High profile report demonstrates that its own results are wrong

As a result of a report released by international professional services organisation KPMG it has been widely reported in Australian media recently that 39% of the so-called gender pay gap in Australia is a result of gender discrimination. Examples include an article from the government-funded Australian Broadcasting Corporation:

KPMG Australia chairman Alison Kitchen told the ABC’s AM program that gender discrimination now accounts for 39 per cent of the gender pay gap.

The same article later reiterates this by listing among the key points:

The report says gender discrimination now accounts for 39pc of the gender pay gap

The Guardian also talked about this with an article stating:

Researchers attributed gender discrimination to almost two-fifths (39%) of the gender pay gap and noted its influence on the gap has increased since 2014.

Business Insider Australia stated that:

The report found gender discrimination accounted for 39% of the gender pay gap in Australia.

These and other news articles are basing their claims on a recently released report by KPMG which was commissioned by the Diversity Council Australia Ltd (DCA), and the Workplace Gender Equality Agency (WGEA). The report was released in full and summary versions with the full version referenced here.

The DCA describes itself as the independent not-for-profit peak body leading diversity and inclusion in the workplace. The WGEA is a federal Australian government statutory agency that according to it’s own website is charged with promoting and improving gender equality in Australian workplaces. The WGEA has featured in a previous article in which I showed that the WGEA clearly admits that the often-quoted national gender pay gap does not compare like-for-like roles.

Under the section Drivers of the gender pay gap, the KPMG report describes a series of factors contributing to the so-called gender pay gap with their percentage contribution and shows that the total of all of the factors sums to 100%. This means that the report is claiming that gender wage differences in Australia can be entirely quantified with factors presented in the report. Notably the expansive CONSAD Report commissioned by the US Department of Labor in 2009 did not make such a claim.

The factors listed in the report are:

  • Gender discrimination
  • Years not working due to interruptions
  • Occupational segregation
  • Industrial segregation
  • Part-time employment
  • Unpaid care and work (proxied by hours per week on housework)
  • Age (years)
  • Tenure with current employer
  • Working in Government or NGO

This very section is where the report claims that gender discrimination accounts for 39% of the total. It also goes on to state that the proportion that is a result of gender discrimination has actually risen from 29% at the time of the last report in 2014.

What is really interesting is how the report defines gender discrimination. The report released by KPMG and commissioned by the DCA and the WGEA defines gender discrimination on p25:

Gender discrimination can be understood as the element of the gender pay gap that would remain if men and women had the same levels of the other factors.

The same statement with slightly different wording is repeated on p34.

The other factors referred to here are the other factors listed in the report and stated above.

The full report goes on to note on p26:

Interpreting the unexplained component of wage decompositions as gender discrimination is an accepted approach in the literature. 65 The unexplained component also includes other variations between men and women that may not be controlled for in the model, any omitted variables and measurement error in the variables used in the model. 66

Thus, the report released by KPMG and commissioned by the DCA and the WGEA states clearly that the unexplained differences in men’s and women’s wages are simply assigned to the category of gender discrimination, producing the claim that 39% of the so-called gender pay gap in Australia is a result of discrimination. A statement that was then widely reported in the media as if it was fact.

Despite a disclaimer that states that the report is solely the opinion of the authors, both the DCA and the WGEA have openly endorsed this report by publishing key findings from the report on their websites.

Following the release of this article, the Australian Men’s Rights Association Inc will be raising this with KPMG, the DCA, the WGEA and Australian politicians.

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