Is there really a gender pay gap for actuaries?

Read­ing time: 5 mins

In this guest post on Actu­ar­i­al Eye, Julia Less­ing analy­ses the sta­tis­tics on remu­ner­a­tion for actu­ar­ies – is there a gap between men and women? Cer­tain­ly the head­lines sug­gest there is a gap, as evi­denced by an arti­cle sent to Jen­nifer Lang by at least five peo­ple. But what is caus­ing it? Julia goes behind the head­lines.

Australian women still earn less than men

My eldest daugh­ter is 17 and has just fin­ished high school. She told me she’d seen a news­pa­per arti­cle show­ing actu­ar­ies on the list of the 50 best paid occu­pa­tions in Aus­tralia, but noticed that female actu­ar­ies earned less than male actu­ar­ies. I couldn’t believe what I was hear­ing! As a female actu­ary and bread­win­ner for my fam­i­ly of 6, I’ve always kept close tabs on my salary and raised any ques­tions or issues about my remu­ner­a­tion with those in charge of the purse-strings as required. I know our fam­i­ly arrange­ments are not typ­i­cal and most of my female friends do the bulk of the child­care while their male part­ners are the main bread­win­ners. But sure­ly in 2017 we don’t still have a pay gap? And if we do, what is caus­ing it?

Getting clear data to understand the problem

I revis­it­ed the Syd­ney Morn­ing Her­ald (SMH) arti­cle my daugh­ter had referred to, which list­ed the 50 high­est pay­ing jobs for men and women in Aus­tralia. It showed the aver­age salary for female actu­ar­ies as $136,819 and the aver­age salary for male actu­ar­ies as $196,144. Being an actu­ary, I quick­ly clicked through to have a look at the under­ly­ing data.

I was some­what relieved to see that this large gen­der pay gap of 30% of actu­ar­ies was based on “aver­age tax­able income”. From expe­ri­ence, my own tax­able income has fluc­tu­at­ed most dra­mat­i­cal­ly depend­ing on whether I was work­ing full-time or part-time. While not referred to in the media arti­cles, the under­ly­ing ATO data can be exam­ined by income bands. This com­par­i­son shows that male and female actu­ar­i­al pro­fes­sion­als are sim­i­lar at low­er income bands, but the gen­der pay gap becomes more appar­ent in high­er income bands.

Capture

 

Look­ing at the num­ber of indi­vid­u­als and my under­stand­ing of the gen­der mix of actu­ar­ies over time, it would make sense that the aver­age female actu­ary is younger and work­ing a small­er full-time-equiv­a­lent load than the aver­age male actu­ary. Actu­ar­ies Insti­tute mem­ber­ship data from 2015 shows that male actu­ar­i­al pro­fes­sion­als are, on aver­age, approx­i­mate­ly 5 years old­er than female actu­ar­i­al pro­fes­sion­als.

The pub­licly avail­able sta­tis­tics on the actu­ar­i­al pro­fes­sion show that 24.8% of Fel­lows of the Actu­ar­ies Insti­tute in 2015 were female (although ear­li­er data split by gen­der is not avail­able). Inter­est­ing­ly, the ATO data in the table above sug­gests a high­er pro­por­tion (32.3%) of female actu­ar­ies than the pub­licly avail­able sta­tis­tics of the pro­fes­sion (per­haps women are more like­ly to describe them­selves as actu­ar­ies on their tax returns).

The 2016 SKL salary sur­vey pro­vides a more like-for-like com­par­i­son between salaries of male and female actu­ar­i­al fel­lows. How­ev­er, the com­par­i­son of full-time salaries based on expe­ri­ence (rather than age), still sug­gests that female actu­ar­ies earn, on aver­age, 93% of their male coun­ter­parts’ salaries. This is gap more sig­nif­i­cant for more expe­ri­enced actu­ar­ies. The aver­age full-time female salary for an actu­ary with 15+ years post qual­i­fi­ca­tion expe­ri­ence is only 71% of the aver­age salary for a male actu­ary with the same expe­ri­ence.

It appears that the SMH arti­cle is draw­ing con­clu­sions from a dataset that is not com­par­ing “apples with apples”.

Is there a gender pay gap in other professions?

The SMH arti­cle cov­ered a range of pro­fes­sions and was based on tax return data from the ATO, but the gen­der pay gap still gets a lot of press. I dug a bit fur­ther to see what oth­er analy­sis has been under­tak­en, and found the Work­place Gen­der Equal­i­ty Agency (WGEA) web­site.

Research shows that the gen­der pay gap can be seen as ear­ly as the first jobs after uni­ver­si­ty. WGEA sta­tis­tics show that amongst uni­ver­si­ty grad­u­ates there is a gen­der pay gap:

Aver­age grad­u­ate salaries for women are 9.4% less than for men. When fac­tors such as per­son­al char­ac­ter­is­tics, occu­pa­tion, indus­try and edu­ca­tion are account­ed for, aver­age grad­u­ate salaries for women are 4.4% less than for men.”

