Pay equity is a big problem in small businesses

The gender pay gap is stuck at 17.5%. Want to find out what you could earn as a man doing the same job? Calculate what you could earn below.

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Equal Pay Day is held each year to illustrate the pay gap between men and women. In 2013 with the gender pay gap at 17.5%, on average women have to work an extra 64 days to earn the same amount of pay as the average man. So, add 64 days to the start of the financial year (July 1) and in 2013, in Australia, Equal Pay Day falls on Tuesday 3rd September.

While there have been significant advances around gender pay equity and women’s workforce participation in many large firms of Australia we know little about the situation in small to medium sized enterprises.

Large firms with 100 or more employees are required to report to the Workplace Gender Equality Agency (WGEA) on their progress towards the elimination of discrimination and their contribution to workplace gender equality. Under the new Workplace Gender Equality Act the WGEA is also required to provide advice and assistance to firms of all sizes and has developed a set of practical tools and resources that will assist all organisations to this end.

Equal pay for work of equal value in small business
Gender equity matters in small business because they employ large numbers of women and make a significant contribution to servicing and producing Australia’s economic growth, wealth, employment and innovation.

Small businesses are a vital part of our economy; they provided almost half of total industry employment and around a third of industry value added in 2009–10. SMEs make up 96% of all businesses- this is 2.5 million businesses! Of these one million employ approximately five million other people. And more and more small businesses are owned and operated by women.

For SMEs to take advantage of the increased participation of women in the workforce, they need to demonstrate they can offer competitive pay and conditions. Small businesses that fail to understand the importance of pay equity may fail to get and keep the best person for the job, when it is a woman.

Economic Security4Women has found that women are less likely to commit to an organisation that is prepared to undervalue their work; they are less likely to stay with an organisation that allows the existence of a gender pay gap or pay inequity.

In 2011, an online survey of 230 women – of whom approximately 45% were under the age of 35 – found that the majority had an understanding of pay equity and expected equal pay.

• The majority indicated that they would feel let down if they found that the pay system at their place of work was gender unfair; 40 % would start looking for another job and five per cent would resign.
• Almost 80% felt that the government should take action to redress any gender pay gap, with employers and unions also being held responsible.

Attitudes to gender pay equity in smaller firms

While many small business owner/managers understand their obligations not to discriminate on the basis of gender, the concept of pay equity, and particularly ‘equal pay for work of equal value’, is not well understood.

A small survey of predominantly Western Australian firms found:

1. There is a lack of knowledge about gender pay equity within SMEs and that managers and owner managers of SMEs are generally noncommittal about applying a gender pay audit to their firms.
2. That in SME’s there is both ‘traditional’ attitudes of managers in relation to women’s and men’s work and more contemporary attitudes as a result of changes in the economy and society as a whole. It is the owner-manager’s values, attitudes and previous work experience that is important in terms of their treatment of women.
3. That awards hold back pay inequity between lower paid employees while pay equity gaps are biggest when individualised ‘rewards’ are given to high performing or ‘meritorious’ employees.
4. SMEs have been difficult to reach with information and advice about a range of business topics generally and more so about those difficult to understand such as pay equity.
5. Many SMEs also lack formal systems to manage the employment relationship, specifically formal human resource management (HRM) practices. In smaller firms there are likely to be fewer jobs undertaken and therefore any comparison between the pay for these jobs should be a relatively simple process.

These findings were reinforced with results of an online survey conducted by eS4W in 2012.

It is clear that training about pay equity is required and that appropriate resources need to be available for those small business owners who want to be confident they are offering fair pay and conditions to all their employees.

To find out more about the pay gap for women in small business come along to a twilight forum at Sydney University on Wednesday 4th September. The event is being hosted by economic Security4Women and Women and Work Research Group. Click here for more details.