The difference between pay inequality and pay equity (and why you should care)

Australia’s gender pay gap currently sits at 13.8 per cent, meaning that women earn $255 less per week than men on average.

Legislation requiring men and women undertaking similar work be paid equally was introduced in Australia in 1972, decades after the United Nation’s International Labor Organization released the 1951 Equal Remuneration Convention. Even then, it was far from an immediate recognition that women should be paid equally for the work they do.

In 1969, legislation was created to grant women 85 per cent of men’s wages for similar work, a move which was considered progressive at the time.

Men were entitled to a higher wage than women due to what they called the ‘breadwinner’ component, based on the assumption that men required a greater income to support their family as women seldom worked outside the home.

Unsurprisingly, only about 18 per cent of women actually benefited from this small step forward, as the remainder were considered to be doing work of less value than men.

The ‘breadwinner’ consideration was removed two years later, but as we all know, pay inequality and pay inequity continued to hinder women’s ability to enjoy financial liberation.

In light of this historical context, it is worth asking: what do the terms ‘pay inequality’ and ‘pay inequity’ actually mean?

These similar terms are sometimes used interchangeably, but they are actually two different concepts.

Danielle Dobson, an expert on gender equality in the workplace, shared her insights into the difference between pay inequity and pay inequality, why the difference matters, and what steps we can all take to help address the pay gap.

What is the difference between pay inequality and pay inequity?

Dobson explained that the main difference between pay inequality and pay inequity is that one is a broad societal issue, and one is both immoral and illegal.

“When we talk about the gender pay gap, we’re talking about pay inequality,” she said.

“It refers to the difference between the average earnings of women and men in the workforce.”

Pay inequality is influenced by deeply ingrained societal factors and gender bias, including the fact that ‘pink collar’ jobs – which are often performed by women and have a ‘caring-centric’ focus, like nursing, aged care and teaching – are often seen as less valuable and therefore underpaid. Pay inequality is perpetuated by systemic biases in recruitment, hiring and promotion processes, as well as the unfair division of family responsibilities and the challenges of securing suitable childcare.

Pay inequity describes an illegal form of discrimination in which people are paid less for work of comparable value. This practice is illegal under the Australian Fair Work Act (2009), yet unfortunately the problem is far from resolved.

“We still have a long way to go when it comes to pay equality and addressing the gender pay gap, but in theory pay equity should be a given, as it’s a legal requirement,” said Dobson.

“Done correctly, pay equity means pay and conditions are assessed in a non-discriminatory way – valuing skills, responsibilities and working conditions in each job, without gender being a factor.

“The pay gap is not a measure of whether women earn less than men for the same job – as pay equity is a legal requirement. The pay gap is an indicator of women’s overall position in the workforce, representing how they and their work are valued.”

Is Australia actually making any progress towards greater pay equality?

Looking at the numbers without context, it can feel like there has been almost no progress at all.

On paper, the persistent 13.8 per cent pay gap is not so different to the 85 per cent of male wages afforded to women in 1969. These numbers are not directly comparable, but they do reflect a broader lack of true progress towards greater equity and equality.

“In Australia, men are twice as likely to be highly paid than women,” Dobson said.

“Forty-two per cent of employers have reduced their pay gaps since 2020, but it widened for 37 per cent of employers, so we’re still not seeing consistent improvement across the board.”

Dobson has also seen incidents of pay inequity first-hand, despite it being supposedly outlawed.

“One woman shared that she and her husband went to the same university, did the same degree, worked at the same company for the same amount of years, and he was earning substantially more than her,” she said. “This is not an isolated incident.”

Discouraging as this may be, there has been a shift in our collective ideology towards valuing women equally for their contributions to the workplace. We are now more comfortable discussing issues of gender equality in the workforce and acknowledging that change is needed, and not at the glacial pace we have seen thus far.

People have become more progressive in their views, from a time when gender equality was considered almost as a charitable act to ‘give women a go’. Most people now understand the economic and performance benefits that come with having more women in the workplace.

“The majority of business leaders know gender equality makes good business sense, but they stall when it comes to the how,” said Dobson.

