Research reveals employee pay gaps exist across 2 in 3 organisations

AN INDUSTRY industry association has released new data that shows  large-scale pay rate discrepancies occur in two of three organisations.

The findings come from a survey commissioned by the Australian Payroll Association (Australian Payroll Association). They asked 601 payroll managers across the country’s big and small businesses and across a multitude of different industries where they mostly see pay gaps.

Overall, 69 percent of payroll managers admitted  they see significant differences in pay rates between employees who do the same work or have similar responsibilities.

Among these respondents, 54 percent said they saw experience and longevity in the company as the biggest factors behind a pay gap. Specifically, 30 percent said they saw a pay gap mostly between less experienced and more experienced employees, while 24 percent said they saw the disparity mostly among new employees and those who had been with the organisation for longer.

Being well networked and playing politics seems to get employees ahead. One in five (20%) of payroll managers see pay gaps mostly between those who play politics well and were well networked in the organisation compared to those who don’t do either well.

Sixteen percent of payroll managers felt that pay discrepancies occurred mostly between employees who did and didn’t work in departments that bring in, or are responsible for, more of the company income.

Just 7 percent of payroll managers that saw variations in pay for the same work claimed that it was mostly due to gender differences, while 2 percent stated that it was because of an employee’s age. 

Pay gaps more widespread in larger organisations

The survey revealed that just 58 per cent of payroll managers in small business (1-50 employees) saw pay gaps between employees who do similar work or have similar responsibilities. This statistic jumped to 75 percent of payroll managers in organisations with 500-10,000 employees.

Small organisations were twice as likely to have pay discrepancies between less experienced and more experienced staff members: 28 percent of payroll managers in small businesses (11-50 employees) see these differences in pay, compared with just 14 per cent of payroll managers in large organisations (500-10,000 employees).

In contrast, 21 percent of payroll managers larger organisations (500-10,000 employees) saw a pay disparity between employees who were new and with the organisations longer, compared with just 11 percent of payroll managers in small businesses (1-50 employees).

By a similar token, 16 percent of those in large organisations (500-10,000 employees) reported more differences in pay rates between employees who worked in areas that brought in less company revenue or more revenue, compared with just 7 percent of payroll managers in small businesses (1-50 employees) who said the same thing. 

Not all industries are made equal

The survey highlighted the factors that might contribute to pay inequality across various industries.

Payroll managers in manufacturing (37% of respondents) and building and construction (35% of respondents) saw pay differences mostly between less and more experienced employees – more than any other industry.

Thirty-one percent of payroll managers in IT and telecommunications reported that the inequality in pay occurred mostly between new and long-standing employees – a rate higher than in any other industry.

One in four (25%) of organisations in the professional, scientific and technical services attributed the disparity in pay to not being in a part of the business that earned the most revenue – a rate higher than in any other industry. In fact, only 7 percent of those in the financial and insurance services reported this as the main cause for pay discrepancies.

Employees in education and training were more likely to face differences in pay if they did or didn’t play politics or networked inside the organisation – a reason chosen by 27 percent of payroll managers in this industry.  

Tracy Angwin, CEO of the Australian Payroll Association said, “Our research shows that pay gaps are still prevalent in the Australian workforce, however they aren’t always based on obvious factors. We knew that a reliable group to base our research on would be payroll managers, who are responsible for processing employee payslips and have visibility to individual salaries.

"From both my, and payroll managers’, experience, discrepancies in pay packets can be due to a myriad of reasons. While there is no legislation that rules out pay inequity between employees who have similar responsibilities, employees must be paid more than the minimum required by law.

"For organisations who want to eliminate the gap I recommend they regularly analyse and monitor their payroll data," Ms Angwin said. "Often, it’s helpful to have this carried out by independent expert consultant or specialist payroll company, who can assess any gender and other pay gaps, and incorporate this into their monitoring process.”

Australian Payroll Association’s pay rate results, taken from 601 payroll managers

Q. In your work, do you see a significant difference in pay rates between any employees who do similar work, or have similar responsibilities?	% of respondents
Yes, the difference is mostly between less experienced and more experienced employees	30%
Yes, the difference is mostly between new employees and those who have been with the organisation for longer	24%
Yes, and I think the difference is mostly between those who play politics well or who are well networked in the organisation, and those who don’t/aren’t.	20%
Yes, and I think the difference is mostly between employees who work in an area of the organisation that doesn’t bring, or is responsible for, in a lot of income to the company, and those who work in an area that brings, or is responsible for, more income.	16%
Yes, the difference is mostly between men and women	7%
Yes, the difference is mostly between younger and older employees	2%

 

About Australian Payroll Association

Australian Payroll Association is Australia’s leading network in payroll training, consulting and advisory for employers. It offers end-to-end payroll process reviews, compliance auditing, specialist recruitment services, payroll qualifications and training courses, and a membership program. Established in 2010, Australian Payroll Association offers the only nationally accredited payroll qualifications at Certificate IV and Diploma level through its registered training organisation, Australian Payroll Institute. It also holds annual events including its national conference and end of year seminars, in addition to releasing an annual Payroll Benchmarking Report. It also has a regular digital podcast series called ‘Talking Payroll’. For more information, visit austpayroll.com.au.

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