Research reveals employee pay gap in two-in-three businesses

A survey, commissioned by the Australian Payroll Association, asked 601 payroll managers across the country’s big and small businesses and across different industries where they mostly see a pay gap.

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

Among these respondents, 54 per cent said they saw experience and longevity in the company as the biggest factors behind a pay gap. Specifically, 30 per cent said they saw a pay gap mostly between less experienced and more experienced employees, while 24 per cent 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 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.

A similar percentage 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 seven per cent of payroll managers that saw variations in pay for the same work claimed that it was mostly due to gender differences, while two per cent stated that it was because of an employee’s age.

Small business equals smaller pay gap

The survey revealed that just 58 per cent of payroll managers in small business of one to 50 employees saw pay gaps between employees who do similar work or have similar responsibilities. This statistic jumped to 75 per cent 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 per cent of payroll managers in small businesses see these differences in pay, compared with just 14 per cent of payroll managers in large organisations.

In contrast, 21 per cent of payroll managers larger organisations saw a pay disparity between employees who were new and with the organisations longer,

compared with just 11 per cent of payroll managers in small businesses.

By a similar token, 16 per cent of those in large organisations reported more differences in pay rates between employees who worked in areas that brought in less company revenue or more revenue, compared with just seven per cent of payroll managers in small businesses.

Not all industries are made equal

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

Thirty-one (31) per cent 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 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 seven per cent 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 per cent of payroll managers in this industry.

Tracy Angwin, CEO of the Australian Payroll Association says, “Our research shows that pay gaps are still prevalent in the Australian workforce, however they aren’t always based on obvious factors.

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.”

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