“Over the past decades, there has been a big focus on providing women with opportunities to adjust to working in a world more suited to the male way of operating. These have typically taken the form of female leadership programs and mentoring. While it has been well intentioned, unfortunately many have been designed to ‘fix’ women and ‘upskill’ them.”

Rather than address the underlying issues, these approaches portray women as lacking in some way, almost blaming women for their own lack of professional progression.

Broad systemic change needed

Dobson believes we need to move away from implying that women simply need to adopt traditionally ‘male’ attributes like being emotionless, ruthless or solely focused on profit to be successful.

Instead, we need to broaden our idea of what makes a good business leader and acknowledge the very real economic benefits of promoting people who are empathetic, compassionate and flexible.

Changing social norms and gender stereotypes is not a straightforward or speedy process. We need to work together to empower more women to be represented in executive and leadership roles, and we certainly need to hasten our efforts to close the gender pay gap once and for all.

To do this, broad systemic change is needed at a global, political and personal level, including fairer distribution of work in the home.

“Without good paid parental leave, affordable childcare, true partnerships in the home and more men taking on lower paid caring professions, we’ll struggle to close the gender pay gap, as the majority of care work in the home still falls to women,” said Dobson.

Whenever a marginalised group speaks openly against systems of oppression and power, there will be challengers committed to upholding the status quo for their own benefit. Some people insist that despite more work needing to be done, women have it ‘so much better now’ and should be satisfied with the progress we’ve already seen. To these people, Dobson poses some questions.

“What does ‘better’ mean? When you say now, compared to when? What time frame? Which women?” she asked.

“I would insist we still have a long way to go.

“I believe it is unfair and unhelpful to judge people in the past through the lens of the present day. It’s equally not fair or helpful to compare the experiences of women today with those in the past. Our expectations have changed, and each person’s experience is unique.”

Dobson explained that gratitude for the hard work and sacrifices of those who came before us can co-exist with recognising the urgent need for greater change.

Acknowledging the progress that has been made should not be used as a way to minimise the very real challenges women face in all domains of private and professional life.

Breaking free of stereotypical Gender Codes

The gender pay gap is a result of complex societal issues like gender bias, so it is these factors that we need to address to contribute to real change.

“We’ve all been conditioned by what I call The Gender Code,” said Dobson.

“This is the set of social constructs we’ve all been taught from a young age, which put us into a pink or blue box. In the blue box we have the competitors, providers and hunters. In the pink box we have the carers, gatherers and supporters of the people in the blue box.

“There is a set of rules, expectations and a training program for each box. We are punished or rewarded based on how well we conform. These social constructs mean we can’t help but view the world through a gendered lens, and this is what is holding us back from achieving true gender equality.”

Dobson believes that real change will occur by collectively committing to unlearning these Gender Codes and instead viewing people for their unique skills and strengths.

The Gender Code puts unrealistic and limiting expectations on how women feel, think and behave, and only by deconstructing it can women truly be free to pursue their aspirations. Once these limiting narratives are dismantled, we can create our own unique codes for life rooted in our personal values, rather than falling into the ‘gender trap’.

For small business owners, the Workplace Gender Equality Agency has created a useful guide offering advice on how to take real steps towards greater equality, starting with awareness of what is working well and what needs improvement.

“Conducting a gender pay audit is a great first step to take,” said Dobson.

“This is a way to get real transparency on the role of gender within your organisation and the way staff are paid, and this can then inform a plan to work towards gender pay parity.”

One of the most powerful actions we can all take is to actively keep the conversation going. We need to keep celebrating success, without ignoring the issues that remain.

After years of unprecedented global disaster, it is understandable that the gender pay gap has fallen off the radar, but it is more important than ever to keep equality at the forefront of our minds.

Importantly, we need to remember that none of us are in this alone.

“One of the most powerful things each of us can do is to build our village,” said Dobson.

“It takes a village to raise a child. It also takes a village to build a career and it takes a village to make small and larger societal change. Be intentional about who is part of your village. Like most things which are hard, addressing pay equality and gender in the workplace can feel overwhelming, so focus on small steps you can take.

“There is still so much we can achieve – and I believe gender equality is a huge benefit for all genders, not just women. It gives all of us the freedom to live our lives with purpose, free from the societal constraints of gender, so that we can all live rich, fulfilling lives and make our own unique contributions to society.”