The Australian Financial Review

By Katie Lahey
Chief Executive, Business Council of Australia

Workplace Relations Minister Julia Gillard has sounded a clear warning to the male dominated boardrooms and executive ranks of Australian companies. Her announcement that industrial relations reforms were required to finally end gender pay inequality was extraordinary for a couple of reasons.

First, it defies belief that, in a sophisticated and modern country such as Australia, we are even talking about paying a woman the same amount as a man for a day’s work – it should already be long-established practice.

Second, it should be a source of shame in 2009 that the federal government sees regulation – forcing companies to act – as the best way to achieve genuine action.

But, of course, pay is only one component of gender equality. We need to do much better at ensuring women, who make up 45 per cent of the workforce, are represented within the most senior executive and director roles. The minister’s announcement is further evidence that the old solutions are not working. Different and perhaps even radical action is now required if we are to have a more productive workforce that provides the same opportunities to women that men have enjoyed throughout history.

Government can only do so much. The challenge for our current leaders is to choose between being the last generation who have failed to properly address gender inequality or the first to make the changes to truly bring our companies in line with community reality and expectations.

The problem is not unique to Australia. In the United States the Centre for American Progress and Maria Shriver, whose husband happens to be California Governor Arnold Schwarzenegger, released a report which found that, for the first time, women comprise half of all US workers and mothers are the primary breadwinners or co-breadwinners in nearly two-thirds of families. Yet, as in Australia, broader participation is not well reflected in senior roles.

Australia has a particularly poor CV on gender equality in the workforce. It is ranked first globally on women’s educational attainment but only 40th for women’s workforce participation. Women are paid only 83 per cent of the pay for men for similar work. In the senior business ranks women chair only 2 per cent of ASX200 companies, hold only 8.3 per cent of board directorships, 2 per cent of CEO roles and 10.7 per cent of senior executive roles. More than half of ASX200 boards have no female directors at all. The government’s review of the Equal Opportunity for Women in the Workplace Act highlights that women’s increased workforce participation has been a major factor in national productivity and economic growth.

It found that, despite this growth in work participation, Australia performed poorly compared with other Organisation for Economic Co-Operation and Development countries on issues such as pay, with the fifth-largest pay gap. On the World Economic Forum’s measure of a range of gender equality issues, Australia ranks 21st, well behind New Zealand (fifth) and the United Kingdom (13th).

The low representation of women in senior levels of large Australian businesses is reflected in the Business Council of Australia’s membership, with only three women chief executives from a membership of more than 100.

Almost all major Australian companies have clear policies requiring equal opportunity and many even have proactive policies encouraging more women to aspire to senior roles within the organisation. But these policies are obviously not working.

I sense a frustration among many of my male colleagues. They genuinely want to see change and have equal employment and opportunity policies and practitioners in place, but little seems to be happening.

So the time has come for a major rethink in how we approach this issue. Ms Gillard has flagged possible reforms to company disclosure rules and to minimum pay decisions among potential reforms to industrial relations laws.

Others have talked about quotas. I have highlighted the prospect of quotas in the past to spark discussion on this issue. Voluntary targets are also now on the agenda. More radical solutions such as requiring those who tender for government contracts to demonstrate diversity could be the next barbecue stoppers.

Perhaps the time has come to just get on with it. Link pay for senior managers to diversity outcomes and I expect you will then start to see the broader changes in workplace flexibility and recruitment processes needed to produce real and sustained results.

Nice policies have not worked. Whether or not quotas are the answer, we need a radical rethink for women to reach their true potential in our economy.

The current federal government review has been successful in highlighting, yet again, the problem. But it is time to accept the evidence and concentrate our efforts on solutions that will work.