Indigenous employees earn an average 16% less per hour than the average Australian worker, a landmark Indigenous-led study spanning the national workforce reveals.
The Towards Indigenous Pay Parity report, released today by the UTS Centre for Indigenous People and Work (CIPW) and Indigenous Business Australia (IBA), found Indigenous workers earn an average 84 cents for every dollar earned by the average Australian worker.
Annually, the average Indigenous Pay Gap is 18%, or around $15,000 less earned by Indigenous Australians compared to all Australian workers on average.
Drawing on linked Australian Tax Office and Australian Bureau of Statistics data, the report found pay gaps across 75% of nearly 230 specific occupations analysed.
CIPW Director Professor Nareen Young said the disparity is costing Aboriginal and Torres Strait Islander workers billions of dollars in wages every year.
"Indigenous workers missed out on a combined three billion dollars in 2022-23 alone, and the pay gap could cost our mob around 170 billion dollars by 2050. For individual workers, it's comparable to losing a lifetime of super payments, or working two months of each year for free," Prof Young said.
"Lower average wages mean lower lifetime earnings, weaker super outcomes, and less intergenerational economic security for Aboriginal and Torres Strait Islander people. The repercussions flow onto families, communities, and the wider economy."
The report found Aboriginal and Torres Strait Islander women face the steepest penalty of all, earning an average $41 an hour compared with $52 for men overall, a gap of 21%.
The largest Indigenous Pay Gaps by occupation group occur in the Professionals and Managers categories, with gaps of 19.5% and 15.8% respectively.
Prof Young said the research had explored the most common explanations for Indigenous pay inequality and found they don't stack up.
"For years we have been told this gap is due to education, experience, hours, and the typical jobs our mob end up in. But the pay gaps are greatest in highly qualified professional and managerial roles, and Indigenous workers at almost every level of education are earning less than other Australians," Prof Young said.
"Age is not a major factor, and job type and hours worked account for less than 30% of the average hourly pay gap. What remains is the structural racism that keeps Indigenous workers' wages low, limits their career progression, and compounds disadvantage across their working lives."
IBA Chief Economist Dr Siddharth Shirodkar, who leads the Office of the Indigenous Economy, said the report provided a much needed quantification of the Indigenous Pay Gap, and has serious implications for Australia's economy at large.
"The report's findings will come as no surprise to many Indigenous Australians, but critically provide an initial benchmark that quantifies the lived experience of many. The Aboriginal and Torres Strait Islander population is younger and growing faster than the rest of the country so, if nothing is done now, a growing share of Australia's future workforce will walk into a labour market that underpays it. That has consequences for Indigenous people, particularly Indigenous women, but also affects Australia's overall economic activity," Dr Shirodkar said.
"The sectors where Australia will most need workers over the next decade show sizeable pay gaps. Aged and disability care, nursing support, and technology are all facing shortages, and all of them underpay Aboriginal and Torres Strait Islander workers."
"More worryingly, there is also evidence in the report to suggest that the Indigenous Pay Gap may have been widening over the last decade."
The research looked at independent data sources such as the Melbourne Institute's Household, Income and Labour Dynamics in Australia (HILDA) dataset to corroborate results, which revealed that the average pay gap may have grown from around 10% in 2014 to 16% by 2021, remaining there since.
Dr Shirodkar said, "Lower wages across a working life mean lower superannuation balances and heavier reliance on the age pension. Governments are investing heavily in Indigenous employment through Closing the Gap, and those employment targets are undercut if the people who do find work are paid less than their colleagues."
Prof Young said the report sets out key reforms to begin closing the Indigenous Pay Gap.
"A positive duty for employers to prevent racial discrimination is key to addressing the structural barriers to pay parity. Legislating this would mean racial discrimination is treated the same way as sex discrimination in Australian workplaces," Prof Young said.
"Embedding Indigenous employment data collection and reporting into existing reporting requirements is essential, as is addressing the undervaluation of cultural skills in wage setting."
"This Indigenous-led report is the first of its kind, giving employers and governments something they have never had before: comprehensive baseline evidence, and a number they can be held to. Equal pay for equal work is not a favour to Aboriginal and Torres Strait Islander workers, it is a legal right, and we now know exactly how far short we are falling."
A full copy of the report
