Contracting is fast becoming the dominant form of worker engagement around the world. Despite its popularity, most organisations in Australia have a blind spot when it comes to any sort of detailed information around diversity, location, job roles, tenure, age or pay. Until now.
CXC’s Contingent Workforce Salary Benchmark Report, analyses rates across our entire contractor base as well as the factors that have contributed to shaping contractors’ pay over the last few years.
Here is a snap shot of the report, taking a look at some trends in contractor pay rates aligned with gender and age.
When taking a high-level view of our contractor base, without looking at industry, role type or tenure, it’s apparent that female contractors are paid significantly less than male contractors – between 2019 and 2021 we have seen a difference of approx $202 per day, or 25% (Refer to Figure 1). This imbalance is significantly larger than the national average according to the ABS: In 2020, females were paid 13.4% less than men.
There are a number of reasons why contingent work creates a larger gender pay disparity. For instance:
- For skilled contingent labour, there’s a greater emphasis on negotiating pay. According to Robert Half, only 34% of women negotiate their pay, as opposed to 46% for men.
- Contingent work often focuses on STEM fields, especially in engineering and IT. Historically these fields have been male dominated – in 2020, 28% of women were employed in STEM.
- Organisations lack visibility over the diversity of their contractors. Historically, they focus more on their permanent workers when it comes to implementing diversity initiatives.
These factors are, of course, representative of the institutionalised disadvantage that women have faced in the workplace for decades. However, like the improvement in the pay gap happening for permanent work, so to is the gap for contingent improving. Since 2019, the gender pay gap in our clients’ contractors has already decreased by 3%.
The gender gap is a lot narrower when it comes to contractors in the information technology space (Refer to figure 2).
The difference in male and female rates sat at 8.10% in 2019, 6.10% in 2020 and in 2021, is currently sitting at 2.86%.
Although female IT contractors, on average, were not paid as much as male IT contractors, over the last three years their pay has consistently increased (Refer to Figure 2).
For most job families across our contingent workforce, the longer a contractor is engaged, the higher they’re paid. (Refer to Figure 3) The more experience a contractor has, and the longer they work with a client, the more they can negotiate their pay.
There’s a clear gender pay gap when comparing average day rates of females and males across all job types, no matter what the tenure is. However, female IT contractors that have been working 3–5 years with the same client are paid notably more than male contractors with the same tenure. (Refer to Figure 4)
This suggests that, when it comes to pay rates, female IT contractors face fewer barriers than females in other fields.
Generally, the older a contractor gets, the higher they get paid. In 2020 we see a significant jump from 20–25-year-olds at $295 per day to 25–35-year-olds at $483 per day. This shoots up again in the 35–45-year-old bracket to $778 (Refer to Figure 5).
Compare this with the average full-time wage – $342 per day, regardless of age. Even when factoring in a casual loading of 25%, our clients’ contractors past 25 years of age are being paid significantly more than the average full-time wage.
Interestingly, this trend doesn’t materialise for 55–65-year-olds, who are paid less than the 45–65-year-old group. This aligns with ABS data that finds employees receive greater earnings as they age until they reach 55, when their earnings drop slightly.
We’ve seen a number of reports in the market that link dwindling earning for over 55-year-olds with a loss of bargaining power over the last 20 years. The Schwartz Center for Economic Policy Analysis shows that this happens even in periods of economic growth, and can be attributed to:
- The lack of sufficient retirement savings, meaning a worker can’t walk away from unsuitable jobs.
- Lack of opportunities for training and promotion.
- Erosion of workers’ rights, including low union memberships and stagnating wage increases.
- Restriction in moving to better working locations.
- Age discrimination.
According to a survey conducted by LinkedIn, 44% of baby boomers believe age was the main reason for employers rejecting their applications.
For IT contractors between the 25-35 and 35-45 age range, we see an increase of 25.48%; this is significantly smaller than the increase we see for other job families, which has an increase of 61.15% (Refer to Figure 6).
IT roles seem to reach the highest level of pay at a younger age bracket than other jobs.
When we look at pay rates by gender and age across all job families, we see the same gender pay gap that was observed when looking at tenure. However, there’s two different narratives that arise when you look at how age affects pay rate.
For both male and female, contractors get paid more the older they get, until they reach about 55 years of age. For female contractors, their pay gets steadily less from 55 onwards. But for male contractors, their pay starts to rise again after 65 (Refer to Figure 7).
We don’t see the same age trends for ‘All Job Families’ being followed by IT contractors when it comes to gender. Overall, both male and female contractors get paid significantly more than all other job families. The jump in pay for males between 20-25 and 25-35 is the most significant, their pay rate over doubling (Refer to Figure 8).
But interestingly, younger and older female contractors get paid more than males – in some segments, significantly more.
And while 55-65-year-old male IT workers experience a dip in pay, that’s not the case for female workers.
Want more? For the full Contingent Workforce Salary Benchmark Report, complete the form below.
As one of the world’s top suppliers of contingent worker management solutions, CXC is perfectly positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across 5 continents, and with decades of experience, we can assist with every aspect of your program.
If you would like to find out more about how we can help with your contingent workforce solutions please contact us.