay equity, including a less adversarial consideration of the undervaluing of women’s work.”
Others measures include: “Amending the Sex Discrimination Act to include a positive duty on employers to reasonably accommodate the needs of workers who are pregnant and/or have family responsibilities; strengthening the ‘right to request’ provisions of the Fair Work Act by introducing a positive duty on employers to reasonably accommodate a request for flexible working arrangements; and a Productivity Commission inquiry into policy options to reduce work disincentives for second earners.”
