Introduction

Despite decades of progress, Australia continues to face a persistent gender pay gap. As of 2025, data from the Workplace Gender Equality Agency (WGEA) shows that women, on average, earn significantly less than men across nearly all industries and roles.

While some of this gap is due to direct pay inequality, a substantial portion stems from deeper structural issues—career interruptions, occupational segregation, and unequal access to leadership.

Recent Global Study

A recent global study by McKinsey & Company, “Tough trade-offs: How time and career choices shape the gender pay gap,” sheds new light on these dynamics. It found that 80% of the gender pay gap can be attributed to differences in work experience, including career pathways and time spent out of the workforce. These findings resonate strongly with the Australian context and offer a valuable lens through which employers can examine their own practices.

The Australian Gender Pay Gap: A Snapshot

National gender pay gap (2025)
Median base salary gap of 28.3%, and total remuneration gap of 44.3% in some sectors.

Key drivers
Occupational segregation, underrepresentation in leadership, part-time work, and career interruptions due to caregiving.

New transparency measures
WGEA now publishes employer-level pay gap data, increasing public accountability.

Global Insights, Local Relevance

McKinsey’s research tracked men and women who began in the same occupations and followed their career trajectories over a decade. By year ten, a 27% pay gap had emerged—largely due to women taking time out of the workforce or shifting into lower-paying roles for flexibility.

Australia shares similar patterns

Women are overrepresented in lower-paid sectors (e.g., healthcare, education) and underrepresented in high-paying fields (e.g., finance, tech).

Career breaks, often for caregiving, lead to slower progression and reduced earnings.

Flexible work is more common post-pandemic, but not always available in senior or high-growth roles.

Reflective Questions for Australian Employers

To address these challenges, employers must go beyond surface-level compliance and ask deeper questions about their workplace structures and culture:

1. Career Pathways and Progression

• Are women equally represented in high-growth, high-paying roles?
• Do we have transparent promotion pathways, and are they equally accessible?
• Are we tracking career progression by gender over time?

2. Flexibility and Time Out of Work

• How do we support employees returning from parental or extended leave?
• Are flexible work arrangements available across all levels, including leadership?
• Do we penalise or unconsciously bias against those who work part-time or take breaks?

3. Pay Transparency and Equity

• Have we conducted a recent gender pay audit? What did we learn?
• Are we transparent about pay bands and criteria for bonuses and promotions?
• Do we regularly report and act on gender pay gap data?

4. Organisational Culture and Leadership

• Do our leaders model inclusive behaviour and champion gender equity?
• Are we investing in mentorship and sponsorship programs for women?
• How do we handle conscious and unconscious bias in hiring and performance reviews?

Suggested Actions for Employers

Based on both McKinsey’s findings and Australian data, here are practical steps employers can take:

• Conduct a Pay Audit
  • Use WGEA’s reporting framework to assess pay gaps by role, level, and department.
  • Act on findings with targeted adjustments and accountability.
• Support Career Continuity
  • Offer return-to-work programs and re-skilling opportunities for employees after career breaks.
  • Normalise flexible work without career penalties.
• Invest in Leadership Pipelines
  • Set targets for gender representation in leadership roles.
  • Provide sponsorship, not just mentorship, to help women advance.
• Foster a Culture of Inclusion
  • Train managers on inclusive leadership and bias mitigation.
  • Celebrate diverse leadership styles and career paths.
• Be Transparent and Accountable
  • Publish gender pay gap data and progress updates.
  • Engage employees in co-creating solutions.

Conclusion

The gender pay gap is not just a number—it’s a reflection of how opportunity, flexibility, and leadership are distributed in the workplace. McKinsey’s research underscores that career pathways and time out of work are not just personal choices—they are shaped by systemic structures that employers have the power to change.

An Organisational & Community Challenge

By asking the right questions and taking bold, transparent action, Australian organisations can lead the way in closing the gap, not just in pay, but in opportunity, equity, and inclusion.

DISCLAIMER: This article is general only in nature and is not advice.