Is there really a gender pay gap for actuaries?

wage-gender-gapIn this guest post, 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 me 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.

Ratio female/male average salaries
a. Less than or equal to $18,200 98%
b. $18,201 to $37,000 100%
c. $37,001 to $80,000 97%
d. $80,001 to $180,000 96%
e. $180,000 or more 83%

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 Institute of Actuaries 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.

Untitled

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.

Julia Lessing

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

  5 comments for “Is there really a gender pay gap for actuaries?

  1. Andrew Wakeling
    January 22, 2017 at 7:29 pm

    The ‘problem’ (if there is one) lies with senior and special jobs, where salary packages are negotiated, rather than set by some company scale. The manager (be they an actuary or not) has a responsibility to find the candidate offering the best value for money. There are subtle elements in the ‘negotiation’ that we do not generally make explicit, around ‘how hard are you prepared to work?’ and sometimes ‘how prepared are you to work nights, week-ends, and to rush off at a moment’s notice for a demanding client?’ Some candidates are hungrier and more ambitious than others; and more demanding on remuneration. In my experience, more often than not such candidates have been male.

  2. January 23, 2017 at 1:48 am

    From my experience (as male in US). I had the awesome experience of working for some great female actuaries. But the highest level of any was “AVP”. That is they were one level below “officer” ranks. Males dominated those positions and the C suite. Some of the women expressed self imposed limits, they were happy with their level of position and responsibility. Others seemed to face a glass ceiling of sorts and would either leave for a different job and a couple started their own companies. While sexism wasn’t overt, it was likely passive. Taking the form of like hires like. Perhaps an unwillingness to have golf mixers with the opposite gender. I hope that as the current mid level female actuaries progress in their careers they can close the gap.

  3. Pingback: The Carer Pay gap
  4. Jennifer Lang
    January 29, 2017 at 5:20 pm

    I’ve rarely come across an executive who believes that they discriminate against women, or against any other group. But as Julia demonstrates, there is a lot of evidence that even after correcting for other factors, discrimination remains.

    There is a lot of documented evidence of unconscious bias, both from male and female hiring and promoting managers – in performance reviews, she is abrasive, he needs to learn to be more patient – in promotion decisions, his business development performance could be judged against effort, while hers might be judged against outcomes. Collecting the links about that might be my next post.

    But to anyone who has read as far as the comments on this post, if you are making hiring, bonus or salary decisions, remind yourself of the classic example of orchestral hiring. No orchestra believed they made sexist hiring decisions until they started doing blind auditions – auditions where the hiring committee could not see the performer, and their proportion of female hires dramatically increased. It is very hard to make gender blind hiring decisions in our small industry. And impossible to make gender blind decisions on bonuses. But it is definitely worth remembering that documented bias exists, and to try and avoid it.

  5. Andrew Wakeling
    January 31, 2017 at 10:36 am

    Yes. The ‘orchestral hiring’ experience is very usefully thought provoking. But this is more complicated than it looks.

    Orchestras are teams with sub teams and complex sub cultures. Many of the best orchestras take great pains to ensure the new recruit will fit in. The very best individual musicians won’t necessarily combine to make the best orchestra.

    Recruiting for ‘team fit’ frequently risks all sorts of discrimination, particularly in my experience on age, but most likely also on sex/ gender and ‘carer status’.

    My sadness is the difficulty of making such issues explicit in the recruitment process. By ‘not talking about it’ we risk making unwarranted assumptions: eg about a single parent’s access to support, or an older person’s readiness to retrain. And so we may well be unfair, we may reinforce stereotypes, and we may not achieve the best results.

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