Wednesday, 6 December 2017

Will all working women in Australia ever achieve equal pay?

Most Australians appear to understand that gender-based discrimination against women is a fact of life females of all ages have to cope with at some point in their lives - often at multiple points in their lives.

This poll gives a clear indication of the level of community awareness of this issue.

Essential Report, Sexism and Discrimination Against Women, 5 December 2017:

A majority of respondents think there is a lot or some sexism in the media (64%), politics (60%), advertising (60%), workplaces (57%) and sport (56%).

Women were more likely than men to think there is a lot or some sexism in all areas – but especially in workplaces (women 67%, men 46%) and politics (70%/49%).

There has been some small changes in these figures since this question was asked in January last year – sexism in workplaces has dropped 4%, in the media up 6%, in sport down 4% and in schools up 8%. However, there has been more significant change in the differences between men and women on some issues. On sexism in the workplace the gap between perceptions of men and women has increased from 12% to 21%.

Despite society knowing that gender-based discrimination against women exists, institutions put in place by government to allegedly mitigate inequality and ensure fairness still manage to entrench such discrimination.

The shorter version of the observations and conclusions set out below is that if you are a female worker on minimum wage working in an industry sector which employs significantly more women than men, then you still cannot reliably look to either the private sector or the Liberal-Nationals version of the Fair Work Commission for the equal pay first promised by the Conciliation and Arbitration Commission in 1972.

Excerpt from Barbara Broadway & Richard Wilkinson, Melbourne University (October 2017), Probing the effects of the Australian system of minimum wages on the gender wage gap, pp.3-4:

In Australia, minimum wages are binding for a large part of the labour market: in 2014, 24% of all employees were paid the applicable minimum wage. Based on the above studies, one would therefore expect minimum wages in Australia to reduce the gender wage gap substantially. However, somewhat unusually, the Australian labour market contains many different minimum wages arising from industry and occupation-based ‘awards’ made by an industrial court. These awards specify legally binding minimum rates of pay, which vary considerably across occupations and industries, applying not only to the low-pay sector of the labour market, but to occupations of all levels, including high-skilled, high-paid jobs such as airline pilots, university professors and medical practitioners.1 The effects of these many minimums will therefore depend, in quite complex ways, on how men and women are distributed across occupations and industries and how minimums are distributed across occupations and industries.

The industrial court does not set different wages for men and women. However, it could, in principle, produce a gender wage gap by setting lower minimum wages in occupations and industries in which women are relatively more concentrated. A gender wage gap caused by legally set minimum wages could therefore be greater than or less than the gender wage gap created by market wages.

Indeed, the raw median gender wage gap among full-time employees in Australia is, at 18%, in the middle range of all OECD countries (Figure 1)2, providing a hint that the minimum wage system does not reduce the gender wage gap as much as might be expected given the high proportion of employees that are paid the applicable minimum wage. This is reinforced by the finding that the raw mean gender wage gap among full-time employees is approximately 20% (and indeed the gap has persisted at this level since the early 1990s (ABS 2016), despite relative growth in female educational attainment and work experience)…….

We therefore doubt that the observed job-femaleness penalty is actually derived from compensating differentials determined by the Fair Work Commission. Rather, what seems more likely is that the award-wage decisions have been influenced by observed “typical” wages in industries and occupations, and male-dominated fields have benefited from a long history of strong unionisation that led to higher average wages.

In any case, irrespective of whether non-skill-related differences in award wages are justified by other job characteristics, what is clear is that the gender wage gap among minimum-wage employees is greater than it would be were award wages neutral with respect to the gender composition of jobs.

Indeed, the gender wage gap within the award system would probably be negative if minimum wages depended only on the skill requirements of jobs, since the observed human capital of female minimum-wage employees is on average greater than the observed human capital of male minimum-wage employees…..

Comparing mean wages of award-reliant men and women shows there is indeed a gender pay gap among award-reliant employees, although it is considerably smaller than among non-award-reliant employees. The mean wage is $20.74 for men and $18.63 for women, corresponding to a mean gender pay gap of approximately 10%, compared to 19% among non-award employees.

1 These minimum wages are, however, less likely to be binding in high-paid occupations, where greater proportions of employees receive a salary that is above the applicable award rate.
2 Note that the OECD estimates are not entirely comparable across all countries because of differences in the way the median gender gap is calculated. For example, the wages variable may be measured over an hourly, weekly, monthly or annual time-frame. Figure 1 nonetheless provides reasonable indicative information on where Australia fits relative to other OECD countries.

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