According to estimates from the recent World Economic Forum, no one alive today will live to see the end of the global gender pay gap. The forum calculated its figure based on current rates, determining it will take an estimated 170 years to achieve parity across the pay packets of men and women ii.
The startling prediction is in line with recent figures from a key Australian Government body responsible for assessing our domestic progress on workplace gender equality.
The Federal Government's Workplace Gender Equality Agency (WGEA) regularly publishes a 'gender equality scorecard' for Australia, based on key findings from the Agency's most recent reporting data.
This year's scorecard was nothing to brag about, with men still earning $26k a year more than women and no improvement evident in the number of women with positions on company boards.
Calls for more female participation in the economy have grown louder, often based on political or cultural arguments founded on fairness. Yet, a persuasive argument for diversity and equality can also be anchored to the bottom line, where ensuring that more women are working and leading in the workplace is simply good business, especially for investors who not only care about the ethics, but also want returns. iii
There is no denying that social stigmas around the role of women in the workforce have decreased significantly. Today it is hard to find a field where competent and highly successful women haven't made their mark. With 70% of women with children under 18 now participating in the labor force, we've come a long way since 1974 - a time when married women found it difficult just to open a credit card in their own name.
So why does the gender pay gap still exist?
Inclusiveness that benefits business
Results from the WGEA score card also show a positive side, indicating more employers are taking action to address persistent pay gaps and gender imbalances.
Strong improvements are shown through the number of organisations conducting gender pay gap analyses, making managers accountable for gender equality outcomes, promoting women into manager roles and encouraging flexible work arrangements.
These efforts make sense, not just for ethical reasons, but also in terms of profitability.
A recent study by Morgan Stanley Research found that highly gender-diverse companies outperform their low gender-diverse counterparts.
The report states: "New research has found empirical data that shows gender diversity does make a difference, particularly when it comes to a company's performance in that highly gender diverse companies have a better return on equity (ROE) and lower volatility than those ranked low in diversity." iv
Highly gender diverse companies tend to outperform other businesses across a number of quantifiable areas including employee productivity, volume of customers, talent retention, and risk management.
A boost for clients, productivity and retention
There are numerous reasons why gender parity and balance make sense in the workplace. Three of those reasons are:
Meeting the needs of clients. A composition of employees that reflects and a company's clientele will be better equipped to meet the varying needs of that client base. Women currently control 51% of wealth v and are the primary or only breadwinners in 40% of U.S. households with children under 18 vi. It makes sense for businesses to capitalise on those statistics by creating a suitably representative workforce - and the benefits are already being supported by research. According to Cumulative Gallup Workplace Studies, organisations with inclusive cultures score 39% higher for customer satisfaction than those that are less inclusive.
Reduced staff turnover. Employee turnover and retention is a key challenge for today's businesses. Costs associated with losing a skilled employee include hiring temporary replacements; advertising to fill the vacancy or enlisting the services of a recruitment agency. New employees may also require training and supervision, which can impact productivity by diverting other staff from their core responsibilities. Workplaces with notably gender inclusive cultures are reported to have 22% lower turnover rates due to increased morale, opportunity and equality (Gallup).
Productivity gains. Building on the benefits that inclusiveness has for workplace culture, research by Gallup suggests a flow on effect for productivity, with an inclusive environment yielding a rate of productivity 22% higher than less inclusive workplaces.
For information on investment opportunities in areas that promote a culture of diversity and inclusion please contact your Morgan Stanley Financial Adviser.