I’d heard sto­ries from my mother’s gen­er­a­tion about high­er salaries being paid to male can­di­dates, but I was hor­ri­fied to see this was still hap­pen­ing in the 21st cen­tu­ry.

What is driving this gender pay gap?

In 2009, KPMG under­took a large study to bet­ter under­stand the gen­der pay gap in Aus­tralia and its con­tribut­ing fac­tors. It showed that the gen­der pay gap between men and women has nar­rowed over the last cen­tu­ry, but that women still earned approx­i­mate­ly 16% less than men, based on full-time aver­age week­ly earn­ings.

KPMG updat­ed this analy­sis in their recent 2016 report.

report

It seems that there are a num­ber of fac­tors con­tribut­ing to the gen­der pay gap, includ­ing dif­fer­ences in gen­der mix­es across dif­fer­ent­ly paid indus­tries, as well as the impacts of part-time or employ­ment “inter­rup­tions”. This sug­gests than using the aggre­gate aver­age week­ly earn­ings may not be a help­ful com­par­i­son to under­stand the gen­der pay gap. How­ev­er, the biggest con­trib­u­tor to the gen­der pay gap still appears to be sex dis­crim­i­na­tion. The table above shows that sex dis­crim­i­na­tion accounts for 38% (an increase from 35% in 2009) of the 2016 gen­der pay gap. The report refers to research that sug­gests sys­temic dis­crim­i­na­tion is a per­sis­tent fea­ture of the Aus­tralian work­force, and may include direct dis­crim­i­na­tion as well as uncon­scious bias.

Sex discrimination is the primary contributor to the gender pay gap

The KPMG study shows that sex dis­crim­i­na­tion, in both direct and indi­rect forms, is the largest con­trib­u­tor to the gen­der pay gap. But what does this mean? And how do we fix it? The issue of sex dis­crim­i­na­tion in our work­places affects more than just pay equi­ty, and like most dif­fi­cult cul­tur­al prob­lems, can be dif­fi­cult to iden­ti­fy and address. From a pay equi­ty per­spec­tive, this may affect a range of fac­tors such as pro­mo­tions and oppor­tu­ni­ties for devel­op­ment, as well as fair and equal remu­ner­a­tion.

Actu­ar­i­al salaries are usu­al­ly set based on mar­ket infor­ma­tion, and are not based on any pre­scribed pay scales. While salary sur­veys con­duct­ed by rep­utable recruit­ment firms may be used as a guide, dis­cre­tion is often used by man­agers to set the salaries of their staff mem­bers. Remu­ner­a­tion for many of the pro­fes­sions quot­ed in the SMH arti­cle would be based under sim­i­lar con­di­tions. In these cas­es, the gen­der pay gap can be influ­enced by those respon­si­ble for salary nego­ti­a­tions (both man­agers and employ­ees).

What should we do about it?

Although the media may exag­ger­ate the gen­der pay gap using data that is not like-for-like, it has suc­ceed­ed in draw­ing atten­tion to an issue in Aus­tralian work­places. There is evi­dence to sug­gest that there is still a gen­der pay gap in Aus­tralia, and part-time work and career breaks appear to have less impact on the gen­der pay gap than they have in pre­vi­ous years, pos­si­bly due to a work­force that is increas­ing­ly tol­er­ant of flex­i­ble and remote work­ing.

How­ev­er, con­scious and uncon­scious gen­der dis­crim­i­na­tion remains the sin­gle largest fac­tor con­tribut­ing to the gen­der pay gap. If we can find a way to over­come this, there is poten­tial to improve the cul­ture and diver­si­ty with­in the work­place, as well as with­in our com­mu­ni­ties and at home for our chil­dren, our next gen­er­a­tion of work­ers.

See the orig­i­nal arti­cle here

This arti­cle is the first of a two part series. In the next arti­cle, Julia will tack­le the car­ers’ pay gap.

CPD Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.

About the authors

Julia Lessing

Julia is a qualified actuary who combines her actuarial skills and passion for helping the most vulnerable members of our community by working in multi-disciplinary teams providing analysis and insight to human services.

Jennifer Lang

Jennifer Lang is CFO and Chief Actuary of Comminsure. She is the author of the popular actuarial blog www.actuarialeye.com. The views expressed in this article are her own, and do not reflect the views of her employer.

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2 Comments

  1. Dave Millar says: 9:51 am, January 24 2017

    Fan­tas­tic arti­cle Julia – well researched and thought­ful.

  2. Sharanjit says: 10:51 am, January 27 2017

    Great arti­cle Julia, and very time­ly giv­en the polit­i­cal winds across the pacif­ic.

    Whilst there may be legit­i­mate under­ly­ing rea­sons for a pay gap in our pro­fes­sion, I don’t think it’s some­thing we can be com­pla­cent about.

    I’m per­son­al­ly very inter­est­ed in the direc­tion tak­en by Ger­many with new leg­is­la­tion that will force com­pa­nies to be more trans­par­ent about salaries paid to male and female employ­ees, in a bid to tack­le the gen­der pay gap. If that’s suc­cess­ful, it’s some­thing that we should con­sid­er in Aus­tralia.

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